Indonesia Instant Coffee Market - Forecasts from 2025 to 2030

The Indonesia instant coffee market is predicted to expand at a CAGR of 8.48% to account for US$5.73 trillion by 2030 from US$3.81 trillion in 2025.

Increasing domestic consumption coupled with rising per capita disposable income is snowballing the market for instant coffee in the region. In accordance with International Coffee Organization, Indonesia's domestic coffee consumption comes second to Brazil. Domestic coffee consumption in Indonesia was 4.75 million 60 Kg bags in the 2018 fiscal year and increased to 5.00 million 60 Kg bags in 2021. On the other hand, Indonesia is a dominant supplier of coffee internationally, providing different types of instant coffee. According to the Foreign Agricultural Services, U.S. Department of Agriculture (USDA), Indonesia is expected to produce 11.35 million (60 kilograms) bags more coffee in 2022-2023 than the previous year. Further, it is anticipated that increased demand as a result of the relaxation of pandemic-related limitations will push domestic coffee consumption to 4.8 million bags.

Indonesia instant coffee market drivers

Growing domestic coffee consumption

Coffee is an important cash crop for Indonesia. According to Enveritas, worldwide there are about 12.5 million coffee farms, out of which 1.3 million are in Indonesia. Due to the vast availability of raw materials and resources, the demand for Indonesian instant coffee is high domestically and internationally. According to the International Coffee Organization, Indonesia comes second only after Brazil for domestic consumption of coffee. In the financial year 2018, Indonesia's domestic consumption of coffee was 4.75 million 60 Kg bags, and reached 5.00 million 60 Kg bags in 2021. Further, according to the USDA, Indonesia's domestic coffee consumption reported in June 2021 was 144% higher than that of Australia, 28% higher than that of the United Kingdom, and only 6% lower than that of Canada. Australia, the United Kingdom, and Canada are a few nations associated with high per-capita consumption of coffee. Due to high consumption and growing per capita disposable income, more and more companies are showing interest in the instant coffee market. Several new coffee chains are entering the market in Indonesia. In addition, already existing coffee chains are receiving high investments. For instance, In January 2022, Indonesia's premium coffee chain start-up Kopi Kenangan attained a US$1 billion valuation after attaining new investments. The company secured US$96 million in Series C funding from investors Horizons Ventures, Kunlun, B Capital, and Falcon Edge Capital

Indonesia instant coffee market Geographical outlooks

The Java Province is expected to hold significant shares of theIndonesia instant coffee market.

With an average annual rainfall of 2000 to 2,500 mm and 120 to 150 rainy days, the climate in Java is comparatively dry. Smallholders produce more than 95% of the world's coffee, with coffee estates, most of which are found in the provinces of East Java and Central Java according to industry statistics. The consumption of coffee has changed in Indonesian cities because of rising standards of living and changing lifestyles, particularly among young people. According to the 2020 Population Census, around 270.2 million people were living in Indonesia, an increase of 14% from the 237.6 million people in 2010. According to the Central Bureau of Statistics, around 56.1%, or 151.59 million people, lived on Java Island; the largest population centers were West Java (48.27 million), East Java (40.67 million), and Central Java (36.52 million) as of 2020. The younger generation typically favors three-in-one coffee, espresso-based drinks, and instant coffee. Hence, the increasing younger population coupled with rising travel, commuting, social gatherings, and outdoor events is expected to propel the market growth.

In addition, the province hosts some of the largest producers of processed coffees catering to domestic and foreign markets, including instant coffee. For instance, PT. Santos Jaya Abadi, one of the largest companies in Southeast Asia, was founded in 1,979. According to the study "The Indonesian Coffee Consumers Perception on Coffee Quality and the Effect on Consumption Behavior," Good Day was listed as the most popular instant coffee by the general public whereas Kapal Api was preferred by the more seasoned group. The two top brands, Kapal Api and Good Day are both made by PT Santos Jaya Abadi, a leader in the instant coffee industry in Indonesia. Moreover, several ready-to-drink (RTD) coffee manufacturers launched new product lines in 2021 that were more reasonably priced and came in smaller packets for consumers whose spending power had been lowered as a result of social limitations brought on by the epidemic according to the Coffee Annual published by USDA in 2022. RTD coffee sales, which will make up 19% of all off-trade sales in 2021, are backed by a substantial distribution network of convenience outlets situated in transportation hubs and public places according to USDA.

Moreover, investments to strengthen the distribution channels will propel the provincial market. For instance, PT Nestlé Indonesia's entered a contract with PT Decorient Partaya Indonesia, for the construction of their new facility in Batang, Central Java, Indonesia in August 2021. The factory will be among the first industrial structures to be constructed at the brand-new Batang Industrial Park in Central Java. As one of the top coffee manufacturers established a new plant in Central Java in anticipation of rising demand for bottled coffee drinks, Java's capacity is anticipated to increase.

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Report Coverage:

• Historical data & forecasts from 2022 to 2030
• Growth Opportunities, Challenges, Supply Chain Outlook, Regulatory Framework, Customer Behaviour, and Trend Analysis
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The Indonesia instant coffee market is segmented and analyzed as below:

By Type

• Freeze-Dried Instant Coffee
• Spray-Dried Instant Coffee
• Others

By Distribution Channel

• Offline
• Foodservices
• Retail
• Supermarket/Hypermarket
• Convenience Stores
• Others
• Online

By Province

• Jakarta
• Bali
• Java
• Others