Indonesia's wheat-based food market has room to grow

by Emily Wilson
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Although rice remains a food staple in Indonesia, the country offers "great potential" as a market for wheat-based products, according to a recent report released by the U.S. agricultural attache in Jakarta. The report, prepared by PacRim Associates, highlights the current situation for wheat-based food consumption, discusses sector trends and outlines recommended steps for market expansion.

The Indonesian bakery industry is underdeveloped for a nation with the world’s fourth-largest population, according to the report. Bread and other wheat-derived food is considered a luxury item, whereas rice is the staple food. Nevertheless, because of its population of more than 200 million, Indonesia offers great potential as a market for wheat-derived products.

Food consumption and nutrition data indicate that urban dwellers consumed 200 grams of flour per capita per month, while the rural population consumed only 150 grams of flour each month. The data show that flour consumption is directly related to income.

Of the 4 million tonnes of flour produced, sources estimate that 15%, or 600,000 tonnes, are used in baking.

Reduced consumption of bakery goods since the economic crisis of 1997 has been difficult for Indonesia’s bakery industry, the report noted. However, sales are expected to increase as middle-class consumers (10 million to 15 million people) recover in the medium term.

There is potential for an increase in bakery goods such as hamburger buns as the fast food market continues to grow in Indonesia. However, the current limited purchasing power of the majority of the population is limiting this growth.

Despite this fact, many fast food companies are consuming large quantities of flour, such as Dunkin’ Donuts, which uses 150 tonnes of flour per month in its Indonesian operations.

Bakery production in Indonesia includes a high proportion of pastry and cakes. The pastry sector is estimated to consume as much as 60% of the flour used in the baking industry.

Consumer protection legislation and food packaging and labeling regulations are now in force in Indonesia.