Bottled drinking water business thriving

Bottled drinking water business thriving

A'an Suryana, The Jakarta Post, Jakarta

The country's bottled drinking water business is projected to
grow by 20 percent next year on the back of strong consumer
demand and a relatively stable exchange rate of the rupiah
against the U.S. dollar, according to an industry executive.

Willy Sidharta, an executive at the Indonesian Bottled
Drinking Water Association, said that the sales volume would
increase to 8.4 billion liters from this year's estimate of 7
billion liters. Last year, the volume stood at 5.4 billion liters.

"Demand has been continuously growing year by year," Willy
told The Jakarta Post on Sunday.

Willy said that the industry's market turnover is projected to
jump to Rp 3.36 trillion (US$377.5 million) in 2003, compared to
an estimate of around Rp 2.8 trillion for this year.

He explained that Indonesians had not been exposed much to the
bottled drinking water culture yet, which provides huge room for
the industry to grow.

As an example, he pointed out as that the annual consumption
per capita in Italy and the U.S. were 165 liters and 80 liters,
respectively, while in Indonesia the ratio was only around 34
liters per capita.

"The gap is still huge, and we believe that Indonesians would
demand more bottled drinking water in the future," said Willy,
who is also president of PT Aqua Golden Mississippi, producer of
the popular bottled drinking water, Aqua.

He also explained that a stable exchange rate of the rupiah
against the dollar would bode well for the industry as it
provided a certainty in production cost calculations.

Fluctuations in the exchange rate affect production costs
because the industry still imports some materials, such as
cartons and plastic seals. According to Willy, some 40 percent of
production costs was affected by the currency exchange rate.

He said that if the exchange rate was stable, producers would
be more confident in producing more bottled drinking water.

In regards exports, Willy said that the volume of export was
tiny in this industry due to protection measures imposed by some
overseas governments, and that a mere 0.1 percent of total output
was being exported.

Malaysia, for example, has imposed an import tariff of 50
cents ringgit per liter, preventing Indonesian products from
entering the Malaysian market.

Regarding public concerns over the poor quality of some brands
of bottled drinking water, which might even pose health problems
for consumers, Willy said that most bottled drinking water
companies had been audited by the government.

The association, whose members comprise 80 out of a total of
about 200 bottled drinking water companies in Indonesia, has also
frequently carried out random checks to make sure that the
quality of the products meets industry standards.

The association has also cooperated with legal authorities in
order to curb counterfeiters.

Morgen Sutanto, president at Equil bottled drinking water
company, suggested the industry and the government to set up a
special watchdog that could ban companies which produce poor
quality products, to help ensure that consumers will receive good
quality bottled drinking water.