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Soft drinks lose their fizz in Indonesia market as pandemic saps consumer demand

Annabeth Leow
Published Fri, Mar 26, 2021 · 07:08 PM

THE Indonesian beverage market was dragged down by both soft drinks and alcohol at the end of last year, despite growth in dairy products.

Sales volumes fell by 1.7 per cent year on year in Q4 2020, an analysis from consumer research firm GlobalData published on Friday said.

The market took a hit from the decline in carbonated products, which dropped by 14.8 per cent. Energy-drink volumes shed 12.1 per cent, and sports drinks were down 11.7 per cent.

Soft drinks together accounted for slightly more than a fifth of the drinks market in Indonesia.

Alcoholic beverages lost 9.1 per cent in volumes in the three months, although the segment was just 0.2 per cent of the overall market.

Sales of hot drinks, which formed the lion's share of the market - at nearly two-fifths of total volume - dipped by 0.8 per cent on the back of a decline in the coffee segment.

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But dairy products grew their share of the drinks market to 6 per cent, up from 5.5 per cent in Q4 2019. Dairy consumption also rose by 7.9 per cent, led by white milk, flavoured milk, condensed milk and "drinking yoghurt".

GlobalData consumer analyst Sukanya Kabali called the fall in the beverage volumes "consistent with the global trend of declining "on-trade volumes", on the back of Covid-19 lockdowns and business restrictions. Still, she expects the industry to pick up this year, as vaccine roll-outs lift the economy.

Separately, analyst Sheryl Gajete, also from GlobalData, said earlier this month that the Philippines dairy market was set to get a boost from the entry of Vietnamese producer Vinamilk.

The firm projects annual consumption of dairy beverages in the Philippines to have grown from 6.8 litres per capita in 2019 to 7.6 litres per capita last year. Ms Gajete added that "the country will outpace all key South-east Asian markets" in its demand for milk drinks.

"While ready-to-drink milk and yogurt drinks offer huge potential, local consumers' growing consciousness on the quality and ingredient base of beverages has the potential to drive success for Vinamilk's premium products," she said. She noted that its rivals, such as Nestle, Friesland Campina and Fonterra, have established strong reputations in the Philippines too.

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