Indonesia's Retail Rice Market Slows Down Due to Risk of Obesity: Mintel


SEPTEMBER 22, 2017

Jakarta. The retail rice market in Indonesia has experienced a slow growth rate over the past five years as urban Indonesians increasingly avoid high carbohydrate intakes due to an increased risk of obesity, research from global market intelligence firm Mintel showed.

According to Mintel's "Food and Drink report" published on Thursday (22/09), compound annual growth (CAGR) of the country's rice market grew 3.5 percent in retail volume between 2012 and 2016 and is projected to only grow by around 1.5 percent from 2017 to 2021.

The retail volume of the local rice market also only grew by 3 percent last year, compared to 5 percent in 2015.

Mintel polled 1,192 online respondents aged 18 and above in June, with the majority of respondents living in Semarang (Central Java), Jakarta, Bandung (West Java), Surabaya (East Java) and Yogyakarta.

"In a country where rice is regarded as a main dietary staple, Indonesia is known to be one of the biggest consumers of rice globally. However, our research indicates that the Indonesian retail rice market is currently seeing a slowdown in growth, perhaps due to the current attention being given to the high prevalence of diabetes within the country," Jodie Minotto, a research manager at Mintel, said on Thursday.

Despite the slowing growth, Indonesia was one of the highest rice consumers in total market size around the world during the first eight months this year, with Vietnam projected to top that list with 232.5 kilograms per capita, followed by Thailand (163.2 kg), China (119.11 kg), Indonesia (103.02 kg) and Malaysia (100.2 kg).

Mintel's data shows that around 27 percent of urban Indonesians have been actively avoiding carbohydrates, while 64 percent of the same demographic said it is healthier to avoid rice.

"The glycemic index [GI]  the one that causes glucose levels in the body to increase  of many popular rice varieties will continue to be an issue as cases of diabetes grow. Rice companies in Indonesia are looking for solutions, and unless lower glycemic index strains of rice are developed and made widely available, rice consumption will likely continue to experience slowing growth," Minotto said.

Urban Indonesians, mostly middle-, upper-middle class residents with a heightened awareness of food safety, are beginning to more frequently purchase certified organic products over unhealthier, but more affordable, options.

Between January to August this year, around 28 percent of urban Indonesians said they seek out organic food and drink products when they go shopping. Around 75 percent of them have purchased organic rice and noodles in the first six months this year.

Despite the growing demand, there are limited health-conscious products in the local market, with only 3 percent of certified organic products being launched in Indonesia in the first eight months this year.

"In Indonesia, rice is seen traditionally as an affordable and filling staple. While organic rice varieties tend to attract a premium price, recent food safety scandals involving rice have fueled consumer distrust in food and drink brands, prompting them to seek reassurance in organic certifications. Urban Indonesian consumers are going for organic options because they believe them to be not only healthier, but safer as well." Jodie said.

The Mintel study also showed that between January to August, around 42 percent of urban Indonesian consumers believed organic products free of harmful ingredients, such as chemical residue, while 45 percent of urban Indonesians purchase organic products because they do not contain harmful ingredients.