Barriers and breakthroughs
Indonesia has traditionally been a tough nut to crack for Kiwi F&BB exporters.e exporters. But, as Nada Young reports, there has been some recent progress ma made.ade.
Access to Indonesia for New Zealand’s food and beverage exporters is a tricky beast.
Most of New Zealand’s F&B goods benefit from duty free access under the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). This FTA is a huge advantage when it comes to competitiveness in a price sensitive market, like Indonesia.
Unfortunately, few F&B exporters have been able to take advantage of the FTA due to the myriad of non-tariff barriers that must be overcome in order to gain access and distribution.
Restrictions in the form of import quotas on sensitive categories such as wine, dairy and beef are particular nuisances.
Indonesia’s trade barriers towards New Zealand beef imports were at the top of the agenda during Prime Minister John Key’s visit to the archipelago in July. Happily, it would seem Key achieved a breakthrough with this issue during his high profile meeting with Indonesia’s President Joko Widodo “Jokowi” on 18 July and we can expect to see access to this lucrative sector open up once again.
There is obvious demand for imported F&B goods from Indonesian consumers. Having lived and worked in Indonesia for the past five years I have seen the F&B sector blossom, particularly in the food service channel where a plethora of new restaurants and cafés are thriving in Jakarta and Bali. It’s common to find Western-style dishes on the menu at such establishments and this is a big factor in the rising demand for imported products.
However, on the retail side, progress is a little slower.
Regulatory compliance for imported retail products is far more onerous than their food service equivalents. More importantly, price sensitivity means that market penetration for expensive imported products (which denotes much of New Zealand’s F&B exports) is currently limited to a small network of 200 to 300 premium retail stores.
To put this into perspective, there are 183 Countdown supermarkets in New Zealand catering to a tiny population of 4.5 million people. By contrast the population of Indonesia is about 250 million and the local convenience store channel alone amounts to some 22,000 stores.
Finding a distributor
To achieve distribution of any kind in Indonesia, F&B exporters must first identify and appoint a local distribution partner. This is not as easy as it sounds. The top distributors are often so frustrated by the regulatory environment governing the F&B sector that they are loathe to take on new products unless they are very confident that the product will be a success.