Boston, MA -- (SBWIRE) -- 04/09/2014 -- Despite a recent slowdown in economic growth, we remain sanguine on the long-term prospects of the Indonesian economy. With a positive demographic outlook that will make the country increasingly attractive in terms of manufacturing, real GDP growth should be relatively broad-based across the archipelago. With food/drink/retail sector investments likely to be more forthcoming in the coming years, dynamism in consumer-facing sectors will consequently remain buoyed to support demand growth.

Headline Industry Data

- Food consumption (local currency) forecast growth in 2014 = +9.1%; compound annual growth rate (CAGR) forecast 2014 to 2018 = +7.6%.
- Alcoholic drinks value sales growth (local currency) in 2014 = +13.9%; CAGR forecast 2014 to 2018 = +9.0%.
- Soft drinks value sales growth (local currency) in 2014 = +11.7%; CAGR forecast 2014 to 2018 = +9.3%.
- Mass grocery retail value sales growth in 2014 = +14.2%; CAGR forecast 2014 to 2018 = +10.7%.

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Key Industry Trends

Nestle Plans to Expand Further in Indonesia: At the end of 2013, Nestle Indonesia CEO Arshad Chaudhry explained that the company plans to expand further in Indonesia, following the US$200mn investment to open a new facility in the Indonesian city of Karawang. He declined to elaborate further on potential investment opportunities. The expansion will strengthen the company's position in the Indonesian market, according to Chaudhry. The company's Karawang unit has been operational since 2012, and the US $200mn investment came alongside a US$100mn investment to upgrade the company's factory in East Java.

Asahi Strengthens Bottled Water Presence: In late 2013, Tokyo-based Asahi announced that it is to acquire Indonesian Tirta Bahagia Group in a deal worth IDR2.2tn (US$193mn). The latter is the second leading manufacturer in the Indonesian bottled water market, producing the Club brand. Asahi Group will acquire TB Group's 19 factories and 22 group firms, aiming to complete the deal by spring 2014. At the time, Asahi said it plans to launch tea products in Indonesia by the end of 2013, and coffee and other drinks starting during 2014.

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