More than 25,000 dairy farmers across 400 milk cooperatives sell approximately 500,000 liters of fresh cow milk to Nestlé’s factory in Kejayan, East Java, says a report by Ken Research
1. Potential Opportunities in the Dairy Food Market of Indonesia.
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Investment in Storage Infrastructure- Road, Transport and Trade. This is will improve the constraints of the supply Chain. Investment in the cold chain equipments.
Rapid growth of retail sector by increasing restaurants chains; Japanese, Korean, and Western bakeries, also growing HRI and tourism sectors. Increased numbers of young, urban and educated consumers with rising incomes, are rapidly changing the retail landscape.
Awareness of dairy product health benefits. Advising farmers or cooperatives to sell directly to processor companies. Improve and provoke farmer entrepreneurship. Tailor made practical training and educating on technology advances.
2. What are the few constraints faced by Indonesia’s dairy product market and suggested solutions to overcome them.
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Fragmented milk supply differs the quality of milk. Lack of logistics infrastructure. Low breeding and genetics potential of animals. Unorganized Market. Seasonality of production and fluctuating supply.
More biotechnology aspects must be inculcated in the production process. The foreign players are investing and improving industry tie–ups for improved Logistic conditions.
Ethical issues regarding animal exploitation are slowly entering the Dairy Market.
Indonesian are switching to Vegan products. Increased awareness amongst Indonesians about Health benefits and substantial substitute.
Making healthy variants, switching to substantial practices and more investments in R&D to fight competitive scenario will solve the problem.
3. Who can be the target end users with need of dairy products in Indonesia.
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- Smaller packaging sizes of Drinking Milk products are popularly consumed within households.
- Demand for milk alternatives remain towards middle and upper middle-class population that are aware of their perceived benefits and can afford them.
- 95% of fresh milk is used by industrial dairy processors for a variety of products, including pasteurized/UHT liquid milk, powdered milk, yoghurt, butter and cheese.
- Majority of Ice Cream and Frozen Desserts consumers belong to the age group of 20 to 35 years of age. Recently launched products include Unilever’s popular Uni Cornetto to attract attention of younger tech-savvy consumers due to various marketing strategies adopted by ice cream brands.
- Restaurants, cafes and other food service joints have generated a higher demand for cheese products rather than retail level sale in supermarkets and hypermarkets
- Companies also target households / housewife’s’ as one of their major end users.