With a population of 275.7 million or the fourth largest in the world, a significant growth of the middle class, and a steady upward trend of expenditure per capita, Indonesia's Food and Beverages (F&B) industry continues to be one of the strongest business sectors in the country. 

In 2019, the average monthly expenditure per capita in Indonesia for food and beverages was Rp 572,551 (or about US$41.96 under 2019 exchange rate). A year later, despite the impact of COVID-19, the number rose to Rp 603,236. In 2021, the average spending per person continues to rise to Rp 622,845. This pattern remains through to the end of 2022, with the average Indonesians expenditure per capita standing at Rp 665,757.  

Average Monthly Expenditure Per Capita for Food and Beverages in rupiah. 

*US$1 = Rp15,354.20. Exchange rates for September 2023 

Source: Statistics Indonesia (BPS)

As shown in the table above, monthly average expenditure continued to rise while inflation remained relatively stable. Even in 2022, despite the very high inflation rate caused by the onset of the Russia-Ukraine war and the subsequent hikes in interest rates from the US Federal Reserves, the monthly spending of Indonesians did not experience a significant drop. 

Given this, it comes as little surprise that Indonesia’s F&B industry has fared reasonably well. Based on data from Statistics Indonesia, the F&B industry is still growing at a positive trend over the past years. Despite not growing as fast as it used to, the table below shows that the sector recorded no declining tendency in terms of GDP contribution. 

F&B Sector in GDP Contribution in percent.

Source: Statistics Indonesia (BPS)

This trend is expected to continue in 2023 and 2024. The Director General of Agro-Industry at the Ministry of Industry, Putu Juli Ardika, said the growth of the F&B industry is projected to grow 5-7 percent by the end of 2023. He added that business players within the sector remained optimistic about the industry’s prospect and subsequent expansion. Reasons behind the optimism include the upcoming presidential election, the easing of permits for international events, as well as the country’s push for the adoption of Industry 4.0 practices. 

2024 General Elections 

The 2024 Indonesian general election will be held on February 14, 2024, to elect the president and vice president, as well as members of the Parliament. This will be the fifth direct election in Indonesia's history. However, it will be the first time Indonesians gather to elect the different executive and legislative branches in parallel. 

In every political campaign activity, there is a culture that is commonplace in Indonesia where the event must be accompanied by eating together or by sharing food and drinks. For political figures, distributing food is one of the most influential ways to attract participation and votes. This kind of political activities have been elaborated in political science journals such as that written by Perhat Alfaz and Suswanta in 2021 titled “Bentuk dan Jaringan Patron-Klien Politik Uang pada Pemilu Legislatif Tahun 2019 di Kabupaten Tasikmalaya” (Forms and Networks of Patron-Client Money Politics in the 2019 Legislative Election in Tasikmalaya Regency), and Puji Astuti and Neny Marlina in 2022 titled “Politik Uang dalam Pemilihan Kepala Desa: Benarkah Penentu Pilihan bagi Pemilih?” (Money Politics in Village Head Elections: Is it Really a Determinant of Voters' Choices?) and is common practice among Indonesian politicians. 

The 2024 election will allow all political entities and parties to compete and campaign at the same time, with the money funneled to thousands of locations in the country for roughly 100 days. In this regard, the benefit of the 2024 elections to the F&B industry is clear.  

The Ease of International Events Permits 

On February 2023, Sandiaga Uno, Indonesia's Minister of Tourism and Creative Economy, disclosed that President Joko Widodo had instructed his cabinet to digitize all event permit grants. In relation to major international events, the aim was to have principal permits issued six months in advance, while the granting of technical permits would be determined three months in advance. The final permits should then be issued 45 days prior to the event at the latest. 

On September 11, the government formally debuted a test system for licensing events in Indonesia. The Ministry of Tourism and Creative Economy Building in Jakarta hosted the trial's launch. The transition team had begun to provide some promoters access so they can try to manage event licensing through the system’s online application system. 

The digitization of event licensing is expected to overcome the bottlenecks that promoters or event organizers had been facing. The system is expected to increase the number of foreign stakeholders who are looking to manage a variety of events to increase in Indonesia, which would bolster economic gains. 

The ease of permits for organizing music concerts, arts, sports, and other creative economic activities has the potential to drive up to US$170 trillion for the economy, according to a Ministry of Tourism and Creative Economy analysis. The digitalized permit line is expected to make it easier for more than 3,000 medium and large events to be held in 2023, which would contribute significantly to the growth of the F&B industry. 

Indonesian F&B Sector’s Task Ahead 

To adapt to the fast-moving global supply-chain landscape, Indonesia's Ministry of Industry has continued to drive the implementation of industry 4.0 concept in the F&B industry. As of July 2023, the Ministry has provided competency-building training to 300 human resources and 200 businesses within the industry. By the end of this year, the ministry intends to enable at least 80 F&B business owners to receive competency certificates in order to hasten the transition to Industry 4.0 – as is in line with the Indonesian government’s Making Indonesia 4.0 Road Map. By 2024, the Ministry plans to have 400 F&B players ready to self-evaluate the readiness of their businesses to be included in the Indonesia Industry 4.0 Readiness Index (INDI 4.0). As an incentive, some 20 businesses that succeeded in adopting Industry 4.0 best practices will be given INDI 4.0 awards, while nine exceptional achievers will be given Industry 4.0 national lighthouse honors. 

Despite the optimism for the F&B industry for the years 2023 and 2024, the sector is not immune to global uncertainties. Global geopolitics, carbon concerns, deforestation, and the consequences of climate change could present the sector with difficulties such as a rise in the costs of raw materials, logistics, and energy. Therefore, in the future, the Indonesian government will not only have to take care of how the F&B industry can implement the industry 4.0 concept, but also how this sector can survive amidst future challenges.