Indonesia’s beverages industry records negative growth in Q1

JAKARTA TheInsiderStories) -The Indonesian Association of Beverages Industry (ASRIM) revealed that the beverage industry experienced negative growth in the first quarter of 2017 because the weakening of consumers’ purchasing power.

Based on data from the Central Bureau of Statistics (BPS), the country’s beverage industry production experienced a negative growth of 5.42 percent in the first three months of 2017. The sector’s performance was in contrast to the food industry as a whole, whose production increased 8.2 percent in the quarter.

Chairman of ASRIM Triyono Prijosoesilo said the decline in the beverage industry is inseparable from the slowing recovery of consumers’ purchasing power. In contrast to food, he said, the demand elasticity for beverages is so high. therefore, it is very vulnerable to the consumers’ purchasing power.

“Indeed, household expenditure on beverages represent only 1.8-2 percent of their total expense, but when the price of goods rises, people immediately switch their consumption of beverages to something more important,” he told journalists on Monday (May 8).

He added, the decrease of beverages industry growth was also contributed by the societys perception that beverages, especially soft drink is unhealthy drink, thanks to massive negative campaign through social media.

In early 2000, the beverages industry was able to grow double digits and touched the highest level in 2009 by 15 percent. However, in the last four years, the growth of the beverage industry continued to dip in the range of 4-8 percent and for the first time growing negatively in the first quarter of 2017.

“In the first three month, the highest negative growth was recorded by carbonated drinks which fell by 15 percent and only isotonic and milk drinks that grow positively,” he said.

This condition, he continue, could be worse if the government imposed excise on sweetened drinks and soda as well as plastics. The implementation of excise will raise the price so that sales can drop.

According to him, the reason for the imposition of excise on drinks on the ground of health factors is also less precise. The problem of obesity is not caused by soft drinks as a single factor but by an unhealthy lifestyle.

In addition, he said the implementation of plastic excise is also not appropriate for waste reasons. He encourages the government to issue the right policy in waste management.

“We hope the government does not make wrong policies and burdensome to the industry, as it does not solve the waste actual problems,” he said.

The beverages industry still has great potential to grow in Asia. In Indonesia, the beverages also has a big market as Indonesia’s population is projected to grow to 300 million in 2020 from around 252 million at present. (RF)