The Jakarta Post , Jakarta | Thu, 06/19/2008 9:59 AM | Business
With strong demand from its large population, Indonesia is among the fastest growing bakery markets in Asia, a study by the German Bakers' Confederation has found.
The study forecasted that within the 2008-2012 period, the country's bakery market will grow by 24.35 percent, the fourth fastest in Asia, just below Vietnam with 48.26 percent, China with 37.63 percent and the Philippines with 34.4 percent.
Chairman of the confederation, Peter Richard Becker, told reporters Indonesia's domestic sales of baking goods were projected to reach 948,000 tons in volume, worth approximately US$2.08 billion, this year.
He added that retail sales were estimated to increase continuously to 1,18 million tons, worth $3.41 billion, in 2012.
"Bakery products are becoming more important in Indonesia. Because bread is an inexpensive and natural foodstuff that is rich in nutrients, especially in the case of wholegrain products that contain essential vitamins," he said.
According to Becker, Indonesia imported baking machinery with a total value of $26.33 million from Germany last year to increase the capacity and quality of production.
"Similar to other countries in Asia, Indonesia is facing big development and increases in bread consumption," Becker said, adding that to support this growing trend in consumption the country would need to upgrade its baking machinery.
CEO of the German bakers' confederation Eberhard Groebel said the healthy growth in bakery products in Asia would create higher demand for machinery.
"I'm very optimistic that demand for baking machinery from Germany will increase," Groebel said.
Indonesian Bakery Association chairman Ramelan said the demand for bakery products might not be so rosy after all, with the recent government's decision to raise fuel prices by an average of 28.7 percent.
"It's not the right time for producers to invest when people are reducing their bread consumption since their buying power is declining on the back of fuel and commodity price increases," he said.
The price increases were putting pressure on production costs, which finally led bakery producers to raise selling prices by up to 20 percent.
"Considering the current economic situation, we don't expect much sales growth in bakery products this year," he said.
Ramelan said bakery producers would not invest in renewing their machinery if their profit margins were low. They would reduce the costs of production instead.(rff)