PACKAGING INDUSTRY IN

INDONESIA
Euromonitor International
December 2017
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LIST OF CONTENTS AND TABLES

Executive Summary ..................................................................................................................... 1
Packaging Design Gains Importance To Attract Consumers .................................................... 1
the Rising Number of Convenience Stores Drive Sales for Small Pack Size Packaged Food .. 1
Non-alcoholic Drinks in Pet Bottles Are Well Received ............................................................ 1
Metal Beverage Cans Gain Volume Share in Alcoholic Drinks Packaging ............................... 1
Beauty and Personal Care Packaging Revolves Around New Product Developments............. 1
Refill Packs for Home Care Products Gain Prevalence ............................................................ 2
Key Trends and Developments .................................................................................................... 2
Convenience Stores Drive Demand for Smaller Pack Size Packaged Food ............................ 2
Pet Bottles Gain Popularity in Non-alcoholic Drinks ................................................................. 2
Metal Beverage Cans Gain Popularity in Alcoholic Drinks ........................................................ 3
Refill Packs Become More Common for Home Care Products ................................................. 3
Manufacturers Explore New Packaging To Suit Beauty and Personal Care Innovations ......... 3
Packaging Legislation .................................................................................................................. 4
Mandatory Product Labelling in Bahasa Indonesia ................................................................... 4
Regulations on Food and Drinks Packaging ............................................................................. 4
Excise Duty Ribbons on Alcoholic Drinks Packaging................................................................ 5
Proposed Excise Tax on Plastic Packaging Faces Strong Opposition ..................................... 5
Recycling and the Environment .................................................................................................... 5
Legislation on Waste Management........................................................................................... 5
Recycling Codes on Plastic-based Foods and Drinks Packaging ............................................. 5
More Effort To Raise Awareness on Reducing Waste .............................................................. 6
Packaging Design and Labelling .................................................................................................. 6
Packaging Design and Labelling Highlight Product Positioning ................................................ 6
Pop Culture Influences Packaging Design in Beauty and Personal Care ................................. 6
More Soft Drinks in Pet Bottles Offer Ergonomic Design for Easier Handling .......................... 7
Usage of More Characters on Packaging Labels ..................................................................... 7

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PACKAGING INDUSTRY IN
INDONESIA
EXECUTIVE SUMMARY

Packaging Design Gains Importance To Attract Consumers

As competition between players across packaged food and drinks, beauty and personal care
and home care products became more intense over the review period, more players are seen
tapping packaging design to appeal to consumers, thereby driving sales. For example, some
soft drinks manufacturers are offering new PET bottles with ergonomic design so that it is easier
for consumers to hold or grasp. They also make use of characters on packaging labels, such as
Disney princesses to attract children and pictures of PSG football club players to attract sporty
consumers. On the other hand, beauty and personal care products such as men’s grooming
products are seen packaged with a masculine look with dark colours and bulkier square shapes
than female beauty products which usually come in bright colours such as pink and orange.

the Rising Number of Convenience Stores Drive Sales for Small Pack
Size Packaged Food
Rising demand for on-the-go products and the expansion of the number of convenience
stores in Indonesia shaped pack sizes of packaged food over the review period. In addition,
single-person or small households are likely to visit convenience stores more often than
supermarkets due to the ease of visiting these stores which are commonly found within housing
complexes or on street corners. The increasingly hectic lifestyle also leaves little time for busy
consumers to go on a full grocery shopping trip or prepare a meal from scratch.

Non-alcoholic Drinks in Pet Bottles Are Well Received

PET bottles gained popularity over the review period as consumers looked for more
convenient and on-the-go packaging. Compared to glass bottles, PET bottles are lighter and,
compared to metal beverage cans, they allow consumers to keep the unfinished beverage for
later consumption. They are also less likely to cause spillage, which makes it easier for
consumers to keep them in a bag and carry around.

Metal Beverage Cans Gain Volume Share in Alcoholic Drinks Packaging

Over the review period, metal beverage cans gained volume share in total packaging in
alcoholic drinks due to the rising popularity of non-alcoholic beer among Indonesians,
particularly launches by leading beer players. Non-alcoholic beer has been well received in
Indonesia and Muslims, representing the dominant religion in the country, are also allowed to
consume it. In addition, Smirnoff Midnight 100, an RTD alcoholic beverage, is the first RTD
packaged in metal beverage cans in Indonesia, thereby also contributing to the growth of metal
beverage cans in 2016.

Beauty and Personal Care Packaging Revolves Around New Product

Developments
Beauty and personal care products saw one of the fastest paces in terms of new product
developments over the review period compared to other fmcg products, which, in turn, affected

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packaging. For example, lotion pump closures gained prevalence in the review period as liquid
face foundation was launched and gained popularity among consumers.

Refill Packs for Home Care Products Gain Prevalence

Refill packs for home care products, which are perceived to be more economical, became
more attractive to consumers as the cost of living increased over the review period. Depending
on the type of product, refill packs are usually sold in sizes ranging from 200ml to 2,000ml. Most
consumers in Indonesia tend to retain the bottle from their first purchase while opting for refill
packs for subsequent purchases.

KEY TRENDS AND DEVELOPMENTS

Convenience Stores Drive Demand for Smaller Pack Size Packaged

Food
Rising demand for on-the-go products and the expansion of the number of convenience
stores in Indonesia shaped pack sizes of packaged food over the review period. Due to the
limited shelf and display space in convenience stores, pack sizes of items sold are generally
small in order to offer and display a wider variety of products. In addition, single-person or small
households are likely to visit convenience stores more often than supermarkets due to the ease
of visiting these stores which are commonly found within housing complexes or on street
corners and consumers are likely to pass by a couple, such as Indomaret, on the way home
from their workplaces. The increasingly hectic lifestyle also leaves little time for busy consumers
to go on a full grocery shopping trip to supermarkets or hypermarkets, where bigger pack sizes
are commonly sold, or time to prepare a meal from scratch.

Outlook
Individual servings or single-portion pack sizes of packaged food are expected to grow over
the forecast period due to a faster-paced urbanised lifestyle. Single-person households, small
families and young professionals who cook less frequently are the target consumers of small
pack size packaged food. Premium supermarkets such as Farmers Market and Food Hall
similarly moved towards offering smaller pack sizes over the review period and are expected to
continue to do so over the forecast period. Some of these products also fit the on-the-go needs
of high-income individuals.

Pet Bottles Gain Popularity in Non-alcoholic Drinks

PET bottles gained popularity over glass bottles and metal beverage cans for non-alcoholic
drinks over the review period. This can be attributed to consumers looking for more convenient
and on-the-go packaging. Compared to glass bottles, PET bottles are lighter and, hence, easier
to carry around. On the other hand, compared to metal beverage cans, PET bottles allow
consumers to keep the unfinished beverage for later consumption. They are also easier to store
in a bag without worrying about spillage compared to metal beverage cans as the plastic screw
closure, the common closure for PET bottles, allows consumers to securely close the bottle.

Outlook
As Indonesia gradually urbanises and consumers are increasingly leading a more hectic
lifestyle, convenient packaging will become more attractive for on-the-go consumption in the
forecast period, hence favouring PET packaging and boosting this trend. However, a potential
threat to the growth of PET bottles is the lack of recycling channels for plastic packaging in

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Indonesia. In addition, many Indonesians do not have the mind-set for recycling yet, although
rubbish scavengers (pemulung) commonly go through the piles at rubbish centres to collect
packaging that they can resell. For PET bottles’ growth to be fully realised, industry players
need to work closely with the government to drive recycling efforts in Indonesia, starting from
school levels and investing in facilities and collection centres, as well as providing incentives for
consumers to recycle PET bottle packaging, in the forecast period.

Metal Beverage Cans Gain Popularity in Alcoholic Drinks

Among alcoholic drinks in Indonesia, metal beverage cans gained volume share in total
packaging over the review period. This can be attributed to the rise of non-alcoholic beer among
Indonesians, particularly launches by leading beer players such as Bintang Maxx, Bintang
Radler 0.0%, Fayrouz and Guinness Zero. Non-alcoholic beer is well received in Indonesia as it
is perceived as a soft drink yet it makes consumers feel “cooler”. Muslims are also allowed to
consume it. Among the launches, Fayrouz even has the halal certification printed on its
packaging to attract consumers. In addition, Smirnoff Midnight 100, an RTD alcoholic beverage,
was a key new launch in 2016 and the first RTD packaged in a metal beverage can in
Indonesia. This also helped to boost the growth of metal beverage cans at the end of the review
period.

Outlook
Metal beverage cans are expected to be the fastest-growing pack type in the forecast period.
This is expected to be driven by non-alcoholic beer which was only available in 330ml metal
beverage cans at the end of the review period. Over the forecast period, non-alcoholic beer is
expected to gain popularity as leading brands such as Bintang and Guinness have helped to
raise awareness of non-alcoholic beer. Manufacturers’ effort to make a bigger distinction
between alcoholic and non-alcoholic beer near the end of the review period will also help to
encourage wider acceptance of the products in Indonesia, a country with one of the highest
Muslim populations, in the forecast period.

Refill Packs Become More Common for Home Care Products

With the cost of living rising in the review period, such as higher home electricity tariffs, many
Indonesians were attracted to refill packs in flexible packaging for home care products, such as
hand wash or liquid detergents, as it was more economical. Depending on the type of product,
refill packs are usually sold in sizes ranging from 200ml to 2,000ml. Most consumers in
Indonesia tend to retain the bottle from their first purchase while opting for refill packs for
subsequent purchases as refill packs are typically cheaper compared to the original bottle.

Outlook
Due to higher living costs, refill packs are expected to remain popular in the forecast period.
Given the rising availability of refill packs in almost all retail channels in Indonesia, more
consumers are expected to be attracted to adopting such packaging. More innovative designs of
refill packaging can also be expected in the forecast period. This includes plastic closures to
ease the refill into the initial product bottles and smaller openings to prevent spillage.

Manufacturers Explore New Packaging To Suit Beauty and Personal

Care Innovations
Beauty and personal care products saw one of the fastest paces in terms of new product
developments over the review period compared to other fmcg products. This also affected
beauty and personal care packaging which had to cater to the new developments in the review

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period. For example, within colour cosmetics, liquid face foundation gained popularity in the
review period and led to the rising popularity of lotion pump closures. In September 2016,
Revlon launched its foundation with a lotion pump closure which claimed to be more efficient in
usage and hygienic.

Outlook
Over the forecast period, the trend is likely to stay as manufacturers are expected to
constantly launch new innovative products to portray a fashionable image and appeal to
consumers’ changing needs. The lotion pump closure is expected to remain popular in the short
term due to the rise of liquid foundation and BB/CC creams in the review period. In addition,
consumers also perceive this closure to be less messy when using as well as more efficient and
hygienic. That said, manufacturers are expected to continue exploring new pack types and
closures in the forecast period to meet the packaging needs of new beauty and personal care
innovations.

PACKAGING LEGISLATION

Mandatory Product Labelling in Bahasa Indonesia

In October 2015, the Ministry of Trade implemented new legislation, Permendag
No73/MDAG/PER/9/2015, which mandates that all manufacturers, importers, wholesalers and
retailers must use Bahasa Indonesia for the labelling of all their products. It is hoped that the
new labelling regulation will eliminate the language barrier and allow all consumers to fully
understand all product information displayed on packaging. Ultimately, the government aims to
offer better protection for all local consumers. The regulation is likely to give domestic brands a
short-term competitive edge over imported brands. This is because international players will
need some time to adjust their product labelling to comply with the legislation. Over the long
term, however, the new labelling requirements are likely to prove beneficial for imported brands
as the use of Bahasa Indonesia labelling will help them engage and communicate better with
local consumers. In addition, the legislation also requires each company to include its full
address on the packaging of all products. This applies to all consumer goods sold in Indonesia.

Regulations on Food and Drinks Packaging

At the top level, food and drinks packaging is governed by Undang-Undang No7 Tahun 1996
or The Act of Republic Indonesia Number 7 Year 1996. The Act regulates food, or pangan,
which, in this case, comprises all processed and unprocessed food and drinks products.
Chapter 2, Section 4, Articles 16 to 19 of this legislation state the regulation on food packaging
materials. They are as follows:
 Article 16: (1) Any person producing food to be circulated is prohibited from using any material
as food packaging that is declared prohibited and/or may release contaminants which are
harmful or endangering human health. (2) The packaging of circulated foods shall be carried
out according to a procedure which could prevent damage and/or contamination. (3) The
government shall determine the materials which are prohibited for food packaging, and the
procedures of packaging of certain foods which are going to be traded.
 Article 17: The material which will be used as food packaging, the impact of which on human
health has yet to be identified, must first be examined in regard to its safety, and its use for
foods which are going to be circulated shall be carried out after approval from the
government.

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 Article 18: (1) Every person is prohibited from opening the final packaging of food to repack
and retrade. (2) The provision referred to in paragraph (1) does not apply to foods whose
procurement is in large quantities and is customarily repacked in small quantities for further
sale.
 Article 19: The provisions referred to in Article 16, Article 17 and Article 18 shall further be
regulated with government regulation (Peraturan Pemerintah).
In addition, Badan Pengawas Obat dan Makanan (BPOM) – also known as the National
Agency of Drugs and Food Controls – regulates the materials which are permitted for the
packaging of food and beverages following legislation number HK.03.1.23.07.11.6664 Year
2011. These materials include colourings, stabilisers, fillers, sanitisers, coatings, debondings,
water/oil repellents, lubricants, adhesives and other agents for plastic, film, ink, rubber, seal,
ceramic, glass, metal, paper-based and carton-based packaging.

Excise Duty Ribbons on Alcoholic Drinks Packaging

Based on legislation No PER-23/BC/2015 issued by the Directorate General of Customs and
Excise in 2015, manufacturers and importers are required to paste excise duty ribbons on the
packaging of all their alcoholic drinks. This is to differentiate contraband items from legal
products. The excise duty ribbons come in different colours, depending on the alcohol content
and the origin (local or imported) of the product. For domestic manufacturers, the excise duty
ribbons are also customised with the special identification code of each company.

Proposed Excise Tax on Plastic Packaging Faces Strong Opposition

In 2016, the Indonesian government proposed to impose tax on drinks packaging, set at
IDR50 per plastic cup and IDR200 per plastic bottle. This is aimed to reduce plastic bottle waste
following the growing popularity of PET bottles for various soft drinks products in the review
period, from carbonates and RTD tea to juice and even RTD coffee. However, the government
has faced strong reaction from industry players, including soft drinks companies and trade
associations, as the tax is not believed to tackle the wastage problem, but will most likely lead to
manufacturers raising the price of products which will then result in slower volume growth of the
drinks. Discussions are ongoing, with suggestions including more education of the public on
recycling.

RECYCLING AND THE ENVIRONMENT

Legislation on Waste Management

Waste management issues are regulated by Undang-Undang No18 Tahun 2008 (or The Act
of Republic Indonesia No18 Year 2008) and its derivative legislation, Peraturan Pemerintah
No81 Year 2012 (or government legislation No81 Year 2012). Both pieces of legislation require
manufacturers to display instructions on their products on how to reduce and manage their
waste. Manufacturers are also required to use green packaging for their products and to collect
and recycle their own waste if the packaging materials cannot naturally decompose. The
government has granted a 10-year grace period until 2022 for companies to comply with these
regulations.

Recycling Codes on Plastic-based Foods and Drinks Packaging

In 2010, the Ministry of Industry also issued legislation No24/M-IND/PER/2/2010, governing
the display of food grade logos and recycling codes on plastic-based foods and drinks

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packaging. For recycling codes, manufacturers are required to include resin identification codes
(01 to 07) as well as symbols which indicate whether the packaging is recyclable. The
abbreviated form of plastic types, such as PET, HDPE, and PVC, must also be printed on all
plastic-based packaging.

More Effort To Raise Awareness on Reducing Waste

In February 2016, the Indonesian government informally imposed a national tax on plastic
bags on a trial basis. It aims to reduce the volume of carrier bags. Each year, tonnes of carrier
bags are dumped into the city water system causing it to clog. According to regulation number
S.1230/PSLB3-PS/2016, issued by the Ministry of Environment and Forestry, an extra tax of
IDR200 is to be added to each plastic bag that is used by consumers. This will be charged in
addition to VAT. Concerns were raised that IDR200 was not enough to deter the use of plastic
bags; nonetheless, the trial continued until the end of May 2016, at least in major cities like
Jakarta. By October 2016, however, the Indonesian Retail Enterprises Association (Aprindo)
decided to stop charging consumers for plastic/carrier bags altogether, thus bringing this
initiative to a halt. This is because the existing regulation cannot be enforced until the Ministry
issues a policy with more teeth. Regardless, this trial attempt represents a first step towards
raising environmental awareness and reducing waste.

PACKAGING DESIGN AND LABELLING

Packaging Design and Labelling Highlight Product Positioning

In 2016, packaging operators in home care products focused on product functionality by
highlighting additional benefits and effectiveness. Many products are seen with labels used to
position the product as more value-added with claims such as “super-white”, “super-clean”,
“extra powerful” or “extra cheap”. Given the hectic lifestyle of modern consumers, manufacturers
need to position their products as being multi-beneficial, partly via the use of packaging.
Furthermore, the new smaller-sized home care products launched during 2016 had their prices
highlighted on the packaging. For example, Fumakilla Nomos spray/aerosol insecticide has a
bright colour sticker mentioning “Special Price IDR9,800”. Meanwhile, the new small pack size
of Sunlight hand dishwashing is labelled “Ekstra Isi 20% IDR5,000” or translated as “Extra 20%
content, IDR5,000”. These help to attract price-conscious consumers when shopping for their
home care products and choosing which brand to purchase.

Pop Culture Influences Packaging Design in Beauty and Personal Care

Attractive packaging has played an important role in drawing the attention of new consumers.
Beauty and personal care witnesses many products launched in non-traditional packaging to
differentiate them from their competitors. Some of the packaging types are asymmetrical, oval
instead of round, or capsule-shaped bottles. Distinctive shapes are popular in beauty and
personal care and not just brand/logo design. For instance, men’s grooming products are
packaged with a masculine look with dark colours and bulkier square shapes than female
beauty products which usually come in bright colours such as pink, orange etc. Shapes and
colours of products are a way to communicate the brand positioning in beauty and personal
care. There are also noticeable creative fonts used in unconventional packaging such as
Helvetica, Lavenderia, and Typnic.

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More Soft Drinks in Pet Bottles Offer Ergonomic Design for Easier
Handling
A few new launches in 2016 were packaged in PET bottles with a new design that is more
ergonomic for easier handling. For example, in RTD tea, Nü Green Tea and Fiesta White Tea
have new PET bottles with a design that is more concave, and curved in the middle for easier
grasp. In bottled water, a few brands offer slightly different PET bottle design to distinguish
themselves from the large number of brands available, especially since bottled water brands do
not compete on taste. Catchy packaging, therefore, becomes more important. Meanwhile, one
of the newer launches in sports drinks, the IsoPlus brand, has a longer and broader bottle neck,
meant for easy handling of the bottle by grasping the neck. Many of the subtle or more
significant packaging designs are all aimed to provide consumers with more convenience in
carrying around and for on-the-go consumption. These have been well received by consumers.

Usage of More Characters on Packaging Labels

Other than new launches in PET bottles with different bottle design, there are also some
innovations in terms of labelling on the PET bottles. For example, leading brand Aqua launched
330ml PET bottle packaging with Disney Princess and Star Wars characters on the packaging
label and a bottle design on the packaging in 2016. These new launches typically target the
younger consumer with the usage of characters. In addition, pictures reflecting a sports theme
are also seen to portray a sportier image. For example, in 2015, the launch of Super O2 was a
specific “sporty” bottled water variant of O2 Supertivo. The label has photos of PSG football club
players on the bottle, targeted towards fans of the club – typically teenagers and young adults.
The images used on the labelling of various PET bottle packaging serve not just as an effort to
distinguish a brand from its competitors but also to attract the attention of and reach out to more
consumers.

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