Bleak outlook for grocery spending

Bleak outlook for grocery spending

Evi Mariani, The Jakarta Post, Jakarta

Indonesia has experienced a bleak outlook in grocery spending
since the economic crisis, with no sign of a strengthening in the
short term, says an AC Nielsen report made available on Tuesday.

The report shows the grocery sales index of the first quarter
at 102 percent, weakening from 109 percent the previous quarter.

The index measures retail sales volume of fast-moving consumer
goods in shops -- traditional and modern -- in urban and rural
areas throughout Indonesia, covering around 80 product categories
like soap, washing detergent, shampoo, noodles, milk, biscuits
and soft drinks, in thousands of brands and pack sizes.

The index is one of the tools that can reflect the progress of
spending power and living standards among Indonesian consumers,
as the products covered represent the everyday shopping basket of
most households.

The results of the volume survey are indexed to precrisis
(mid-1997) levels.

Therefore, the current 102 percent index means that the
grocery volume purchased during the first quarter is 2 percent
higher than that of mid-1997.

The report also provides a quarterly index from March 2001,
presenting a fluctuating index that ranges from 101 percent to
109 percent. It shows an annual trend in which spending slumps in
the first quarter then steadily climbs in the following quarters,
peaking in the fourth, when people spend more money on food
products for the celebration of Christmas, New Year and Idul
Fitri, when it has occurred in that quarter.

However, from March 2001 to March 2003, the index never rose
above 109 percent, despite the fact that the population grew by
about 1.7 percent per year, according to AC Nielsen.

The survey shows that grocery prices have almost tripled as
compared to their precrisis level.

The index excludes cigarette spending because "the share of
cigarettes sales is too large, so it would affect the index
greatly," said AC Nielsen director for client services Teguh
Yunanto.

"For example, we once found that cigarette sales accounted for
40 percent of a shop's total sales," he added.

Another AC Nielsen report, titled Asia Retail and Shopper
Trends 2003 shows that in Indonesia traditional trade remained
dominant, amounting to 74.6 percent of the total trade share in
2002.

However, according to AC Nielsen's retail services director
Yongky S. Susilo, the trade share of modern stores, such as
hypermarkets, supermarkets and minimarkets has grown healthily by
12 percent per year, as they have implemented a better marketing
strategy than traditional markets.