Consumer goods to Indonesia
Trends and opportunities
Indonesia is currently the world’s fourth most populous country. With a
population exceeding 250 million, it is estimated that Indonesia has 90
million people that will be rated as ‘consumer class’ by 2030 with an
annual net income of more than US$3,600 (Source: McKinsey & Company, 2014). This consumer class, more
commonly known as the middle-income group, is creating a consumer boom in
Indonesia that will only grow over the next two decades.
Domestic consumption makes up a high proportion of the gross domestic
product (GDP) on a comparative basis with other emerging economies, meaning
that increased GDP growth will see an accelerated growth in consumption
compared to regional neighbours. In 2015, BMI estimated the spending on
clothing and footwear accounted to 2.5 per cent of Indonesia’s GDP.
With approximately a quarter of Indonesian households currently earning
above US$10,000 a year, BMI predicts this number to nearly double by 2020.
The improved earnings will lead to more disposable income to spend, which
will substantially increase the demand for discretionary items like fashion
and luxury goods, especially international brands.
Increasing access to credit among domestic consumers also plays a crucial
part in the increased spending on discretionary goods and other
non-essentials. BMI (2016) reports that in 2015 there are approximately 15
million credit cards in circulation in Indonesia. The ease of obtaining a
credit card with reasonable limit and the attractive zero per cent
instalments offer from most banks certainly contribute to the growing
consumerism in the country. Aligned to this, a number of banks are
facilitating ease of access to debit cards to ensure more Indonesians than
ever have access to growing retail opportunities.
Similar to many other emerging economies, e-commerce is growing rapidly,
posing a threat to conventional brick-and-mortar stores. The improvements
in connectivity and infrastructure contribute greatly to the growth. BMI
(2016) reports that there are approximately 90 million internet users in
the country and total e-commerce sales in 2016 reached US$7 billion and is
forecast to triple by 2020.
Indonesia's changing consumption patterns and unique position as a
developing country with a sizeable youth population and growing middle
class in Jakarta and other second tier cities presents numerous
opportunities for Australian exporters.
The beauty industry is one of the top 10 priorities of the Indonesian
government’s masterplan for economic growth and development. Cosmetics play
a strategic role in Indonesia given the reality and potential of the market
and the approximately 800 companies directly employing 75,000 people and
creating an additional 600,000 jobs in related industries.
Indonesia’s emerging middle class with rising disposable incomes and a
desire for imported, high-quality products, sees a beauty and wellness
sector expected to grow. Euromonitor suggests that year on year growth to
2018 will be more than 9 per-cent, making Indonesia the fastest growing
beauty and wellness market in Asia. The demand is largely driven by middle
class consumers, especially females. In addition, there is an increasing
trend of men in urban areas spending more on cosmetics and skin care
products. Imported cosmetic sales in 2015 reached US$441 million (Source: Ministry of Trade, 2016) and accounted for more than 60
per cent of the cosmetics market share in Indonesia.
An opportunity also exists in the fashion industry. The growing youth
population and the increasing purchasing power resulted in higher spending
on fashion items in terms of value, quantity, and frequency. Improved
internet connection has allowed local consumers to access what’s trending
in the fashion capitals around the world, creating a stronger appetite for
foreign brands, holding the perception that fashion trends are set in the
The shift of behaviour towards new and fashionable trends is supporting
fast growth in international fashion brands in Indonesia, particularly in
'fast-fashion', where chained stores will turn over stock regularly to
create emerging trend opportunities for consumers.
Indonesian consumer behaviour in adopting the latest trends in global
fashion has been the key contributor in the growth of foreign fashion
brands, particularly fast fashion. The quick turnover style, where
retailers refresh stock and product displays regularly on short-term basis
to create emerging trends, and the affordable price-range influence
consumers to make regular purchases to keep up with the trends.
Competition in the Indonesian retail sector is intense due to the large
number of existing and new players, both local and foreign brands. Some
larger players continue to expand their distribution channels to enlarge
their customer base.
For cosmetics and skin care products, international brands still dominate
the market. Renowned players such as Unilever, P&G, and L’Oreal lead
the market, offering a wide range of products to meet consumer’s needs.
However, smaller foreign brands with an established presence in
international markets are also attracting the interest of new consumers who
prefer high quality brands and are looking to distinguish themselves from
the mass goods market. Indonesia is also looking to strengthen their own
domestic production and this will only increase competition in the
The distribution channels for consumer products rely heavily on the modern
retail channels – department stores, and specialty stores located in
shopping malls. These retailers either source the products from importers
and distributors, or import directly from manufacturers.
Regardless of global e-commerce growth, E-commerce in Indonesia is still
less than one per cent of total retail sales and the regulatory environment
means that Australian companies must still have a local partner to import
and product in market in order to compete.
There are quite a number of importers in Indonesia specialising in
different types of consumer products. Austrade is able to assist Australian
exporters in identifying a suitable partner based on your product and
business expectations. For companies looking to manufacture their products
in Indonesia, Austrade is also able to assist in assessing the most
suitable manufacturing partners for your business.
To find out the specific tariffs pertaining to the export of your product
to Indonesia, enter the unique HS product code at
Association of Southeast Asian Nations (ASEAN) Tariff Finder.
Marketing your products and services
To successfully market to Indonesia consider:
participating in major local trade shows
highlighting your international track record to customers, especially
in the ASEAN region
engaging a local distributor (crucial to effective business penetration
visiting the market on a regular basis and investing time (relationship
opening a representative office or presence in Indonesia / engaging a
engaging Austrade in tailored services to help you identify
opportunities or connect you with key distributors and buyers.
- department stores
modern retail stores
e-commerce (but only if you already have a presence in market)
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
For more information on how Austrade can assist you, contact us on:
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A list of Austrade offices (in alphabetical order of country) is also available.