Singapore's consumer, F&B brands going all out to tap Indonesia's growing middle class
Share this article:

: Singapore's consumer, F&B brands going all out to tap Indonesia's growing middle class

Singapore consumer FB brands go all out to tap Indonesia growing middle class

[Jakarta] WITH nearly a decade's experience of operating in Indonesia, Singapore fashion label Love, Bonito wants to further expand within -- and beyond -- its capital, and head to other populous cities such as Medan (in North Sumatra) and Bandung (in West Java).

The company currently has three stores in South-east Asia's most-populous country; all are in Jakarta. Suzanne Simanjuntak, the company's country director for Indonesia, wants to double that number by the end of this year, with at least one new branch in a different city. Apart from retail, she said Love, Bonito -- which first entered Indonesia in 2015 -- is looking to grow its e-commerce presence and capture a larger slice of the country's huge online marketplace.

For instance, it is eyeing various online "partner channels" through which to sell its clothes and other products. The brand is already present on platforms such as Zalora, Tokopedia and Shopee, with a debut on Lazada to come later this year.

"Apparel is one of the key (consumer) segments that is growing fast in Indonesia, and we feel it's very strategic for us to expand our presence there," Simanjuntak told The Business Times in a recent interview in Jakarta.

The chief reason Singapore companies and their counterparts in other parts of the region are actively expanding in Indonesia is they want to target the country's fast-growing middle-class segment.

A 2020 report from the World Bank found that the size of Indonesia's middle class has been growing faster than other groups. There are 52 million people in this category -- about a fifth of the population -- accounting for some 43 per cent of total household consumption. The report said that Indonesia's middle class has been a significant driver of economic growth, with the group's consumption increasing by 12 per cent per year since 2002.

Among the other Singapore brands that are beefing up their footprint in Indonesia is Song Fa, the popular bak kut teh (pork bone tea) chain. Song Fa has seven restaurants in malls in Jakarta, as well as two in Medan, one of which opened just before the Covid-19 pandemic began in early 2020.

Guntur Sutanto, the master franchisee representative for Song Fa in Indonesia, said the brand, which first entered the country in 2014 plans to expand into Bandung and Surabaya (in East Java) later this year.

Asked how the company picks the cities to venture into, he said it was key to look at the "pork-consuming population" of each city.

One hurdle that it has had to consistently deal with, however, is the government's strict restrictions on imports. "There are only a few countries that we are allowed to import from, such as the US and Vietnam," said Sutanto.

Another well-known food chain from Singapore, Saladstop!, entered Indonesia in 2016 as it saw opportunities to tap the demand for healthier food offerings that it felt were lacking at the time.

SaladStop! has 22 stores in the Greater Jakarta area currently, but Astrid Kusumadewi and Edo Widjaja of Ateria (the franchisee partner of Saladstop! Indonesia) said they reckon the company has captured only about 10 per cent of the so-called "healthy food market" in the capital.

Lim Jing Jun, Enterprise Singapore's regional director for South-east Asia, said that there has been "increasing appetite and receptivity" for a broad range of products and services in Indonesia, including premium consumer products, as well as food and beverage experiences.

She noted that the proximity of the two countries means Indonesian consumers are familiar with Singapore brands, which they often perceive as "reliable and of high quality". "This is an advantage that Singapore lifestyle and consumer brands can leverage when exploring the South-east Asia market, including Indonesia," she added.

This story is part of an ongoing BT regional series on South-east Asian markets. In the coming months, BT journalists will head to different countries in the region to bring you the latest from the ground.

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.