The future of F&B industry

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DESPITE THE ECONOMIC slowdown and health crisis COVID-19 had created, the food and beverage (F&B) industry remain at the top of its performance, even showing positive growth. 

Statistics Indonesia (BPS) shows that in the third quarter of 2021, the F&B industry grew 3.49% compared to the same period in the previous year. In fact, throughout 2021, the F&B industry shows consistent growth, with 2.45% in the first quarter and 2.95% in the second quarter. In terms of exports, during January- October 2021, the industry reached USD36.9 billion, which increased 52% compared to the same period in 2020, amounting to USD24.2 billion.

According to the Minister of Industry, Agus Gumiwang Kartasasmita, the F&B industry can be at the forefront of the non-oil and gas processing industry, knowing there’s increasing domestic demand for F&B products and abundant agricultural resources as the backbone of the industry. 

F&B Industry Investment Outlook 

Indonesia is a large market with a population of more than 270 million and a growing middle class. Furthermore, Indonesia is in a period of a demographic bonus, where the population is young and in the productive age range—thereby increasing their purchasing power. Additionally, as the country returns to normal, public consumption is expected to increase, alongside the returning of regular economic activities.

With current growth number, the F&B industry has increased foreign investors’ appetite to invest in the domestic food market. According to the Ministry of Investment/BKPM, foreign direct investment (FDI) in the F&B industry from January to September 2021 amounted to USD2.02 billion, growing by 75.93% compared to the same period in 2020 of USD1.14 billion. 

Adhi S. Lukman, the Chairman of the Association of Indonesian Food and Beverage Entrepreneurs (GAPMMI), said, “We see that investors in the food and beverage industry are more optimistic about the prospects in Indonesia, because in 2020 to mid-2021 there’s still a significant increase in consumption despite the impact of the pandemic. Investment in the F&B industry in Indonesia is still very much available, because with such a large market, there’s a lot of opportunities to be profitable.”

“Making Indonesia 4.0” Initiative 

With plenty of opportunities in hand, what are the challenges the F&B industry will be facing in the coming days? In order to create a competitive manufacturing industry, the F&B industry needs to produce more value-added products with good quality and function, solve logistics and distribution challenges, and use various platforms in line with the emerging trend of purchasing goods online. 

In supporting the F&B industry to solve these challenges, the Indonesian government has developed the Making Indonesia 4.0 initiative. This is a roadmap that provides direction and strategies in strengthening Indonesia’s industrial structure through the Industrial Revolution 4.0 (4IR).

4IR covers a wide range of technologies, including artificial intelligence (AI), Internet of Things (IoT), wearables, advanced robotics, and 3D printing. Indonesia will prioritize five sectors to focus on using these technologies. These five sectors are food and beverage, textiles and clothing, automotive, chemical, and electronics. 

These five sectors accounted for 60% of manufacturing GDP, 65% of manufacturing exports, and absorbed 60% of manufacturing workers. Through 4IR, the government hopes to make Indonesia’s F&B industry a powerhouse in ASEAN. So what are the strategies for F&B industry within the 4IR framework?

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