Indonesia Market Insights

INDONESIA
MARKET INSIGHTS
Copyright © 2017 The Nielsen Company. Confidential and proprietary.
PELAMBATAN PERTUMBUHAN
RETAIL FMCG INDONESIA
October 2017
Presented for Kementerian Sekretariat Negara RI
Ernawati
Associate Director The Nielsen Company Indonesia
Copyright © 2017 The Nielsen Company. Confidential and proprietary. 1

Growth model Indonesia:
Consumption + Investment Confidential for Wapres
GDP CONTRIBUTION BY SECTOR
32
55 If consumption goes down, GDP

growth will likely go down also
9
HH Consumption Gov. Spending

Investment Net Export/Import
Others
Source: BPS
2
The Sequence of Hits Form
Economy Tsunami
Property Vehicle Lifestyle FMCG Commodity

3
Fast Moving Consumer Goods Has Been Growing Very Low
2.7% in YTD 2017 While Annual Average Was 11%
YTD
2.7%
Inflation 7.7%
8.4%
+11.5%
+10.5%
14%
+11.1%
Inflation
11% +9.6%
+ 11%
Inflation + 4.7%
17% + 21.1%
+ 15.2%
+ 14.3%
+ 17.7%
+ 13.8%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2003 2004 2005 2006 2007 2008 2009 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17
4
Source: Nielsen Retail Measurement Services
Lebaran 2017 Hanya Mencapai 5%
Total Key Account | 75 Festive Categories
38,7
29,8
20,6
13,4
16,3
5,0
FEST 2012 FEST 2013 FEST 2014 FEST 2015 FEST 2016 FEST 2017
Source: Nielsen Retail Measurement Services 5

September growth is Higher than July & August Despite Much
Lower Than Jan 2016 (13.6%)
Retail Audit Total Indonesia Market | 55 Categories Indonesia market average growth is 10%-11%
13,6 13,1 Unit Value Change Volume Change Nominal Growth
9,0 9,7 10,1 8,5
7,7 7,6 7,7
8,3 8,1 5,9 5,8 5,5 6,2 5,1
4,5 2,7 5,2 6,1 4,0 3,0 2,9 3,7 3,8
3,4 2,6 3,8 1,6 5,0 2,6 1,5
1,8 2,0 0,4 2,3 2,7
4,4 4,5 5,3 5,0 5,0 4,4 4,0 3,9 4,4 4,0 3,8 3,9 0,8 -0,8 -0,7 1,4
2,8 3,4 3,6 3,7 3,2 2,8 2,9 2,7 2,5 1,7 2,3 2,4
-0,1 -0,8 -0,3 -0,2 -1,2 -2,5 -3,0
Total Indonesia Modern Trade | 55 Categories MT average growth is 15%-18%
17,6
11,7 13,1
8,6 9,5 9,8 10,3 9,5
6,1 6,2 6,4 5,8 7,5 5,8

14,4 4,2 4,4 5,6 4,1 5,1
5,6 3,3 8,9 6,3 7,0 11,1 3,6
4,6 2,2 2,3 2,4 4,8 2,2 1,1 8,2 1,5
0,8 4,1 0,8 1,0 3,2 1,7 1,3 3,2
3,9 3,9 2,4 3,2 2,9 3,9 3,6 3,3 2,0 3,9 2,3 3,4 2,7 3,4 3,5 3,4 2,7 2,5 2,4 2,3 1,3 -4,1 0,2
1,3 1,9
-1,6 -0,1
-4,0
Total Indonesia General Trade | 55 Categories GT average growth is 6%-9%
14,0
11,0 10,1
8,6 8,4 9,5 10,0
7,2 7,7 7,6
0,1 4,3 5,6 5,9
3,1 4,4 5,5 3,8 6,0 4,2 3,9 4,3 3,4
2,5 2,2 1,6 2,0 3,5 1,6 2,2 2,8
8,5 6,6 6,3 0,3 0,1 1,1 0,9 0,7 0,0
4,7 5,3 5,1 4,6 4,0 4,0 4,1 3,9 3,9 3,8 3,8 4,1 1,1 0,9
2,6 3,4 2,6 2,3 2,2 2,1 2,3 -2,2
2,3 2,0
-0,4 -0,1 -2,0 -2,2 -0,5 -0,1
-2,7 -4,5
6
Most Region is in Low Single Digit Weak Growth, Except
Kalimantan (coal), South Sumatra (CPO) and Bali Nusra (tourism)
Retail Audit Indonesia Total Groceries | Total FMCG 55 Categories | YTD Sep ’16 vs YTD Sep ‘17
Indonesia Growth
2.7%
N.
Sumatra
-1,9% Contribution
4.9
Kalimantan
C.
14.3%
Sumatra
3.2% 5.1
Sulawesi
4.4 S. 5,0%
Sumatra Jakarta
8,0% Greater 5.3
7.1 -2.3%
20.4
W. Bali
E.
Java C. Nusra
Java
6.1% Java 7.4%
-0.1%
1.7% 4.5
18.5 14.5
15.2 7
2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
DRAINED MIDDLE LOW CLASS

MID-LOW CLASS WEAKENING PURCHASE POWER
How Did They Lose Buying Power
Take Home pay decrease

(Lembur, Trade, Commission, Service, Other income)
Purchase Power Salary may stay the same or

Pressure increase single digit
Cost of living & expense increase

(Electricity, Food, School fee, etc)
9
Because expense is going up –cont’d
Less Consumption on Instant Noodles, Powder Milk, Coffee and Beverages
Retail Audit
Indonesia Total Groceries | Total FMCG 55 Categories | YTD Sep ‘17
Family Needs are Going Up
Instant Noodles -2,7
• Children are getting bigger. -5,5 Value growth
Their needs are getting more
• New family member is coming Powder Milk -1,5
Volume Growth
up. -0,2
Coffee 3,8
• “the needs is increase, for -1,5
meals, school, etc. The
8,0
expenses are increase and Biscuit
need a bigger house .” 7,6
Cooking Oil 13,4

3,4
Inflation – Price is Going Up Mineral water
4,3
-0,9
• Shopping needs not only for -4,9
immediate family, but also for Tea-RTD
-7,6
parents.
• Daily food shopping is now Baby Diapers
5,4
50,000. If buying food from 7,0
outside, it can cost up to 100,000 13,8
Liquid Milk
12,4
• “2 years ago, I spend 30,000 for
cooking, but now 50,000 is not 1,1
Sweetened Condensed Milk
enough.” 0,9 10
MAKING SNACK AT HOME TOO… (TO SAVE)
Snacking is also made at home, more economical and healthy and hygiene too
Retail Audit
Seasoning Flour 28,1
20,7
Liquid Milk 13,8
12,4
Chilli Sauce 13,5
7,3
Cooking Oil 13,4
3,4
Eye Drops 12,7

3,2
10,5
Soft Cake
9,7
What changed?
10,5 Value growth
• Not buying supper at night anymore Dishwashing Liquid
8,9
• Not buying snacks and beverages more Volume Growth
10,3
often Bleaches 2,2
• Bring food to office
• Eating in shopping malls is only once a 8,7
Gel Dessert RTD 6,4
month
• Not doing/ less doing hunting foods, try 8,6
new restaurant Snack 3,4 11
Consumer Shift to Sachet to Control / Lessen Volume
Usage Retail Audit
Change the packaging size /
Skincare 5,0
product format
Value growth -1,0
Snack 8,6
• Buy sachet than the refill pack Volume Growth
3,4
for detergent, softener, coffee,
Toilet Soap 1,2
shampoo, SCM, due to easy to -2,0
control
Shampoo -3,4
• Pay attention on dosage now
-2,6
use the product wisely, using
Detergent -0,8
the spoon for dosage. E.g. for
-1,8
detergent
Stock Soup 2,2
-0,8
Cologne 1,1
-3,3
Total Candies2 4,3
0,8
Toothpaste 4,1
0,9
Carbonated Soft Drink -5,7

-11,2 12
13
“Wait and See” Mid Upper Class
Mid-Upper Class Solid Buying Power
Spending in FNB chain grow 34%
Based on Nielsen Food & Beverage Measurement, the F&B sector is still growing
particularly for food counter
Growth
41%
34% 34%
28%
Total Fast Food Food Counter Restaurant
Source: Nielsen FNB Measurement 15

Ecommerce is click for
lifestyle
(NOT Grocery-Commodity)

Online Sales for Groceries in 2016 is Estimated to
Reach 1.5 T Rupiah (Out of 450 T Nielsen 55 cat)
If we compare to the offline sales, the top categories contribution in online sales only
reached about 1 %
Market estimation of top categories

est. less than 1%
Source: Nielsen Ecommerce FMCG Measurement (P Milk, Skincare Diapers, Snack, Shampoo) 17
2016-2017 Grocery Lost Growth IS NOT
Because Online
Nasional sales Annual growth 2017 growth Lost Sales 2017

11% 2.7% 8.3%
____________________________________________________________________
450 T 49 T 12 T 37 T
vs 1.5 T
Source: Nielsen eCommerce FMCG Measurement

18
Summary
 Tahun ini FMCG hingga September mengalami perlambatan pertumbuhan dimana
growth hanya mencapai 2.7% sedangkan rata-rata pertumbuhan normal tahunan
mencapai 11%
 Mid low class sebagai pemegang porsi yang besar mengalami perlambatan karena:
menurunnya THP, kenaikan harga utility sehingga berdampak pada pengurangan
konsumsi, menahan pembelian impulsife produk dan downsizing
 Upper class masih menunggu situasi dimana mereka hanya bertindak ‘wait and see’,
namun ada indikasi dimana pengeluaran di lifestyle cenderung terus bertumbuh
 Perlambatan pertumbuhan FMCG di tahun ini bukan semata-mata dipengaruhi

langsung oleh bertumbuhnya e-commerce di Indonesia. Untuk core products FMCG E-
commerce hanya mencapai kurang lebih 1% dibandingkan dengan penjualan offline
secara total.
19
Copyright © 2017 The Nielsen Company. Confidential and proprietary. 20

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INDONESIA

Copyright © 2017 The Nielsen Company. Confidential and proprietary. 1

GDP CONTRIBUTION BY SECTOR

55 If consumption goes down, GDP

HH Consumption Gov. Spending

Property Vehicle Lifestyle FMCG Commodity

Total Key Account | 75 Festive Categories

Source: Nielsen Retail Measurement Services 5

6,1 6,2 6,4 5,8 7,5 5,8

DRAINED MIDDLE LOW CLASS

Take Home pay decrease

Purchase Power Salary may stay the same or

Pressure increase single digit

Cost of living & expense increase

Cooking Oil 13,4

Eye Drops 12,7

Carbonated Soft Drink -5,7

Total Fast Food Food Counter Restaurant

Source: Nielsen FNB Measurement 15

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Market estimation of top categories

Nasional sales Annual growth 2017 growth Lost Sales 2017

Source: Nielsen eCommerce FMCG Measurement

 Perlambatan pertumbuhan FMCG di tahun ini bukan semata-mata dipengaruhi

Copyright © 2017 The Nielsen Company. Confidential and proprietary. 20

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