Changes in Consumption Foods in Indonesia to Frozen Food Industry
How is the growth of the frozen food industry globally? How can Indonesia’s consumption of foods change?
Frozen food is familiar for its practicality and convenience. Frozen food is familiar for its practicality and convenience. According to Tastingtable, the general public began to accept fast food in the 1950s, and since then its popularity has continued to rise and become higher. Over the past 70 years, frozen meals have evolved from turkey, then fries, and frozen sweetcorn to plant-based burritos and zucchini fries.
And nowadays, many consumers are buying frozen food online. The American Frozen Food Institute said that between 2020 and 2021, 42% of households purchased frozen food via online platforms, an increase of 19% from 2018. And in 2020, online frozen food sales also increased by 75%. According to the data from Statista, from 2018 to 2026, it is estimated that the global frozen food market value will increase by more than 40% by 2018 the market value has reached USD 260.8 billion.
How to drive the frozen food market? What are the opportunities for the frozen food industry in Indonesia? Read this article to know more!
Things That Drive The Frozen Food Market Globally
According to IndustryARC, in general, 3 main factors drive and shape the frozen food market in most countries. These 3 factors are playing an important role in the market dynamics of frozen food products around the world, which they are:
1. Growing Demand for Preservative-free Food
Consumers every day need fresh vegetables, seafood, and fruits that can be stored for a longer time, where the demand for organic products continues to increase. Meanwhile, most organic products do not last long and have a short expiration date. That way, supermarkets or hypermarkets need to present more frozen foods which are certainly in demand by consumers who need foods that have a longer expiration date. On the other hand, the need to extend the expiration date also requires innovation related to the minimization of additional preservatives. If these products can be provided, consumers will flock to buy and help grow frozen food even more.
2. Millennial Shopping Trends
In the current millennium era, the frozen food market has very ideal consumer habits, especially from the millennial market share. Millennials are considered to be unlike previous generations, they are willing to try new things and invest in them. Millennials also tend to buy products that are practical to use and efficient in terms of time.
This certainly encourages the growth of the frozen food market because it provides convenience values in preparation and uses that are very suitable for the younger generation. In addition, another factor that can influence is that because millennials have responsibilities as students and/or workers with minimum wages, millennials need frozen food products because they are more cost-efficient.
3. Challenges in The Frozen Food Market
One of the challenges faced by most frozen food markets is the lack of a good supply chain system and the fear of cold chain failure. In terms of distribution, frozen food requires an optimal temperature of around -18°C, which means that if there is a small disturbance or problem it will have a big impact on the cold chain system and generate considerable waste. Minimizing these losses certainly requires adequate reserves of energy resources to ensure products are distributed properly.
The Impact of Covid-19 in Indonesia on The Tendency to Buy Frozen Food
Based on Mordor Intelligence data, in 2020 the frozen food market in Indonesia reached USD 995.79 million and is projected to record a CAGR of 8.49% during the forecast period (2021–2026). In Indonesia itself, the frozen food market managed to show good performance after the emergence of the coronavirus because frozen food was present as an ideal solution for consumers during the quarantine period while they still needed nutritious food with a longer shelf life.
In addition, currently, modern retail channels are also progressing which is also a determining factor in the development of frozen foods. Several supermarkets, such as Super Indo, Giant Ekstra, and Ramayana, have become significant sources of growth for the frozen food market in Indonesia. Thus, the Indonesian market is expected to generate a high growth rate as it is supported by increasing taste preferences and consumer income, which is also supported by an increase in selling value as well as a deeper and wider market penetration by well-organized retail players with an increase in freezer space facilities, available in the retail domain.
Quoted from Kompasiana, it is predicted that the frozen food market value in Indonesia in 2025 will reach IDR 200 trillion. If consumers can be wiser in consuming frozen food products, the frozen food industry is expected to continue to grow in line with changes in people’s lifestyles and the needs and developments of the times. In addition, with the support of technological developments that also have a wider reach, as well as a rapidly growing frozen food distribution system, it encourages entrepreneurs to continue to innovate and produce frozen processed food, which is supported by marketing strategies through online media such as e-commerce or marketplace.
Especially the pandemic conditions have caused many people to switch from conventional shopping methods to modern shopping methods using technology, which indicates that currently almost all people have smartphones and use social media as a promotional platform for their brands. This is certainly an effective strategy in product marketing and distribution.
In the current digital era, where the availability of smartphones and internet technology is very adequate to support the growth of the frozen food industry in Indonesia with the maximum utilization of technology. That way, there will be more things that can be turned into opportunities and also solutions to increase the productivity of frozen food businesses in Indonesia.
The Opportunities of the Frozen Food Industry in Indonesia
During the Covid-19 pandemic, Indonesian people’s consumption patterns changed. This is supported by the existence of regulations in Indonesia regarding social distancing, stay-at-home, and Large-Scale Social Restrictions (PSBB). So people prefer to eat at home and cook. According to Kartika Wulan Sari, a Researcher at Gajah Mada University (UGM), a university in Indonesia, the availability of products, product functions, and delivery in terms of speed and convenience are the most important factors that support consumer spending decisions.
Kartika said that the change in people’s consumption patterns is due to desires such as healthy eating, at least human touch points, and food safety, to focus on local food. These are some of the things that ultimately make people’s interest in frozen food increase. Prospects that support frozen food include the need for convenience eating related to the millennial lifestyle which requires fast food to be served at any time, easy to carry everywhere, and longer stored.
Based on data from the Government of Indonesia, citing Kompas in 2020, the frozen food market value is IDR 80 trillion. The frozen food market value is estimated to continue to increase to reach IDR 200 trillion in 2025. The Indonesian Refrigeration Chain Association (ARPI) also provides support with various infrastructures such as third party logistics and reefer containers for business owners in developing this industry. There are three famous brands in the frozen food industry in Indonesia likes Unilever, Charoen Pokphand, and Ajinomoto which will be discussed further below:
1. Unilever
As reported by Statista.com, Unilever, which was founded in 1929, is a multinational consumer goods company whose produce main products are food, beverages, cleaning materials, to personal care products. As stated in the report of Statista.com, the global revenue 2021 generated by the Unilever Group reached around USD 51.54 billion, an increase of more than half a billion euros from the management recorded in the previous year.
2. Charoen Pokphand
According to information compiled from Companiesmarketcap.com, Charoen Pokphand Foods’ latest financial report recorded that the company’s current revenue reached USD 16.46 million. Charoen Pokphand in Indonesia has exported 50 tons of frozen chicken meat from a target of 100 tons to Singapore by 2022. Revenue is the total amount of revenue generated by the company from the sale of goods or services.
3. Ajinomoto
Ajinomoto Co. Inc., launched the Ajinomoto Group Nutrition Profile System on Products (ANPS-P), which is a method for scientifically assessing the nutritional value of products such as frozen food and soup powder in April 2020. According to data presented by Statista and Forbes, Ajinomoto generated net sales of up to USD 7.3 billion (according to the October 2022 exchange rate) for the 2020 fiscal year. Ajinomoto managed to record revenues of USD 10.3 billion in 2022.
Enter The Indonesian Frozen Food Market with BRIGHT Indonesia
Because of the huge impact of the food frozen industry in Indonesia, of course, it takes a lot of in-depth research about the food frozen market in Indonesia. So, to enter the Indonesian market, you need the right local partner to assist you.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Provide assistance for you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email info@brightindonesia.net
