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Brands in soft drinks and hot drinks are pushing smaller pack sizes to consumers with less disposable incomes. As smaller packs are mostly made of flexible plastic, it is set to gain from this trend. Flexible plastic remained a primary type of packaging material in home care in Indonesia, as it is a more affordable option, and is versatile in terms of format and size. Multipacks witnessed rising demand as at-home consumption increased due to home seclusion, andbrands promoted multipacks by placing them at a prominent location in hypermarkets/supermarkets. 

Travel-size packaging formats in beauty and personal care appeal through convenience and low cost. Consumers with limited disposable incomes usually opt for products with lower selling prices, such as smaller packs. On the other hand, in modern retail outlets, consumers tend to purchase refill pouches because they already have the PET packaging format at home, with the pouches offering convenience and value for money as they will be used for refilling the at-home PET packaging.

In October 2015, the Ministry of Trade implemented new legislation that mandates all manufacturers, importers, wholesalers, and retailers must use Bahasa Indonesia for the labeling of all their products. This labeling regulation helped to eliminate the language barrier and allows consumers to fully understand all product information displayed on the packaging. Over the long term, however, labeling requirements are likely to prove beneficial for imported brands as the use of Bahasa Indonesia labeling will help them engage and communicate better with local consumers. In addition, the legislation also requires each company to include its full address on the packaging of all products. This applies to all consumer goods sold in Indonesia.

The Ministry of Environment and Forestry (KLHK) set a 2025 target to reduce waste by 30%. The government’s plan to impose a tax on plastic will include the classification of excisable goods in a move that was originally meant to cover only single-use plastic bags. The starting point of a tariff on plastic bags has been chosen to ease the country into the new situation gently, given that many rules and regulations have already been imposed in recent times. Food and beverage packaging plastics will also be subject to the new excise tax. Most major grocery retailers in Indonesia now offer eco-friendly plastic bags which will degrade in less than two years and are made from materials such as oxium plastic.

In September 2019, under the National Agency of Drug and Food Control’s Regulation no. 22/2019, all processed food and beverages must carry information of the product’s salt, sugar, and fat content on the packaging. The new labeling system is a color-coded system wherein a red color warns of high levels of certain ingredients. The healthier choice logo allows for quick comparison of a product with others in terms of nutritional benefit and aims to encourage consumers to read the labels more closely on products they purchase. The new halal logo launched in October 2019 and known as Halal Indonesia will be mandatory by October 2022, with business and services permitted a three-year grace period to use the old halal logo before making the change.

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• Beauty and Personal Care Packaging: This is the aggregation of packaging for baby care, bath & shower products, deodorants, hair care, color cosmetics, men's grooming products, oral hygiene, perfumes & fragrances, skincare, depilatories, and sun care. Black market sales and travel retail are excluded.
• Dog and Cat Food Packaging: This is the aggregation of dog and cat food packaging.
• Packaged Food Packaging: This is the aggregation of packaging for baby food, Bakery, canned/preserved beans, canned/preserved fish/seafood, canned/preserved fruit, canned/preserved meat and meat products, canned/preserved tomatoes, canned/preserved vegetables, other canned/preserved food, confectionery, chilled fish/seafood, chilled lunch kit, chilled processed meats, fresh cut fruits, dairy, dessert mixes, rice, frozen bakery, frozen desserts, frozen meat substitutes, frozen processed fish/seafood, frozen processed potatoes, frozen processed poultry, frozen processed red meat, frozen processed vegetables, other frozen processed food, ice cream, meal replacement, noodles, oils and fats, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads and sweet and savory snacks.
• Home Care Packaging: This is the aggregation of packaging for laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners, and insecticides. 
• Beverages Packaging: Beverage packaging is the aggregation of alcoholic drinks packaging, hot drinks packaging, and soft drinks packaging.

• Consumers are switching from metal food cans to aluminum/plastic pouches or aluminum trays, which provides a greater degree of convenience and freshness to consumers. Normally, pouches and aluminum trays for wet dog and cat food contain only single-serve portions, that eliminates the need for consumers to store leftover products. But popular brands such as Pedigree (Mars Foods Indonesia) and Royal Canin (Royal Canin Indonesia) now offer large packs of wet food variants in flexible packaging. As a result, flexible packaging grew by 6.3% by volume in dog and cat food packaging in 2020.
• Flexible packaging is the most common pack type for dry dog and cat food, as it is the most suitable packaging material for ensuring airtight storage to prevent oxidation or spoilage. Manufacturers are launching new flexible packs with zip/press closures that will help consumers to maintain the freshness of food. As a result, flexible packaging grew at 22.3% and 8.4% by volume in dog and cat food respectively.

• With dog and cat food products increasingly seen in stand-up pouches, this is also benefiting zip/press closures. The convenience, practicality, and no-mess features of zip/press closures are popular among local consumers, even if they generally carry a higher price tag. Thus, zip/press closures are mainly found in premium dog and cat food, while also having some presence in value-added mid-priced products. Leading premium brands such as Hill’s Science Diet and Royal Canin also use zip/press closures on their dry dog food, while pet treats and wet food players are also beginning to use zip/press closures for some of their products.
• Small pack sizes continue to gain in popularity in Indonesia, supported by the expansion of convenience stores, supermarkets, and hypermarkets with lower retail selling prices and by consumers’ growing demand. Many are attracted to smaller packs by their lower pack price and ease of carrying, with these factors also encouraging impulse purchases. Apart from that, the rise in health-consciousness is set to have an impact across product categories, leading to demand for food with a healthier image such as nutritional supplements. During the pandemic, pet owners spent more time with their pets, thus the pet humanization trend is expected to influence the market. Humanization is likely to support the health-consciousness trend.

• Dog and cat food packaging is expected to continue growing in line with the increasing pet population in the country, driven by the rapid rate of urbanization and expanding middle-income consumer segment. This is likely to include larger pack sizes benefiting from increasing numbers of larger dog breeds. On the other hand, smaller pack sizes are expected to grow as companies are likely to launch smaller packs of premium products. While it is common for economy products to sell in pack sizes up to 20kg, premium brands are more commonly sold in packs up to 7kg. Metal food cans, followed by flexible plastic, are expected to remain the main pack types for dog and cat food over 2021-25.
• Rising health awareness among affluent dog owners is expected to cause a shift towards raw dog food, which is deemed to be healthier than packaged dog food. These products can be purchased, prepared, and made from high-quality fresh produce. However, raw food diets cost far more than most packaged dog food products. Thus, raw dog food is likely to be packaged in premium packaging such as stand-up pouches. The boost in the raw dog food category is expected to help stand-up pouches grow over 2021-25.

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• Before the pandemic, manufacturers announced that the use of plastic for packaging would be completely eradicated. However, consumers became skeptical of reusable packaging during the pandemic due to the risk of contracting the virusus, manufacturers put their plans on hold and consequently returned to other formats of packaging such as plastic. As a result, flexible packaging grew 2.7% by volume in home care packaging in 2020.
• Flexible packaging gained traction during the pandemic. This can be attributed not only to being a more affordable option but also to its versatility in terms of packaging format and packaging size. Stand-up pouches gained popularity during the pandemic as they were offered with innovative formats such as zip/press closures. As a result, stand-up pouches grew 13.4% by volume in home care packaging in 2020.

• The economic fallout of the pandemic led to the reduced disposable income of the population. Thus, affordability became a prime factor in purchasing decisions. Smaller packs were preferred by the consumers over larger packs due to the low upfront cost. Small packs such as sachets and pouches were trending, even if this made the product more expensive than a larger pack size in terms of price per liter/kg.
• Despite a travel ban in the initial months of the shutdown, there was a surge in demand for travel-sized sanitizers, which are usually packed in pouches. This can be attributed to low disposable income. Consumers and businesses were also buying sachets of sanitizers to further reduce the risk of contracting the virus by touching common surfaces. In addition, sales of pouches were also being supported by marketing that targets price-sensitive consumers. When considering the same product in different types of packaging, pouches usually offer greater value for money, thus helping them gain popularity.

• With the approval and implementation of several vaccines in 2021, consumers are gradually returning to their normal lives. Manufacturers are likely to return to scaling down their usage of single-use plastic and continue innovating with new and sustainable packaging formats for home care products. Metal packaging is expected to experience a challenging environment following the Indonesian government’s decision to extend the anti-dumping duties on steel and tinplate products from countries such as China and Vietnam into

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In comparison to other markets in the region, Indonesia records a lower number of cases per million inhabitants

• According to the World Health Organization (WHO), on May 2022, Indonesia had 6,053,670 COVID-19 cases, with 156,556 deaths and 246 new daily cases.
• According to the WHO, as of May 2022, Indonesia’s total cases per million inhabitants was 22,132. In comparison, the Philippines recorded 33,669 on the same day.
• As of May 24, 2022, Indonesia’s total administered vaccine doses stood at 411,503,064, representing 61.0 of 100 persons, based on the World Health Organization.

The chart below shows Euromonitor International’s Recovery Index.

The quarterly reported Recovery Index is a composite index that provides a quick overview of economic and consumer activity. It keeps track of the latest quarterly economic/consumer data and forecasts in key economies to gauge when economic activity and consumer demand are likely to return to the pre-pandemic levels of 2019.

A score of 100 and over indicates a full recovery in which economic output, the labor market, and consumer spending all return to/exceed 2019 levels.
Detailed methodology is provided in the Appendix.

Quarterly Recovery Index and Related Indicators, Indonesia

Click here for more detailed information from Euromonitor on the overview of COVID-19 conditions in Indonesia

This graph shows our “best case” and “worst case” estimate scenarios of how COVID-19 will impact the real GDP value in Indonesia. Our “best case” or Baseline scenario has an estimated probability of 65-75% over a one-year horizon. Our “worst case” or Pessimistic2 scenario has an estimated probability of 2-5% over a one-year horizon. For more details, please refer to the detailed explanation of the COVID-19 scenarios in the Scenario Definitions section.

Please note that the forecasts will be adjusted every three months, according to the expected number of cases, recoveries, and deaths due to COVID-19 in this country, as well as shifting socioeconomic conditions (the most recent update was January 2022).

Baseline forecast refers to the "best case" COVID-19 scenario forecast that has an estimated probability of 45-60%.

C19 Pessimistic refers to the "worst-case" COVID-19 scenario forecast that has an estimated probability of 13-23%.

Indonesia’s exports reached a record high in 2021, boosting further economic growth

• Indonesia's real GDP expanded by 3.7% in 2021, far behind Asia Pacific's average growth of 6.4%. Strong exports, solid industrial activity, and supportive macroeconomic policy measures drove the country's economic development this year. Household consumption and private investment on the other hand remained flat. Over the course of the year, the continued COVID-19 epidemic and re-imposed containment measures slowed the recovery of both the economy and the labor market. On this note, the unemployment rate has continued to rise, standing at 6.4%.
• In January 2022, the government implemented new tax reductions on property and car sales in order to stimulate economic recovery. The chances of additional infection waves, supply chain disruptions, and increased financial market volatility amid global monetary tightening, however, cast a shadow over the economy's prospects. The country's National Medium-Term Development Plan 2020-2024 intends to boost prosperity, develop infrastructure, increase human capital investment, and improve public services.
• After a fall in 2020, the strong recovery in global demand bolstered international merchandise trade, surpassed pre-pandemic levels internationally in 2021. Indonesia's export value increased by 40.5% to record high levels in 2021 due to growing global commodity prices. During the year, goods exports accounted for 19.5% of Indonesia's GDP, lower than the Asia Pacific average of 24.4%. Mineral products remained Indonesia's most valuable export category in 2021, accounting for 17.1% of the country's overall export value. With 27.3% of all products exported to China during the year, China remained Indonesia's most important trading partner.

Please note that the forecasts are adjusted every three months according to the expected number of cases, recoveries, and deaths due to COVID-19 in the country, as well as shifting socioeconomic conditions.

The graph below shows the adjusted forecasts of the percentage growth for the categories mentioned, highlighting the impact of COVID-19 between our pre-COVID-19 estimates and the “most probable” (Baseline) forecast, which has an estimated probability of 45-60%.

Baseline forecast refers to the "best case" COVID-19 scenario forecast that has an estimated probability of 45-60%.

The rather sombre national mood that emerged during the pandemic continues to impact demand for alcoholic drinks

• The COVID-19 pandemic had a significant detrimental influence on Indonesia's alcoholic drinks industry, as the state response to the pandemic scenario, along with widespread fears of contagion among the public, resulted in a significant reduction in consumption occasions. Among the most significant direct impacts of the pandemic are expected to be the economic recession that has unfolded since the onset of the COVID-19 situation, and which is likely to put pressure on consumer spending until at least 2022. Given the uncertainty that this will certainly bring to the country's consumer and foodservice industry, customers are likely to become more conscious of their expenditure, leading to lower spending on alcoholic beverages. According to Euromonitor’s Baseline scenario forecast, alcoholic drinks suffered a decline of 16.9% over 2019-2022.

Please note that the forecasts are adjusted every three months according to the expected number of cases, recoveries, and deaths due to COVID-19 in the country, as well as shifting socioeconomic conditions.

This graph shows our “most probable” and “worst case” estimate scenarios of how COVID-19 will impact the percentage growth for the sectors mentioned in Indonesia. Our “most probable,” or Baseline scenario, has an estimated probability of 45-60% over a one-year horizon. Our “worst case,” or Pessimistic scenario, has an estimated probability of 13-23% over a one-year horizon.

Baseline forecast refers to the "best case" COVID-19 scenario forecast that has an estimated probability of 45-60%.

C19 Pessimistic refers to the "worst-case" COVID-19 scenario forecast that has an estimated probability of 13-23%.

Rice is likely to retain importance as a key component of the local diet, pushing sales of staple packaged food

• Packaged food in Indonesia continues to record positive value growth, despite the economic recession. This is due to the essential nature of many items available within packaged food, with consumers continuing to invest in general staple food for daily needs. Products that are fundamental for the Indonesian household, such as cooking ingredients and staple foods enjoyed dynamic growth of 45.8% and 15.1%, respectively, over 2019-2022, according to Euromonitor’s Baseline scenario forecast.
• Rice and noodles are two of the key staples of the Indonesian diet, with these products being used in a huge range of traditional dishes. These products are also largely affordable to most consumers, making them an economical option. With the government actively involved in controlling the prices of key staples, this should ensure that rice for example remains affordable across the income spectrum. In fact, even as the economy came under pressure, rice benefited from consumers’ price sensitivity.
• Organic and multigrain rice had been gaining popularity in Indonesia prior to COVID-19, with these goods becoming more common in more developed areas such as Jakarta, Surabaya, Bali, and Medan. Pure Green organic red rice, organic pandan wangi (fragrance rice), organic long-grain white rice, and Jatiluwih Premium Organic Rice are some popular brand examples. Most organic rice demand comes from middle- to high-income households that can both afford these products and are generally more health-conscious.

The following tables display adjusted market size for 2021, market size forecasts for 2022, and the percentage difference between the February 2022 and June 2022 estimates for the year 2022.

Please note that for the current quarterly update, the following table covers beauty and personal care packaging and home care packaging industries only.

Sustainable packaging to remain a key focus in the coming years

• Sustainable packaging remains a key focus in Indonesia, as using environmentally- friendly packaging materials is increasingly visible in the home care industry. For example, Henkel is demonstrating its commitment to sustainable packaging and the promotion of a circular economy with a new global packaging concept for toilet cleaning bottles. The company has dramatically increased the percentage of recycled polyethylene (PE) in toilet cleaner gel packaging, reaching 50% for ordinary toilet cleaners, such as those from the Biff brand, and up to 75% for cleaners from the Pro Nature range.
• Moreover, in 2021, companies launched new laundry care products in recycled materials. For example, Unilever sought to reduce plastic waste by introducing its Rinso hand wash detergent in recycled pouch packaging in early 2021. Furthermore, local fast-moving consumer goods company, Mayora Indah Tbk PT, ventured into laundry care by launching a new brand of concentrated liquid detergents, Gentle Gen, in April 2021. Using plant-based ingredients, the new product is packaged in recycled plastic bottles.
• Pouches are widely used in many segments of home care packaging, including laundry, bleach, surface care, dishwashing, etc., and had been performing well prior to the pandemic due to rising demand for refillable products. Manufacturers have been working hard to increase the availability of pouch packaging in both modern and traditional merchants, in order to boost sales. Furthermore, pouch sales were aided by marketing that targeted price-conscious customers - when comparing the same product in different types of packaging, pouches typically give better value for money, resulting in higher popularity.

• Beauty and Personal Care Packaging: This is the aggregation of packaging for baby care, bath & shower products, deodorants, hair care, color cosmetics, men's grooming products, oral hygiene, perfumes & fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.
• Dog and Cat Food Packaging: This is the aggregation of dog and cat food packaging.
• Packaged Food Packaging: This is the aggregation of packaging for baby food, Bakery, canned/preserved beans, canned/preserved fish/seafood, canned/preserved fruit, canned/preserved meat and meat products, canned/preserved tomatoes, canned/preserved vegetables, other canned/preserved food, confectionery, chilled fish/seafood, chilled lunch kit, chilled processed meats, fresh cut fruits, dairy, dessert mixes, rice, frozen bakery, frozen desserts, frozen meat substitutes, frozen processed fish/seafood, frozen processed potatoes, frozen processed poultry, frozen processed red meat, frozen processed vegetables, other frozen processed food, ice cream, meal replacement, noodles, oils and fats, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads and sweet and savory snacks.
• Home care Packaging: This is the aggregation of packaging for laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners and insecticides.
• Beverages Packaging: Beverage packaging is the aggregation of alcoholic drinks packaging, hot drinks packaging and soft drinks packaging.

Recover Index Methodology

Euromonitor International’s Recovery Index is a composite index that provides a quick overview of economic and consumer activity and helps businesses predict recovery in consumer demand in 48 major economies. The index takes into consideration total GDP and factors that determine consumer spending - employment, consumer spending, retail sales, and consumer confidence. Index scores measure the change relative to the average per quarter for 2019.