Changing Trends Offer Strong Growth Potential for Indonesian Dairy Market

Jakarta, 17 February 2017 – Fonterra Brands Indonesia, a leading producer of high quality dairy products for Indonesia, predicted the Indonesian dairy industry is set for exponential growth due to significant shifts in how Indonesian consumers view health and lifestyle.

As a result of these developments, dairy is now a common part of urban families’ daily lives with 97.8 per cent penetration[1]. The dairy industry is forecast to grow annually by about 13 percent over the next few years[2]. The key driver of this growth is Indonesia’s growing middle class who are eating out of the home more often and have a greater demand for high-quality food as they start to place more importance on a healthy lifestyle.

Across all socioeconomic groups, spending on dairy-based products shows increasing movement. In particular, consumption of powder milk grew 9 per cent and cheese grew 8.1 per cent[3]. Upper socioeconomic groups purchased 15 percent more often and spent 10 per cent higher on dairy products compared to last year[4].

“Indonesians are beginning to take their place as savvy consumers alongside their counterparts in the region,” said Achyut Kasireddy, President Director of Fonterra Brands Indonesia.

“Higher disposable income, greater awareness of health and quality issues, and a growing middle class eager to define itself in society are all factors driving change in consumer habits.”

Commenting on the significant factors driving dairy industry growth, Ines Yumahana Gulardi, Senior Nutrition Manager, Fonterra Brands Indonesia said consumers today want to eat real butter, real cream and real milk with the great taste that comes from natural products.

“We expect to see more Indonesians demanding full fat and reduced fat products rather than no-fat dairy products as consumers increasingly want foods to be as close as possible to their natural state – less processing, fewer additives and less intervention,” Ms Gulardi said.

Another integral change in consumer habits is the rise in demand for “grab and go” foods that are healthy and conveniently packaged. Convenience stores or mini-markets are one of the fastest growing retail platforms and have expanded by 400 per cent in the last 10 years, reflecting a strong on-the-go lifestyle where there is a clear position for dairy products[5].

As the world’s largest dairy exporter, Fonterra is well positioned to support and be part of Indonesia’s expanding dairy market.

“Dairy is nature’s answer to consumer and health needs in modern Indonesia and offers many opportunities to deliver a high level of nutrition to a greater number of Indonesians,” said Mr Kasireddy.

According to Rabobank, Indonesia’s dairy consumption is set to grow annually by 5 per cent until 2020[6]. The combination of a booming modern retail industry and increasing nutrition awareness and income levels is leading to a growing demand for high protein foods, including dairy.

Mr Kasireddy concluded, “Traditionally, Indonesia has the lowest level of per capita dairy consumption amongst the other ASEAN countries which share similar economies and cultures. At 12 litres per capita, Indonesia’s dairy consumption is less than half of the consumption in Malaysia and only a quarter that of Singapore. Whilst this presents sound growth fundamentals, changing attitudes will be the main catalyst for exponential growth.”

Fonterra is committed to providing high-quality dairy nutrition to Indonesia, meeting evolving consumer needs as they demand greater nutrition, convenience, and natural goodness from dairy products.


[1] Consumer Panel Survey: Indonesia Urban | Dairy Categories | Penetration | MAT Sep’16 vs YA

[2] Source: Mintel Group Ltd.

[3] Consumer Panel Survey: Indonesia Urban | Dairy Categories

[4] Consumer Panel Survey: Indonesia Urban | Dairy Categories

[5] Global Business Guide

[6] Rabobank, Agriculture in Focus, Indonesia – Islands of Opportunity, Spring 2013