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Indonesia 2015 | Overview | Cross-category trends

The search for value

Robust economic growth is putting more money in people’s pockets, but demand is no less intense for great value for money. Consumers are not necessarily buying the cheapest products available, but they are looking for more efficient ways to buy, and want to strike the right balance between quality and price. Kantar Worldpanel Indonesia has tracked increasing demand for large pack sizes on FMCG products ranging from biscuits to shampoo, which deliver better overall value for money. Even relatively affluent consumers are on the lookout for great value, and are increasingly buying budget brands. In fact, urban households are more likely than those in rural areas to buy brands that position themselves as economical, and top-tier households (A or B on the SES socio-economic scale) are almost twice as likely to buy these brands as are those shoppers at the lower end of the scale.

A desire for local meaning

Across every aspect of their lives, Indonesian consumers tend to be drawn to products and brands that they perceive to be aligned with their own lives and beliefs. While this puts local brands in a strong position to make meaningful connections with consumers, it also provides opportunities for international brands that can provide a locally relevant expression of their brand – and, in some cases, a localised version of their product – that feels at home in this market. McDonald’s has localised its offering with rice-based meals, British American Tobacco makes hand-made kretek clove cigarettes for this market, and to many people, Kit-Kat and Oreo are fondly regarded because they have generated a sense of familiarity that has a local ‘feel’ to it.


Demand for aspirational brands and products are fuelling the growth of premium goods across categories from cars and fashion, to soap and chocolate. Consumers are willing to pay for the brands, and higher-priced products within a range, that they see as providing something that goes beyond simply meeting their needs. Those who can afford it are buying top-end BMWs and premium Samsung mobile phones, while others are treating themselves to little luxuries. Kantar Worldpanel found sales of premium liquid soap, for instance, were up 39 percent in a year (2013), while premium chocolate sales rose 35 percent and top-end mouthwash saw a 15 percent surge in sales in the same period. Premium instant coffee, toothpaste and baby products are also on the rise. This is not simply about consumers splashing out; premium products must prove they deliver something extra that justifies their premium pricing.


People are leading increasingly complex and busy lives, so are keen to buy products that help them free up time either for time with family and friends at home, or for the pursuit of hobbies, entertainment and socialising. Many city-dwelling couples now both go out to work, and commute times can be long, so ready-to-heat and ready-to-eat meals, canned and frozen food and disposable nappies are all enjoying growth. At retail, shoppers are drawn to services that help them save time in store or make the experience simpler. While urbanisation is behind some of the drive for convenience, consumers outside major centres are also seeking out time-saving products and services, as they seek an improved balance between work life and their personal lives.

Changing spheres of influence

Television remains the cornerstone of national campaigns for mainstream products and brands, providing unparalleled reach across Indonesia. But increasingly, particularly among young consumers, digital media is providing new sources of information and inspiration. Given the near-ubiquity of mobile phones and the popularity of social media, online forums are alive with opinion, and the sources of influence are many and varied. More than 15 million Indonesian consumers are on Facebook, and local social networking site Kaskus has nearly 6 million; while only about one in five mobile phone users currently has a smartphone, that figure is rising rapidly, and with it, so will the effect of online word-of-mouth and digital advertising.


This is still a nascent area of retailing in Indonesia, and is far from a mainstream activity, but it is one that is rapidly growing as smartphone penetration and trust in buying online increase. KADIN Indonesia, the country’s Chamber of Commerce, expects that by the end of 2015, 10 percent of internet users in Indonesia will be buying online, as consumers do banking online and buy groceries and big-ticket items via e-commerce. One of the biggest hurdles to growth is the fear of being duped, along with a lack of clarity over e-commerce regulations, the complexity of delivering items across a sprawling network of islands, and the fact that many consumers don’t have a payment card they can use online to complete a transaction. However, there is a sense that a tipping point for e-commerce is near, as individual brands launch e-commerce ventures and as B2C e-commerce companies such as Lazada Indonesia, Rakuten, and eBay gain users.