Will In­done­sia Run Dry?

Indonesia Expat - - Contents - BY ARTIE SMITH

For most of 2017, distrib­u­tors of im­ported al­co­hol have been met qui­etly with re­sis­tance by var­i­ous min­istries and gov­ern­ment li­cens­ing de­part­ments. The bu­reau­cratic process that im­porters must fol­low to al­low spir­its and wine into the coun­try is a long and ar­du­ous one, with sign- offs and ap­provals done at all lev­els of this heav­ily reg­u­lated in­dus­try. Re­cent im­ped­i­ments at cus­toms and trade of­fices, as re­counted by a num­ber of un­named sources fa­mil­iar in In­done­sia’s dis­tri­bu­tion and hos­pi­tal­ity in­dus­tries, have re­vealed a sys­temic stop­page for rea­sons un­known. At the present time, very few to no new or­ders for spir­its or wine have been ful­filled and hos­pi­tal­ity op­er­a­tors na­tion­wide have al­ready started to feel the pinch.

As sup­plies run low, prices in­crease. Bar and restau­rant op­er­a­tors have read­justed to new op­er­a­tional norms where much of the low-mid range al­co­hol stocks are steadily de­pleted or have sim­ply run dry. Some hos­pi­tal­ity firms have made the switch to lo­cally made wine, spir­its and beer; drop­ping prices for happy hours and well drinks to at­tract clien­tele.

The profit mar­gins for branded liquor have also dras­ti­cally de­creased. As one Cen­tral Jakarta bar man­ager re­vealed ear­lier this year, one bot­tle of Jack Daniels Black La­bel could com­mand up to AUS$80 whole­sale. To make any de­cent re­turns on such a price, the bot­tle would have to be mar­keted more than dou­ble, and con­sumers just weren’t will­ing to pay for the brand at those rates.

Re­cent inquiries to dif­fer­ent restau­rants and ho­tels have also of­fered some in­ter­est­ing in­sight. In Septem­ber this year, along the ma­jor tourist routes of Seminyak and Sa­nur, hos­pi­tal­ity op­er­a­tors were re­peat­ing the same over­ture when re­quests for branded al­co­hol were made: “habis” or “not avail­able.” When pressed for fur­ther ex­pla­na­tion for why te­quila, gin or cer­tain brands of rum were un­avail­able, most ser­vice staff de­murred. How­ever, one out­go­ing wait per­son of­fered, “The or­der has been made, but it hasn’t come yet. We wait al­ready long time. I’m sorry; do you want cock­tail with vodka?” In­ter­est­ingly, a bou­tique ho­tel’s happy hour con­sisted of a Rp. 50,000, all-you- can- drink, cock­tail spe­cials made with lo­cally crafted vodka.

Per­heps the an­swer is con­nected to the fledg­ling, lo­cally-pro­duced, al­co­hol trade. Vodka, rum and whiskey are dis­tilled here; wine is made from lo­cally grown grapes mixed with im­ported grape juice, fer­mented and bot­tled. Di­a­geo, a multi­na­tional al­co­holic bev­er­age com­pany, also runs a do­mes­tic pro­duc­tion fa­cil­ity (where they also pro­duce al­co­hol-free Guin­ness). Stolich­naya and Cap­tain Mor­gan’s Rum are also lo­cally pro­duced. Could there be a push from this in­dus­try to cap­ture a larger cor­ner of the drinks mar­ket? With­out any com­pe­ti­tion, they could be the only source of al­co­hol for hos­pi­tal­ity op­er­a­tors des­per­ate to lure thirsty tourists and din­ers with rea­son­ably priced drink of­fers.

In this en­vi­ron­ment, sev­eral ques­tions loom. When will new and back­o­rdered ship­ments re­sume (if at all)? Can the pub­lic have con­fi­dence in the lo­cal mar­ket un­til then? Is lo­cally dis­tilled al­co­hol safe to con­sume? Will gov­ern­ment de­part­ments re­veal why they’ve put un­of­fi­cial mora­to­ri­ums on im­por­ta­tion?

*Due to the sen­si­tive na­ture of the ar­ti­cle, all sources con­sulted on deep back­ground and names of ho­tels, restau­rants and bars have been omit­ted.


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