Posted November 27

What’s Cooking in Indonesia’s F&B Scene?

With wealth among Indonesians on the rise, so is their appetite for eating out and the finer things in life, including a ravenous interest in contemporary-style food and beverage (F&B) outlets.

Ask any teenager in Jakarta and they’ll probably be able to tell you what their favourite brand of bubble tea is. From Gong Cha to Boba Inc, cafes that serve up refreshing cups of tea with toppings like strawberry-flavoured tapioca balls or ice jelly have popped up in malls across town, often accompanied by queues.

According to Nielsen estimates, Asia’s middle class is on track to comprise 52 per cent of the region’s population by 2020. Indonesia is at the forefront of this trend, with a middle-income segment expected to more than double in size by the end of this decade.

With a large young population that enjoys socialising over food, a higher number of women joining the workforce and busier lifestyles, more Indonesians are choosing to dine out for both leisure and convenience.

Eager to feed the growing hunger for this restaurant lifestyle, international F&B operators, as well as local brands, are seeking retail opportunities in big cities like Jakarta, Bandung, Surabaya and Medan – hotspots with concentrated numbers of mid- to high-level income earners.

Yet another lure for F&B providers is the surge in shopping centre openings, which bring a whole range of new retail opportunities and prime real estate for putting their consumables in front of the most active purchasers.

Between 2011 and 2013, a further 11 shopping centres were launched, opening up an unprecedented 40 per cent of new retail space or 45.7 million square feet. Up to 40 per cent of this retail space is regularly eaten up by F&B outlets, according to shopping mall operators in Jakarta.

Unquenchable thirst for cafe culture

Euromonitor International has already been tracking Indonesia’s unstoppable upward trajectory in per capita food expenditure, rising since 2002. Its research also showed that between 2007 and 2012, the number of chain cafes more than doubled to 680, with sales value growing by a compound annual growth rate of 15 per cent during that period.

James Austen of JLL’s Retail Leasing, Indonesia says: “Demand for highquality food in Indonesia has been growing steadily and big-name outlets are taking notice.

“All the indicators are only pointing to the market getting stronger for F&B operators, with more choices opening every year for Indonesians.”

Brands taking advantage of the strength in the market include the iconic Starbucks, which has 200 stores in 13 big cities and is intending to double its stores in the country in five years. Other American drink and snack brands, such as Dunkin’ Donuts, Baskin Robbins and Cold Stone Creamery, have also seen continued success in satiating the sweet tooth of local customers.

Meanwhile, F&B players closer to home, such as Singapore’s famous BreadTalk bakery and Chinese cuisine specialist Crystal Jade have also been moving in and expanding their presence in Indonesia.

New flavour for holidaymakers

Yet F&B outlets are not just thriving in the major cities. Top tourism locations, such as Seminyak, Ubud and Bukit Peninsula in Bali, are attracting interest from foreign companies, with the current weak rupiah a strong motive for international investment and crowds of tourists.

Bali has come a long way since cult brand Ku De Ta in Seminyak opened on the island in 2000, cementing itself as a formidable dining destination venue with its diverse menu, resident DJs and gorgeous sunsets.

Over the past decade, decorated local and international chefs, such as Will Meyrick, Chris Salans, Nicolas Tourneville and Said Alem, have all set up shop, putting Bali on the dining map.

More recently, Potato Head Beach Club has been another game changer. Launched in 2010, this trendy spot is the place to see and be seen, with its infinity pool, two bars, restaurants and world-renowned mixologist, beckoning sunseekers and drinkers alike.

“Much of the opportunity for international F&B outlets is in chic resorts, which have been seeing an influx of interest in the past few years,” observes Austen. “However, the arrival of these cult brands and international chefs have also helped spur development in the surrounding areas.”

With both locals and holidaymakers keen for a seat at many of the country’s hot new cafes and restaurants, the F&B retail scene in Indonesia shows no signs of slowing.