Indonesia Dairy Food Market Outlook to 2027

Market Overview:

The dairy food market in Indonesia has been experiencing significant growth owing to several factors including increasing urbanization, rising disposable incomes, changing dietary habits, and growing awareness of the nutritional benefits of dairy products. The consumption of dairy products amongst Indonesians has been steadily increasing due to changing lifestyles and dietary patterns. As more people move to urban areas and adopt Western dietary habits, the demand for dairy products such as milk, yogurt, cheese, and butter has been on the rise.

Growing awareness among Indonesian consumers about the health benefits of dairy products. Milk and dairy are increasingly seen as sources of essential nutrients such as calcium, protein, and vitamins contribute to the overall well-being of individuals. Indonesia's growing middle class and rising disposable incomes have led to an increased ability to spend on higher-value food items, including dairy products. As consumers become more affluent, they are willing to pay for value-added dairy products. Despite the growth potential, the Indonesian dairy food market faces challenges like infrastructure limitations, logistical constraints, and seasonal variations in milk production. Moreover, competition from imported dairy products remains a concern for domestic producers.

The dairy food market in Indonesia is a fairly fragmented market wihich consists of multiple manufacturers & consists of large number of domestic & international players. They offer a wide range of products like milk, yogurt, cheese, and other dairy-based products. These companies often compete with each other for market share across different segments of the dairy food market.

Indonesia Dairy Food Market Analysis

• Growing health and quality issues among Indonesians is growing. In this scenario, dairy products in Indonesia are considered as healthy products. This trend has increased the consumption of dairy products.
• Milk is an important source of vital nutrients especially for vegetarians, consumers are shifting away from cereals to milk & dairy products with a national herd of around 500K cows, Indonesia produces less than 1 Bn liters of milk each year.
• In 2022, Indonesia has ~115 Mn middle-class population, which is expected to increase dairy product consumption, and growing income and disposable income will promote milk and dairy product consumption.
• Players in Indonesia are trying to differentiate their products to cater to the changing and healthy eating habits of the consumers and positioning brands as being suitable for snacks.

Key Trends by Market Segment:

By Butter & Spreads: In 2022, Indonesia Dairy Food market is segmented with margarine & spreads at ~87% of overall contribution. Traditional cooking in Indonesia often involves the use of vegetable-based oils and fats rather than dairy-based products like butter. Margarine is used more than butter due to awareness of heart diseases and rise in cholesterol level.

By Yoghurt & Sour Milk In 2022, Yoghurt has contributed to ~90% of overall segment in comparison to sour milk due to its availability in single servings and bottled packaging which are easily available on retail offline channels. As demand for drinking yoghurt and preference for flavored products remains higher, manufacturers like Yummy Food and Diamond Cold Storage’s introduced numerous new flavored drinking yoghurt.

By Drinking Milk Market: In 2022, this segment is divided into Powdered Milk, UHT Milk & Flavored Drinking Milk. Flavored drinking milk is dominating the market with ~53% of overall contribution of segment. This demand is driven by surge in health awareness, new product launches and expanded distribution channels.

Competitive Landscape:

Major Players in Indonesia Dairy Food Market

• Upfield Indonesia PT maintains its lead in butter and spreads in Indonesia with more than 50% of the share by value in 2022 and Palmia, Forvita, Anchor and Orchid are some of the prominent brands in Indonesia
• Yakult dominates the market by contributing 54% of the overall market by value in 2022 driven by factors such as deep product awareness and positive brand equity among consumers, alongside wide distribution.
• Kraft, Prochiz, Dairylea, Cheesy, The Laughing Cow are some prominent cheese brands in Indonesia with top 3 companies are contributing more than 90% of the market’s share in 2022.
• Indonesia ice cream market is highly concentrated due to the presence of international players in the ice cream and Frozen dessert products segment.
• Nestle Indonesia is leading the market in terms of value and contributing ~23% of the drinking milk supported by strong geographical presence along with well-diversified product portfolio.

Recent Developments:

• May 2023: MegMilk Snow Brand entered into a partnership with Agrocorp International to produce and distribute plant-based ingredients.
• Feb 2020: Upfield Indonesia entered Gulfood with the updated portfolio of Plant based and dairy free products.
• May 2019: Blue Diamond launched non-dairy yogurt alternative category with the launch of Almond Breeze Almond milk Yogurt Alternative

Future Outlook:

• The market will grow at a CAGR of 8% during 2022-2027 driven by rising consumption of flavoured milk & changing lifestyle of Indonesians with respect to healthy consumption.
• With rising income and lifestyles change, a shift is expected towards more Westernized diets, including greater consumption of dairy products like cheese, yogurt, and milk-based beverages.
• There is a rising awareness of health and wellness among Indonesian consumers. In this scenario, there is an increasing demand for functional dairy products like probiotic yogurts and fortified milk.
• Government policies regarding food safety, import regulations, and subsidies is expected to significantly impact the dairy food market. Changes in regulations is likely to affect production, distribution, and pricing of dairy products.
• Improving transportation network and growing Ecommerce industry of Qatar is expected to increase average distance travelled by commercial trucks, which would heighten lubricant drain intervals.
• Advances in dairy farming techniques, milk processing technologies and packaging innovations is expected to enhance the quality, variety, and availability of dairy products in the Indonesian market.