Consumer Staples

Sweet Investment In Indonesia

<p style="text-align: justify;">The consumption pattern of white sugar so far has shown an increasing trend from year to year. This is due to the trend of people's lifestyles in serving various types of food and drinks.</p><p style="text-align: justify;">The upstream industry and supporting industries are also growing rapidly. This is marked by the opening and expansion of sugarcane plantations in the upstream sector, as well as the rise of food and beverages that use sugar with the presence of manufactured processed products and the increasing number of cafes/restaurants/home food industries in the downstream sector.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Dilemma Regarding White Sugar</span></h2><p style="text-align: justify;">There is a dilemma for the government and industry in carrying out their business policies. This is related to the gap between business expectations vs. health expectations.&nbsp;</p><p style="text-align: justify;">For the business sector, of course, the profit factor is the main goal; they respond to every opportunity and demand from consumers. However, it is undeniable that consuming sweetened beverages at high levels and for certain periods can trigger cases of obesity, diabetes, and other diseases that are very dangerous for human life. To find a balance point between business expectations and health expectations, a change has begun in the pattern of using sugar ingredients, namely by conducting research and looking for sources of artificial sweetener ingredients and also other sources of natural ingredients to replace white sugar so far.&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><strong>Shift towards Artificial Sweetners</strong></p><p style="text-align: justify;">At the start of the change, natural sugar options were replaced by artificial sugars. Then for natural ingredients, options have begun to be presented by the industrial sector and supported by the government, for example, the cultivation of stevia, xylitol, and palm sugar as natural ingredients to replace granulated sugar.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Palm Sugar as a Source</span></h2><p style="text-align: justify;">Palm Sugar? Indonesia?&nbsp;</p><p style="text-align: justify;">Yes, palm sugar is an abundant sugar resource. Thousands of hectares of land for development are also extensive, and the soil quality supports the optimization of sugar production. Indonesia is a tropical-agrarian country, has a very long coastline, and the population of farmers is still widely dispersed. The lack of studies, coaching farmers, opening access to advanced industries, management still traditional, and economic value still not competitive. This potential needs to be taken seriously by the government and businesses.&nbsp;</p><p style="text-align: justify;">The good news is that many downstream sectors have initiated products made from palm sugar. For example, sales figures for palm sugar coffee drinks always show high sales in restaurants and cafes. This has become a good signal for the industry to start switching and researching products using this alternative source in line with public awareness to use healthier sweeteners.</p><p style="text-align: justify;">This is a response to the gap in public health expectations so far. You can imagine the potential demand from 270 million Indonesian people with a consumption pattern who like sweet foods and drinks. From a production standpoint, it is also relatively easy compared to other sugar production of sugar cane and stevia, are the planting and harvesting processes repeated.&nbsp;</p><p style="text-align: justify;">However, in palm sugar production, the planting process is carried out once with repeated harvests for many years. Efficiency can be carried out from the start, related to seeds, enlargement, and maintenance, to the harvest process, providing less effort.</p><p style="text-align: justify;">For example, thousands of hectares of land already planted with coconuts in the southern part of Java are only managed for producing coconuts and a small part for producing palm sugar. Opportunities to carry out mass production with various variants of production (size and shape), packaging, and grading are very open to being carried out by conducting research and developing processed products that use palm sugar as ingredients. Ofcourse, this requires the seriousness of all parties in making this change. Both the government and corporations must also carry out campaigns about healthier sugar alternatives.</p><p style="text-align: justify;">This potential analysis is very simple, but in reality, the resources exist, the land is vast, the land quality is also supportive, and the demand continues to increase, but there is minimal government and industrial sector attention. The big industry still needs to produce in the upstream sector, even if there is still a conventional production capacity.</p><p style="text-align: justify;">However, if you look closely, production continues to increase because the export market continues to grow, and demand for exports continues to increase. Domestically, a ready-to-serve downstream industry is also growing, namely the growth of cafes and restaurants that use palm sugar, especially on the coffee menu.</p><p style="text-align: justify;">It should also be noted that the sugar tax factor will become a concern for all parties. You know what we mean? There will be a massive switch in the use of granulated sugar in food and beverage products, judging by the amount of sugar. Apart from that, it will start switching to alternative sugar products, so this will certainly be a sweet meal for anyone good at seeing opportunities.</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="" target="_blank" rel="noopener">Aris Ruswandi</a></em></span></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Aris Ruswandi &nbsp;</span></h3><h3 style="text-align: justify;">&nbsp;</h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What is the demand for sugar substitutes?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Demand continues to increase, along with public awareness of consuming excessive sugar and information on obesity and diabetes sufferers in Indonesia. So that more attention is paid to natural substitute sweeteners such as palm sugar.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What is the market trend of artificial sweeteners?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Demand has increased in the latest decade. New products with artificial ingredients keep popping up.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. What are investors' concerns regarding producing and marketing alternative sugar products in Indonesia?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">What investors are concerned about is education about the effects of excessive sugar consumption on causing dangerous diseases. Indonesia itself has a very high sugar consumption index, which is above 30 grams. This means that this is an opportunity with a high consumption ratio, but intensive education to the public to switch to healthier alternative sugars or reduce the consumption of white sugar is necessary.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. What strategies are for introducing and marketing healthier artificial sweeteners to consumers?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">A massive campaign involves the government and non-profit organizations in educating the community. Label the sugar content, which is more clearly visible, and the danger information. More massive education to schools so that consumer education can be aware of the risks starting with children.<br /></span></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Aris Ruswandi

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