Statistics Indonesia, a non-departmental government institute of Indonesia that is
responsible for conducting statistical surveys, reported Indonesians only consume milk 16.5 liters per capita per year in 2017.
Per-capita consumption is estimated to rise to 20 liters by 2020 and to 30
liters by 2025. The current consumption
rate is far low
behind any other countries in Asia, with Brunei Darussalam leads the way at 129 liters and other Asian countries such as Singapore, Malaysia, and
India have already reached above 40 liters.
Indonesia’s total dairy consumption is 3.8
billion liters or 3.9 million tons. The industry produced 1.692 and 1.903 billion liters of milk in 2016 and 2017, respectively.
70% of the total end-product of RTD Milk is
imported ingredients.
Processing companies (that rely on cooperative-produced milk) report that in order to meet fluid milk demand, they are required to blend locally purchased milk with imported whey, lactose and nonfat dry milk (NFDM). Indonesia does not produce NFDM.
Indolakto,
manufacturer of Indomilk, shared their attempt to produce fresh milk
independently and reduce imports, is by collaborating with farmers. They
distributed pregnant Australian cows to farmers and demand them to hand over
the calves to other farmers. The company then buys the milk from this farmer’s community.
RTD
Milk showed strong growth in 2019.
According to Euromonitor a leading independent provider of strategic market research data, RTD Milk had positive value growth at the range of 7% to 15% CAGR in 2014-2019 in all sub-categories, including flavored milk, fresh milk and shelf-stable milk (UHT and pasteurized milk). It is also expected to continue its positive performance at 3% to 8% CAGR in 2019-2024.
Indolakto, one of
the players in the milk industry producing Indomilk brand, is optimistic that the liquid
milk market will have a 2-digit
growth in the next 5 years, as they believe consumers are shifting from powder
milk to liquid milk – due to practicality and affordability.
RTD milk competitive landscape
According to Euromonitor, drinking milk products in Indonesia is dominated by Nestle (Bear Brand), Frisian Flag (Pure Farm, Milky, Kids), Ultrajaya (Ultra Milk), Indolakto (Indomilk), which together control around 70% of the market in 2019.
Within the UHT Milk category, Ultrajaya’s 2018 annual report showed that Ultra Milk still sits at 1st place by owning 42% of the market. Other big players are Frisian Flag (19%) and Indomilk (18%).
Competition is also intensifying, with various up-and-coming producers such as Kalbe Farma, Nutrifood Indonesia, Danone Dairy Indonesia, Sari Husada, and Greenfields Indonesia (Japfa) emerging.
Communication
on RTD Milk currently still revolves around the education to get more
Indonesians to drink milk by showing the product functional attributes
(healthier, tastier), while also showing more emotional benefit, like creating
a family special time each day to drink milk together.
Consumers consumption and purchase habit
Some perception among
Indonesian consumers contributed to the low rate of milk consumption in Indonesia:
There is a belief that drinking milk
is only for babies and toddlers, no need to drink it again as
one gets older.
The perception of drinking milk
as an unpleasant experience. Indonesian parents often push children to drink it
as a sort of health drink rather than something that tastes good and is good
for their children. Because of this, the children will stop drinking milk as
soon as they can.
Indonesians still have limited knowledge about types of milk
and nutritional ingredients in milk. Sweetened condensed milk (SCM) mixed with water is still perceived as drinking milk, rather than a sweetener
or dessert topping. SCM is the most
preferred because kids like the sweet taste and it’s highly affordable.
A research conducted by an NGO in Batam and Kendari, Indonesia, proved that moms still give SCM as daily nutrition
intake for their kids. They perceived SCM as drinking milk products as they saw the
SCM’s TVC. In 2017, the consumption of SCM drinking milk products was higher than milk in
Indonesia.
Smaller packaging
sizes, notably single-serving sizes, have gained popularity with consumers of
drinking milk products as household sizes in Indonesia are getting smaller and
consumers are generally demanding more products they can consume on the go.
Another reason is that they can help to decrease the
chance of spoilage caused by improper storing without the use of a refrigerator.
