INDONESIA COFFEE MARKET

IRFAN ANWAR
Chairman of Association of Indonesia Coffee Exporters and Industries

PROBAT DAY 2014, Bali, 7 November, 2014

AEKI-AICE.ORG
AEKI-AICE.ORG
Address:
Jl. RP. Soeroso No. 20 - Jakarta 10330, Indonesia
T: 62-21-3106765
F: 62-21-3144115, 2306019
Email: sphpaeki@gmail.com

AEKI-AICE.ORG
 AEKI/AICE
Association of Indonesian Coffee exporters and Industries

 As the Profesional Coffee Association for the whole coffee stake holders from the farmer, local trader, exporters and
Industries.

 Was established since July 30, 1979 as the idea & spirit from the Coffee Exporters and Government ( Trade
Ministry).

 Has members more than 250 companies.

 Has regional offices in major coffee producing areas in Indonesia such as : Nangroe Aceh Darussalam, North
Sumatera, West Sumatera, South Sumatera, Lampung, DKI Jakarta, West Java, Central Java, East Java + Bali,
South Sulawesi.

 Now AEKI is 35 years old, and has done more siginificant effort in developing Indonesian Coffee as well as actively
submit some positifely coffee programe to Government , to carry out Goverment policy on coffee both domesticaly
and internationally in long term.

 Promote Indonesian coffee in both domestically and internationally, maintain international market and penetrate to
new market.

 Encourage Indonesian Coffee farmer welfare, increasing coffee production and quality.

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 AEKI/AICE Dedication:

• QUOTA ERA (1979 – 1991).

 Togather with Government to make the Rule of National Coffee Quota.

 Improve the Volume of Indonesian Coffee Quota.

 Penetrate of Indonesian Coffee Market to Non Quota Destination Countries.

TRANSITION ERA (1991 - 2011)

 Improve of Indonesian Coffee Quality (Standardization of Green Bean Coffee).

 Improve of Indonesian Coffee Production and Productivity.

 To encourage Indonesian Coffee Farmers welfare and Educate coffee farmers.

 To expand Indonesian coffee export market with coffee promote , etc.

 To increase National Coffee Consumption

AEKI-AICE.ORG
• FREE TRADE AREA 2011 – UNTIL NOW

 Increasing National coffee productivity.

 Increasing National Devisa from Coffee Sector.

 Expand Coffee market for both specialty and Commercial Coffee.

 To Strength Bergaining position of Indonesian Coffee in International Market.

 Increasing Local coffee consumption.

 Intelectual Property Right of Geografic Indication of Indonesian Coffee specialty.

 Sustainability coffee.

 Improve of Indonesian Coffee Image.

AEKI-AICE.ORG
• FREE TRADE AREA 2011 – UNTIL NOW

 To Make Public Awareness of Indonesian Coffee With “ AEKI EDUCATION

PROGRAME” , such as:

* Barista Class.

* Roasting Class.

* Cupping & Brewing Class.

* Coffee Compatition ( Coffee Contest , AEKI Brewing Competition 2014, etc).

* Coffee Export Training.

AEKI-AICE.ORG
OVERVIEW:

 International Coffee
 ASEAN Community 2015
 Indonesia Overview
 Indonesia Coffee’s Industry

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 INTERNATIONAL COFFEE

 The world’s most consumed beverages after water - 2 billion each day in the world

 The consumption is increasingly embedded into the culture of emerging nations such as
Indonesia, as indicated in the forecast of Indonesia coffee consumption CAGR (Compound
Annual Growth Rate) of 10,4%, higher compared to US 1,4%,

 The majority of coffee consumption is developed nation, while 90% of supply is produced in
developing countries.

 The world’s production is dominated by the top 4 producers, where Indonesia is the third
place.

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 ASEAN COMMUNITY 2015

 ASEAN Community is a transformation of ASEAN countries towards more integrated and comprehensive economic,
social, and political regional integration

Purpose :

1. Enhance regional economic growth

2. Intensify social interaction among both ASEAN and international community,

3. Lead ASEAN to be center of global economic.

Indonesia Role / Part :

1. Ready to face this advance regional integration, shown by the current economic growth which is higher than US and UE.

2. The Economic growth is predicted still increasing in years further, in mid level society, population number, and income
per capita

3. Complete with its wealth of natural resources also its strategic and potential geographic.

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 INDONESIA OVERVIEW

 The 16th largest economy in the world based on nominal GDP in 2012.

 The 4th most populous country in the World with a rapidly growing middle class market that will represent
63% of its population.

 GDP per capita is projected to grow from current level of USD3,500 to over USD6,600 in 2020.

 The population projected to reach 270 million in 2020,

 Overall size of the economy is expected to expand to over USD1,8 trillion, the highest in ASEAN.

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Source: Global Insight

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 INDONESIA COFFEE’S INDUSTRY

 Has strong recognition for Arabica coffees such as Sumatera Mandheling and its specialty
coffees such as Kopi Luwak.

 The micro-climate is ideal for growth and production of coffee, resulting in its rich, full body,
and mild acidity coffee.

 Has achieved international appeal with its distinctive taste depending on the region in which it
is planted as the specific soil type, altitude, coffee variety, processing, and aging affects its
characteristics.

 The exports value is reached an all-time high at USD1,5 billion in 2012, indicating its high
international appeal.

 But the rising domestic consumption is quickly growing well, beyond its exports each year at
24% CAGR (Compound Annual Growth Rate) from 2010 to 2013.

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 Indonesia is the 3rd biggest coffee producing country in the world

Below ten leading producing countries in crop year 2012/2013 (in thousand bags):

NO Countries Production % share of world total

1 Brazil 50 826 35,0

2 Vietnam 22 030 15,2

3 Indonesia 12 730 8,8

4 Colombia 10 371 7,1

5 Ethiopian 6 366 4,4

6 India 5 303 3,7

7 Honduras 4 537 3,1

8 Peru 4 450 3,1

9 Mexico 4 327 3,0

10 Guatemala 3 703 2,6

Source: ICO
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 PLANTATION AND PRODUCTION

Coffee plantation area : About 1,3 million hectars

Production : More less 750.000 ton

Average productivity : 760 kg/hectars/year

Amount of farmers in Coffee : 1,9 million household

Production by type of coffee (Ton) Production by producer (Ton)

Source: Ministry of Agriculture

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 Coffee Plantation Area and Production by Type of Coffee

Year ARABICA ROBUSTA TOTAL

Coffee
Area Production Area Production plantation Production
(ha) (Ton) (ha) (Ton) Area (ha) (Ton)

2007 228,931 124,098 1,058,478 549,088 1,287,409 673,186

2008 239,476 129,660 1,063,417 553,278 1,302,893 682,938

2009 281,398 147,631 984,839 534,961 1,266,237 682,592

2010 251,582 146,641 958,782 540,280 1,210,364 686,921

2011 251,753 146,761 1,041,212 487,230 1,292,965 633,991

2012 252,645 147,017 1,053,250 601,092 1,305,895 748,109

Source: Ministry of Agriculture

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Coffee Production Area in Indonesia by Regions (Tonnes)

1 South Sumatera 161.491

2 Lampung 159.418

3 Bengkulu 60.932

4 East Java 59.702

5 North Sumatera 56.835

6 Others 51.404

7 Aceh 48.823

8 South Celebes 37.922

9 West Sumatera 32.323

10 South East Nusa 21.814

11 Central Java 18.665

12 Bali 15.582

13 West Java 15.089

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Indonesia Coffee Production Area

Arabika coffee Robusta Liberica

(19%) coffee (80%) coffee (1%)

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 Indonesia Coffee Variety & Single Origin Production

 ARABICA: Arabica Aceh Gayo (Bener Meriah, Takengon, Central Aceh)

Arabica Sumatera Mandheling (North Sumatera)

Arabica Sumatera Lintong (North Sumatera)

Arabica Java (Central Java and East Java).

Arabica Preanger (West Java)

Arabica Bali Kintamani.

Arabica Flores (Bajawa, Ngada).

Arabica Toraja

Arabica papua (Wamena, Nabire)

 ROBUSTA: Robusta Sumatera (Lampung, Bengkulu, Jambi, Palembang)

Robusta Java (West Java, Central Java, and East Java)

Robusta Flores

 LIBERICA (Tanjung Jabung, Jambi – South Sumatera, and Central Kalimantan)

 EXCELSA (Meranti Island – Riau Province)

AEKI-AICE.ORG
Indonesia Coffee Certification

Some producers / exporters of coffee in Aceh, North Sumatra, Lampung, and East Java hold following certification:

 Utz Certified Good Inside

 Fair Trade

 Rain Forest Alliance

 Organic Coffee

 4C

Coffee plantation in Indonesia has been implementing of sustainability coffee, such as:

 Environmentally friendly with shading tree

 Preventing of erosion

 Water sources

 Source of livelihood for generations.

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Coffee Production Area with Geographical Indication

Certificates are as following:

 Arabica Bali Kintamani Coffee, number of ID G 0000001

 Arabica Gayo Coffee, number of ID G 0000005

 Arabica Flores Bajawa, number ID G 0000014

 Arabica Toraja Kalosi, number ID G 0000018

 Arabica Java Preanger, number ID G 0000022

 Arabica Ijen Raung, number of ID G 0000023

AEKI-AICE.ORG
Strength Of Indonesia Coffee

 All of Indonesian Coffee Specialty and Commercial has known in International market.

 Indonesian Robusta Coffee has good body.

 Has more producing areas with different caracteristic and cup taste each other.

 Coffee Producing areas are friendly environment , sustainable and treaceable.

AEKI-AICE.ORG
 Indonesia Future Coffee Production Development

 Expanding more to Arabica Coffee.

 Growing Arabica coffee more in mountain slopes for instance Aceh, Sumatera, Bali, South Celebes, South
East Nusa, and Papua.

 Increasing coffee productivity, from 760 kg/hectare to 1,5 ton/hectare.

 Encouraging the sustainable coffee plantation, environment friendly, and maintaining the quality.

 Planting coffee in the sidelines of tree stands in forest land, in order to prevent the erosion

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EXPORT

Table: Indonesia’s Coffee Export in 2007 – 2013 (Calendar Year)

Year Green Beans Instant Coffee Extract, Essence, Concentrate Roasted Coffee Total

Volume Value Volume Value Volume Value Volume Value Value

(Ton) (000 US$) (Ton) (000 US$) (Ton) (000US$) (Ton) (000US$) (000US$)

2007 321,545 633,918 13,186 50,491 6,096 13,259 935 2,079 699,747

2008 468,018 989,399 7,829 49,098 15,618 40,915 727 2,055 1,081,467

2009 510,187 835,999 7,200 41,616 19,647 50,507 708 1,700 929,822

2010 432,780 812,531 7,384 40,812 43,870 126,445 812 4,210 983,998

2011 346,091 1,034,814 7,196 48,467 69,721 218,358 399 1,855 1,303,494

2012 447,064 1,244,146 71,685 274,598 14,941 42,695 1,526 5,366 1,566,805

2013 532,157 1,166,244 72,899 263,810 10,030 30,502 1,867 7,797 1,468,353

Source: Indonesian Central Bureau Statistic

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 Indonesia Green Bean Coffee Export to All of Destination Countries (in Volume)

Source: Indonesian Central Bureau Statistic

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Indonesia Instant Coffee Export to all of Destination Countries

(in volume)

Source: Indonesian Central Bureau Statistic

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 Indonesia Export of Coffee Extract, Essence, and Concentrate to main Destination Countries
(in Volume)

Source: Indonesian Central Bureau Statistic

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 Indonesia Roasted Coffee Export to All Destination Countries

Source: Indonesian Central Bureau Statistic

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 COFFEE IMPORT

TYPE OF COFFEE

Extract, Essence,
Year Green Bean Instant Concentrate Roasted Coffee Total

Volume Value Volume Value Volume Value Volume Value Value

2007 47,962 72,708 3,893 44,396 1,358 33,313 2,054 5,606 156,023

2008 5,948 11,584 6,810 74,189 2,510 46,153 1,582 5,703 137,629

2009 14,064 23,773 2,539 18,123 551 4,612 336 1,238 47,746

2010 18,550 31,369 3,105 19,133 690 3,734 1,205 3,483 57,719

2011 17,618 45,519 8,821 67,150 1,634 5,810 483 3,571 122,050

2012 52,180 113,009 9,497 63,066 960 3,883 522 3,621 183,579

2013 15,196 34,278 13,223 82,008 2,661 15,948 604 4,560 136,794

Source: Indonesian Central Bureau Statistic

Note : Volume in Ton, Value in CIF 000 US$

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Indonesia Coffee Industries – Import

Purpose:

• Blended Coffee.

• Cheaper price than local for instant coffee production

• More coffee variety offered in coffee shop

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 INDONESIA COFFEE CONSUMPTION TRENDS

No Year Amount of People Need of Coffee Coffee Consumption

(Kilogram) (Kg/kapital/year)

1 2010 237,000,000 190,000,000 0.80

2 2011 241,000,000 210,000,000 0.87

3 2012 245,000,000 230,000,000 0.94

4 2013* 249,000,000 260,000,000 1.04

5 2014** 253,000,000 300,000,000 1.19

6 2015** 257,000,000 350,000,000 1.36

7 2016** 260,000,000 400,000,000 1.54

* AICE estimate

AEKI-AICE.ORG
Indonesia’s Coffee Consumption Trends:

 Continues to expand rapidly :

- Specialty Coffee and Commercial Coffee
- Coffee shops and mass coffee production

 Competes with International brands:

- Micro Roasters
- Retailers
- Manufactures

AEKI-AICE.ORG
Growth of Indonesia’s Coffee Consumption is Driven by:

 The development of the coffee processing industries (coffee products), as well as the coffee product
variants for instance, white coffee, coffee with herbs, etc

 The growth of home and middle coffee industries in some major coffee production area

 The increasing of income per capita

 The life style

 The emergence of coffee shops and micro roasters

 The improvement of coffee education

 The Increasing of local coffee consumption

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 Indonesian Coffee Market Chain

Small Farmer

1th Collector /small

2nd collector / medium

Local Trader

Coffee Industries/ Hotel, Restaurant , cafe,

Factory Coffee shop (Retailer) Exporters
Roastery

Importers
End User

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Possitively empact of
levelling coffee market chain:

 There are opportunity of non formal employees

 Need more employee.

 Creat non formal and formal market.

 Create local economic emprovement

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THE INPUT AND EXPECTANCE

 Building the cooperation with stakeholders

 Supporting the upstream and downstream activity

 Conducting more training to transfer coffee knowledge

 Creating program to share information

 Providing more facilities and accommodation in order to accelerate and reinforce coffee
activities.

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 Thank You
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