People Innovation Excellence

Business Opportunities within Regional Food Industry

Based on World Bank’s 2014 statistics, ASEAN is in top 5 world’s business powers, following EU, US, China, and Japan, recording a GDP of US$2.48 trillion. ASEAN Economic Community (AEC) declaration opens up 2016’s opportunities to business practitioners on one hand. However, for those who are less prepared, AEC’s coming into force is translated as threats. With ASEAN standing as one of world’s 5 economic powers, Indonesian business people should be able to take advantage of the momentum. There are at least 4 reasons why Indonesia’s businessmen should start expanding to regional scope, namely customer, supplier, functional processes, and human resources factors.

These findings arose from the talkshow called “CEO Insight: Managing Regional Business” on Wednesday (3/2). The event invited Alex Sung, Enzymetech Founder and Director, and was organized by Binus Business School (BBS) in cooperation with Learn Sharing (a business and professional skills learning and sharing community based in Singapore). These 4 factors become challenges too to Indonesia’s wide business community. Danny Supriyadi, Learn Sharing Founder and Director, said that going into a new market will add to customer potentials. At the same time, business practitioners can identify suppliers that perfectly support business process effectiveness.

Apart from that, human resources prove to be a crucial factor for companies and owners, yet can become opportunity for professionals over the course of AEC. “I got a report from a professor in management, stating that in 2020, Indonesia will be in human resources shortage, in middle management level. With AEC looming, the risk of human resources shortage in this level will grow greater because domestic companies will compete with regional companies to win qualified human resources.  Meanwhile, for young professionals, AEC enforcement invites opportunities of expansion,” Danny elaborated.

Food Industry Case Study

Based on Indonesian Food and Beverage Association’s (GAPMMI) statistics, Indonesia’s food industry is worth US$8 billion. However, ASEAN’s food industry, based on ASEAN Food and Beverages Alliance’s (AFBA) data, is worth nearly 3 times, being US$22 billion. This value signifies opportunities for Indonesian companies that aims at regional expansion. Alex Sung, Enzymetech Director and a food industry executive with 24 years of international experience, revealed how food consumption patterns changed as GDP per capita develops.

As GDP increase, positive trends are found the increasing meat consumption, processed food production, middle class consumption, healthy food consumption. “Middle class growth in Indonesia affects growth in property, traveling activities, processed food consumption. The more people are busied with metropolitant life, especially in Jakarta, the more they look for fast food that facilitates their activities. It is well indicated in the mushrooming convenient stores offering fast food. At the same time, there is a growing awareness in urban populations to eat healthy food, not just to fill their stomach,” explains Alex.

Alex brought up several trends in food industry, such as processed food, awareness of health, natural food, sustainability, even shrinking food packaging. “As was mentioned before, more processed food is produced today. And awareness of health raises so that the majority of population are more selective about choosing food, thus pushing an upturn in natural food demand. Apart from it, people are more concerned about sustainability, influencing their choices when buying food. More consumers choose food that is produced by producers based on sustainablity principles. For instance, when choosing coconut oil, consumers will buy products made by producers that apply sustainable business processes, as can be proven by an RSPO certificate,” Alex elaborated.

For Alex, to strive for success in regional food industry nowadays, one can’t count merely on good product and services. Salesmanship and problem solving should be improved, leadership and management should be strengthened. However, a number of factors within business scope must also be given attention.

  • Good local partner to tend to business, consumers, regulation in local level, as well as good supply chain management
  • Competitive pricing policy
  • Control over business area, both remote and on-site

Alex suggested to distinguish between fundamental factors that may be generally applied in every market (country) and specific factors that should be treated differently in different markets. Basic composition or general factors that can be accepted in every market are quality/brand, incentive/commission, and global brands offering local taste. On the other hand, specific factors that needs special treatments in each market are culture, preferences, religion, raw materials, trade regulation or obstacle, infrastructure, and currency.

In addition, Alex elaborated on food industry’s opportunities across ASEAN. He described how Singapore has built a biotechnology, finance, trade, as well as logistics centres that support food industry. Meanwhile, Thailand has a fairly big consumer market, many factories (especially food), logistics and trade centres in Mekong. The Philippine consists of a fairly big consumer market and many factories. Malaysia is well-known with its commodity-based and halal-certified food industry. Meanwhile, Vietnam, Laos, Cambodia, and Myanmar are competitive for their low mass-production costs and are transitioning from the traditional into a modern consumer market.

Published at : Updated
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