INDONESIA DAIRY MARKET

Indonesia dairy market is estimated to witness a robust growth rate in the years ahead owing to the population growth, increase in disposable income, and new government programs focus on improving milk production and distribution.

Major Indonesia Dairy Market Drivers and Emerging Trends

The surge in disposable income within the middle class is a significant driver for Indonesia dairy market expansion. This financial improvement is leading to higher dairy products consumption with a particular focus on premium items such as flavored milk. As dietary habits have become more diverse, the average consumption of dairy products has increased substantially. These products offer an array of vital micronutrients and high-quality protein. With the rising population and greater demand for high-nutrition foods, milk and dairy products are projected to gain popularity as a primary protein source and boosts the expansion of Indonesia dairy market size.

The trend of prioritizing high-nutrition foods is on the rise and will remain strong. Consumers are conscious of how protein contributes to a healthier lifestyle. Milk nutrients are generally in forms that are quickly absorbed by the body. This drives the consumption of milk and dairy products which results in robust demand for the dairy products market.

The other key factor supporting the growth of Indonesia dairy market is a new government initiative to distribute milk to the population which ensures greater availability of this important nutrient. With a total budget of USD 28 billion upon full implementation, the program seeks to address nutritional issues in a country with high grain-based caloric intake, low milk consumption, and a stunting rate of 21.5% among children below the age of five.

With Prabowo Subianto slated to start his presidency in October after his February election victory, he has advocated for the country to achieve food self-sufficiency. Nevertheless, the country still depends on substantial imports of wheat, beef, and dairy. The Agriculture Ministry of Indonesia has indicated that the lunch program which also includes complimentary meals for pregnant women, will necessitate 4.1 million tonnes of milk. In contrast, the US Department of Agriculture forecasts that Indonesia’s milk consumption will reach four million tons this year.

Indonesia dairy market analysis observes that the local fresh milk accounts for only 16% of its total demand which means that there will be a substantial need to ramp up imports. This includes powdered milk from New Zealand and Australia’s live cattle that potentially offers a boost to exporters due to lower demand from China.

With a milk consumption per capita stand at 16.27 kg annually, Indonesia lags behind Southeast Asian countries like Vietnam and Thailand where consumption is around 26 kg, while also falls far short of the worldwide average of approximately 100 kg. According to the FAO, this is attributed to restricted land availability, expensive dairy cattle maintenance, small-scale farms, and a 2022 outbreak of foot and mouth illness that cut domestic production.

Prabowo has been pushing for a White Revolution aimed at increasing milk consumption for more than ten years. In his campaign, he highlighted the necessity for Indonesia to bring in 1.5 million dairy cattle to expand the industry and decrease import dependency. This would mark a dramatic increase from the roughly 260,000 dairy cattle estimated by the USDA at the close of 2023 in cooperatives and advanced farms. Such an import scale could take over ten years to accomplish and would cost billions. The top milk exporter to Indonesia in 2023 was New Zealand which sent almost USD 600 millions of dairy products, while the European Union ranked second.

The market is categorized by manufacturing processes into milk, yogurt, and additional products. The milk segment is anticipated to experience the most rapid growth throughout the forecast period. Increasing milk consumption is due to its excellent nutritional benefits such as providing calcium and protein. Furthermore, its ability to lower osteoporosis risk in seniors is expected to greatly enhance demand.

Based on the distribution channels, the market is segmented into hypermarkets and supermarkets, convenience stores, e-commerce platforms, among others. The hypermarket and supermarkets segment led the market largely due to the expansion of these stores and their extensive range of products.

Several key players within the market such as PT Nestle indonesia, PT Indolakto, PT Fonterra Brands Indonesia, among others.

Segments covered in the Report:

The Indonesia Dairy Market has been segmented based on product type and distribution channel. Based on product type, the market is segmented into milk, cheese, butter, dairy desserts, yogurt, and others. Based on distribution channel, the market is segmented into supermarkets/hypermarkets, convenience stores, specialist retailers, online retail stores, and others.

Market Segmentation:

Indonesia Dairy Market by Product Type

• • Milk
  • Cheese
  • Butter
  • Dairy Desserts
  • Yogurt
  • Others

Indonesia Dairy Market by Distribution Channel

• • Supermarkets/Hypermarkets
  • Convenience Stores
  • Specialist Retailers
  • Online Retail stores
  • Others