Rtd Tea - Indonesia

Euromonitor International : Country Sector Briefing January 2011

RTD Tea

Indonesia

List of Contents and Tables

Headlines ................................................................................................................................................................. 1 Trends ...................................................................................................................................................................... 1 Competitive Landscape .......................................................................................................................................... 2 Prospects .................................................................................................................................................................. 3 Category Data ......................................................................................................................................................... 3 Table 1 Off-trade Sales of RTD Tea by Category: Volume 2005-2010 ......................................... 3 Table 2 Off-trade Sales of RTD Tea by Category: Value 2005-2010............................................. 4 Table 3 Off-trade Sales of RTD Tea by Category: % Volume Growth 2005-2010 ........................ 4 Table 4 Off-trade Sales of RTD Tea by Category: % Value Growth 2005-2010 ........................... 4 Table 5 Leading Flavours for RTD Tea: % Volume Breakdown 2006-2010 ................................. 4 Table 6 Company Shares of RTD Tea by Off-trade Volume 2006-2010 ....................................... 5 Table 7 Brand Shares of RTD Tea by Off-trade Volume 2007-2010 ............................................. 5 Table 8 Company Shares of RTD Tea by Off-trade Value 2006-2010........................................... 5 Table 9 Brand Shares of RTD Tea by Off-trade Value 2007-2010 ................................................ 6 Table 10 Forecast Off-trade Sales of RTD Tea by Category: Volume 2010-2015 ........................... 6 Table 11 Forecast Off-trade Sales of RTD Tea by Category: Value 2010-2015 .............................. 7 Table 12 Forecast Off-trade Sales of RTD Tea by Category: % Volume Growth 20102015 ................................................................................................................................... 7 Table 13 Forecast Off-trade Sales of RTD Tea by Category: % Value Growth 20102015 ................................................................................................................................... 7

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RTD Tea

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RTD TEA IN INDONESIA

HEADLINES
RTD tea records 9% retail volume growth to reach 1.2 billion litres in 2010 Green tea and PET bottle packaging increase in relevance in line with growing demand for healthy and convenient products Still RTD tea excluding Asian registers the best growth in retail volume terms with 14% in 2010 Average unit price of RTD tea remains stable in 2010 Sinar Sosro PT continues to dominate RTD tea with 74% off-trade volume share in 2010 RTD tea is expected to register a 7% retail volume CAGR over the forecast period

TRENDS
RTD tea continued to be the preferred soft drink for the majority of Indonesian consumers, more so than carbonates which is perceived to be unhealthy or fruit/vegetable juice which despite being perceived as healthy also carries a marginally higher unit price than RTD tea. Improved economic conditions and rapid expansion of modern trade outlets paved the way for growing popularity of RTD tea in PET bottle packaging which offers convenience and the option to consume the tea in small amounts over time. The retail volume growth of RTD tea gained one percentage point to register 9% in 2010. Improved disposable income and higher availability of RTD tea driven by rapid expansion of modern retailers are attributable for the accelerated performance. Population growth is also a factor since RTD tea is consumed by consumers from all walks of life. The growing concern placed on health also benefits RTD tea which is perceived to be healthy, despite some misgivings regarding the sugar levels of sweetened RTD tea. Still RTD tea excluding Asian registered a 14% off-trade volume growth in 2010 to lead RTD tea. The good performance is due to the growing popularity of fruit-flavoured tea and lemon tea which serve as alternatives to the widely accepted sweetened black-jasmine tea. The increasing popularity of fruitflavoured tea and lemon tea are also attributed to the younger generation of consumers who are the key target audience. 2010 also witnessed an improved performance of RTD green tea, yet this product is classified under Asian still RTD tea and therefore retail volume growth of the product is overshadowed since this segment also includes the popular black-jasmine RTD tea. The average unit price of RTD tea is maintained at relatively the same level in 2010. Despite rising costs of raw materials, manufacturers of RTD tea, some of which target middle to lower income consumers are reluctant to increase retail unit prices of RTD tea. Trading up to PET bottle RTD tea which carries a marginally higher unit price is counterbalanced with growth of the plastic cup and returnable glass bottle packaging which carries slightly lower unit prices. Other grocery retailers contributed the most significant off-trade volume sales of RTD tea with 79% share due to the significant contribution of Sosro brand RTD tea in returnable glass bottle packaging towards total volume sales. Despite growing popularity of PET bottle packaging, returnable glass bottles continued to be the most significant packaging type in Indonesia. Products in returnable glass bottles also carries lower unit prices than PET bottle packaging which explains the popularity of the product among consumers from most income groups. On-trade volume sales of RTD tea were hampered by the availability of boiled tea at foodservice retailers, often given as free service with the purchase of food. However, on-trade availability of RTD tea improved over the review period. Manufacturers also pushed the availability by cooperating with foodservice retailers to provide RTD tea as part of combination meals to provide value for consumers. Fountain sales of RTD tea were available at fast food retailers and on-trade channels, yet were negligible at convenience store outlets with manufacturers preference to push sales of PET bottle packaging instead. RTD green tea witnessed a significant emergence during the review period due to increasing awareness of the functional benefits of consuming green tea for ones health. In addition to manufacturers attempts, the

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RTD Tea

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mass media was also responsible for communicating the benefits of antioxidants found in green tea. The growing popularity of green tea was driven by consumers belonging to the middle and upper income groups where health awareness has caught on more easily due to better average education levels. RTD green tea products also carry a marginal premium price compared to the standard black-jasmine tea in Indonesia, dictating the target audience to some extent. Despite the increasing popularity of RTD green tea, blackjasmine tea continued to be the most significant contributor with 84% off-trade volume share in 2010 due to its long history and abundance of raw materials in Indonesia. Tea in Indonesia is commonly consumed by consumers from all walks of life. Unlike the younger generation who are open to all types of soft drinks, older consumer groups generally prefer non-carbonated products and RTD tea is a popular choice. RTD tea is generally consumed with meals as it is customary for Indonesians to drink before, during and after meals. RTD tea is also consumed as thirst quenchers during hot summer days with very high availability in all parts of Indonesia.

COMPETITIVE LANDSCAPE
Sinar Sosro PT continued to retain its dominating presence within RTD tea with 74% off-trade volume share in 2010. As a pioneer in RTD tea, the company has the advantage of having an extensive distribution network spanning modern and traditional retailers across the nation. Its distribution network for returnable glass bottle packaging is unmatched in terms of traditional retailer reach with competitors preferring to focus on RTD tea in PET bottle, plastic cups and tetra pak packaging and modern retailer availability instead of competing against the leading brand of glass bottle packaging, Teh Botol Sosro. With the exception of Coca-Cola Indonesia PT, other players have limited presence in returnable glass bottle packaging and traditional retailer reach. Coca-Cola Indonesia PT registered the highest retail value share gain in 2010. The companys RTD tea brands Frestea and Frestea Green benefited from the companys attempt to provide separate chillers for its products at modern retailers, which is mainly to drive sales of carbonates. The separate chillers provided better visibility and placement of product from a consumers point of view, allowing it to outperform other brands of RTD tea. Frestea also benefited from the companys advantage in terms of traditional retailer reach with shared distribution costs with Coca-Cola, Sprite and Fanta in returnable glass bottle packaging. Domestic manufacturers dominated RTD tea with Sinar Sosro PT accounting for more than 70% of both off-trade volume and value share in 2010. Multinational players Coca-Cola Indonesia PT, ABC President Indonesia PT and Pepsi-Cola IndoBeverages PT had to be content with second, fourth and seventh positions respectively in RTD tea in 2010. Liang Teh Cap Panda was launched in July 2009, classified as Asian still RTD tea highlighting its efficacy as a cure to a common health problem panas dalam or heatiness. The launch was followed up with an aggressive above-the-line campaign on television to boost product awareness featuring Deddy Mizwar, a veteran actor/director who is strongly associated with the Muslim religion due to his role as a Muslim religious leader in many television series. The choice of brand ambassador helped to negate some of the possible negative sentiments from non-Chinese Muslim consumers since Liang Teh is a product which leans heavily towards the Chinese ethnicity. Teh Kotak from Ultrajaya Milk Industry & Trading Co Tbk PT which is known for tetra pak packaging launched a 500ml tetra pak packaging with re-sealable screw cap in 2010. This development is an attempt to match PET bottle packaging which offers portability and the option to consume the tea in small amounts over time. With many existing products available, new launches of RTD tea may have to compete for the limited amount of chillers space available at convenience stores. Over the review period, there are an increasing number of products available in larger size packaging such as one litre packs for family consumption or for entertaining guests. Most RTD tea falls into the standard category, with the exception of PET bottle packaging which carries a marginally higher unit price. Most RTD products compete on the same shelves with the exception of Frestea and Frestea Green which benefits from Coca-Cola Indonesia PTs separate chillers and point-of-sale displays. Sinar Sosro PT is also known to have an extensive number of branded chillers in foodservice outlets and retailers throughout Indonesia. RTD tea in plastic cups and returnable glass bottle packaging lean heavily towards traditional retailers. Private label RTD tea was non-existent over the review period with strong brand loyalty towards well established brands.

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RTD Tea

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PROSPECTS
RTD tea is expected to continue as the preferred soft drink for the majority of consumers. The negative perception that carbonates are harmful towards health plays out well for RTD tea as the most readily available alternative. Fruit/vegetable juice is also an alternative, but most of these products carry a marginally higher unit price which lowers their suitability for some income segments with the exception of fruit-flavoured drinks (no juice content). Population growth is a key factor for RTD tea sales growth as its consumers base comes from all walks of life. RTD tea is expected to register 7% off-trade volume CAGR over the forecast period. This will be a marginal decrease compared to review period CAGR which was one percentage point higher. This is attributed to the maturity of RTD tea and an increasingly competitive environment with aggressive manufacturer stance to promote other soft drinks such as sports drinks, fruit/vegetable juice and carbonates. Increasing health awareness regarding the benefits of meeting the daily recommended intake of two litres of water per adult is also affecting RTD tea, along with the negative perception regarding the sugar content in the sweetened variety. Increasing health awareness and higher availability of fruit/vegetable juice is a potential threat towards RTD tea. Although they generally cost more, better economic conditions also allow for higher disposable income levels. Health awareness may also hamper the demand for RTD tea as most products are sweetened and the sugar content is perceived to promote possible health problems such as diabetes and obesity. Although unsweetened tea is available, most of these products green tea with a marginally higher unit price which may not be suitable for all consumers of RTD tea. Some manufacturers such as Sinar Sosro PT and ABC President Indonesia PT are addressing this problem by launching reduced sugar and zero sugar variants. Still RTD tea excluding Asian is expected to record the highest off-trade volume CAGR of 11% over the forecast period. Fruit-flavoured RTD tea is a welcome alternative for Indonesian consumers who like to try out new and differing tastes. The key consumers for these products are children, teenagers and young adults who are open to experimenting with new flavours. The average unit price of RTD tea is expected to increase moderately over the forecast period. Some RTD tea products targeting middle to lower income consumer groups such as those in plastic cups and glass bottle packaging are less likely to increase in price compared to PET bottle products sold in modern retailers. Nevertheless, trading up to green tea and PET bottle products for convenience are likely to marginally increase average unit prices. Liang Teh Cap Panda is expected to continue to perform well over the forecast period as an herbal RTD tea product with functional health benefits. Increasing health awareness and the well-known efficacy of its unpackaged unbranded alternative is expected to benefit the product. The success of the product proves that there is potential for new product developments with health enhancing characteristics besides green tea. Sinar Sosro PT is embarking on a campaign to approach young children with a new animated super hero mascot Saga set to feature in 4D cinemas throughout Indonesia in 2010. Saga also makes appearances in between cartoon and animated television programmes targeting children such as seen on the Nickelodeon channel. This development is an attempt to secure the long-term future consumer base of RTD tea.

CATEGORY DATA
Table 1 Million litres 2005 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea 788.0 745.9 42.0 1.0 788.9 2006 837.8 790.7 47.0 1.1 838.9 2007 915.3 861.9 53.4 1.7 916.9 2008 996.0 935.1 60.9 2.1 998.1 2009 1,079.0 1,009.9 69.1 2.5 1,081.5 2010 1,174.5 1,095.8 78.8 2.5 1,177.0 Off-trade Sales of RTD Tea by Category: Volume 2005-2010

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RTD Tea

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Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2 Rp billion

Off-trade Sales of RTD Tea by Category: Value 2005-2010

2005 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2006 5,587.9 5,289.7 298.3 10.8 5,598.7

2007 6,778.3 6,420.4 357.9 16.3 6,794.6

2008 8,441.4 8,010.1 431.3 20.5 8,461.9

2009 9,849.3 9,331.8 517.6 24.6 9,874.0

2010 11,293.0 10,684.9 608.1 24.8 11,317.7

4,638.4 4,391.9 246.5 9.6 4,648.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3 % volume growth

Off-trade Sales of RTD Tea by Category: % Volume Growth 2005-2010

2009/10 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2005-10 CAGR 8.3 8.0 13.4 20.7 8.3

2005/10 TOTAL 49.1 46.9 87.5 156.2 49.2

8.9 8.5 14.0 1.5 8.8

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4

Off-trade Sales of RTD Tea by Category: % Value Growth 2005-2010

% current value growth 2009/10 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2005-10 CAGR 19.5 19.5 19.8 20.9 19.5

2005/10 TOTAL 143.5 143.3 146.7 158.5 143.5

14.7 14.5 17.5 0.4 14.6

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5 % retail volume

Leading Flavours for RTD Tea: % Volume Breakdown 2006-2010

2006 Black - apple Black - jasmine Black - lemon Chrysanthemum Green - honey Green - sweetened Green - unsweetened Other flavours Total
Source:

2007 1.0 86.7 0.7 0.4 0.5 5.7 1.0 4.0 100.0

2008 1.1 85.5 0.7 0.4 0.6 6.4 1.1 4.2 100.0

2009 1.1 84.3 0.7 0.3 0.7 7.0 1.2 4.7 100.0

2010 1.1 84.0 0.8 0.2 0.8 7.3 1.3 4.5 100.0

1.2 85.5 0.9 0.7 0.5 6.8 0.4 4.0 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

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Table 6

Company Shares of RTD Tea by Off-trade Volume 2006-2010

% off-trade volume Company Sinar Sosro PT Coca-Cola Indonesia PT Ultrajaya Milk Industry & Trading Co Tbk PT ABC President Indonesia PT Tang Mas PT Garudafood Group Pepsi-Cola IndoBeverages PT Pokka Corp Heinz ABC Indonesia PT Unilever Indonesia Tbk PT Monysaga Prima PT Others Total
Source:

2006 74.6 10.9 3.9 4.8 2.3 0.3 1.4 0.4 0.3 0.3 0.8 100.0

2007 75.6 12.2 3.7 3.9 2.1 0.5 1.3 0.2 0.2 0.3 0.0 100.0

2008 75.1 12.5 3.8 2.2 2.2 0.7 1.1 0.2 0.1 0.3 1.8 100.0

2009 73.7 13.5 3.9 2.8 2.2 0.7 0.9 0.1 0.1 0.2 1.7 100.0

2010 73.5 13.9 4.1 3.0 2.2 0.8 0.7 0.1 0.1 1.6 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7

Brand Shares of RTD Tea by Off-trade Volume 2007-2010

% off-trade volume Brand Sosro Frestea Teh Kotak N 2 Tang Joy Tea Mountea Tekita TEBS S-Tee Teh Bunga Pokka ABC Lipton Hi-C Mony Others Total
Source:

Company Sinar Sosro PT Coca-Cola Indonesia PT Ultrajaya Milk Industry & Trading Co Tbk PT ABC President Indonesia PT Tang Mas PT Sinar Sosro PT Garudafood Group Pepsi-Cola IndoBeverages PT Sinar Sosro PT Sinar Sosro PT Ultrajaya Milk Industry & Trading Co Tbk PT Pokka Corp Heinz ABC Indonesia PT Unilever Indonesia Tbk PT Coca-Cola Indonesia PT Monysaga Prima PT

2007 75.0 12.2 3.5 3.9 2.1 0.5 1.3 0.1 0.5 0.2 0.2 0.2 0.3 0.0 100.0

2008 73.4 12.5 3.6 2.2 2.2 1.2 0.7 1.1 0.1 0.4 0.1 0.2 0.1 0.3 1.8 100.0

2009 71.9 13.5 3.8 2.8 2.2 1.3 0.7 0.9 0.2 0.3 0.1 0.1 0.1 0.2 1.7 100.0

2010 71.7 13.9 4.0 3.0 2.2 1.4 0.8 0.7 0.2 0.2 0.1 0.1 0.1 1.6 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 8

Company Shares of RTD Tea by Off-trade Value 2006-2010

% off-trade value rsp Company Sinar Sosro PT

2006 76.8

2007 78.9

2008 78.9

2009 78.2

2010 77.2

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Coca-Cola Indonesia PT Ultrajaya Milk Industry & Trading Co Tbk PT ABC President Indonesia PT Tang Mas PT Garudafood Group Pepsi-Cola IndoBeverages PT Pokka Corp Heinz ABC Indonesia PT Unilever Indonesia Tbk PT Monysaga Prima PT Others Total
Source:

11.4 3.0 1.7 1.9 0.2 1.0 0.7 0.2 0.4 2.7 100.0

12.0 2.6 2.6 1.6 0.3 0.9 0.3 0.1 0.4 0.4 100.0

12.5 2.4 1.7 1.5 0.4 0.6 0.3 0.1 0.4 1.2 100.0

13.5 2.3 2.2 1.4 0.4 0.5 0.2 0.1 0.1 1.1 100.0

14.4 2.5 2.4 1.4 0.4 0.4 0.1 0.0 1.1 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 9

Brand Shares of RTD Tea by Off-trade Value 2007-2010

% off-trade value rsp Brand Sosro Frestea Teh Kotak N 2 Tang Joy Tea Mountea Tekita TEBS Pokka S-Tee Teh Bunga ABC Lipton Hi-C Mony Others Total
Source:

Company Sinar Sosro PT Coca-Cola Indonesia PT Ultrajaya Milk Industry & Trading Co Tbk PT ABC President Indonesia PT Tang Mas PT Sinar Sosro PT Garudafood Group Pepsi-Cola IndoBeverages PT Sinar Sosro PT Pokka Corp Sinar Sosro PT Ultrajaya Milk Industry & Trading Co Tbk PT Heinz ABC Indonesia PT Unilever Indonesia Tbk PT Coca-Cola Indonesia PT Monysaga Prima PT

2007 78.4 12.0 2.5 2.6 1.6 0.3 0.9 0.1 0.3 0.3 0.1 0.1 0.4 0.4 100.0

2008 77.7 12.5 2.3 1.7 1.5 0.9 0.4 0.6 0.2 0.3 0.2 0.1 0.1 0.4 1.2 100.0

2009 76.9 13.5 2.3 2.2 1.4 0.9 0.4 0.5 0.2 0.2 0.1 0.1 0.1 0.1 1.1 100.0

2010 75.8 14.4 2.5 2.4 1.4 1.0 0.4 0.4 0.2 0.1 0.1 0.1 0.0 1.1 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 10 Million litres

Forecast Off-trade Sales of RTD Tea by Category: Volume 2010-2015

2010 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2011 1,271.3 1,183.4 87.8 2.7 1,274.0

2012 1,369.7 1,272.2 97.5 2.9 1,372.6

2013 1,469.0 1,361.3 107.7 3.1 1,472.1

2014 1,568.2 1,449.7 118.5 3.3 1,571.6

2015 1,666.5 1,536.7 129.8 3.5 1,670.0

1,174.5 1,095.8 78.8 2.5 1,177.0

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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Table 11 Rp billion

Forecast Off-trade Sales of RTD Tea by Category: Value 2010-2015

2010 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2011 12,384.1 11,699.9 684.1 27.7 12,411.8

2012 13,519.2 12,752.9 766.2 30.9 13,550.1

2013 14,691.3 13,836.9 854.4 34.3 14,725.6

2014 15,892.2 14,943.9 948.3 37.9 15,930.1

2015 17,112.6 16,064.7 1,047.9 41.7 17,154.3

11,293.0 10,684.9 608.1 24.8 11,317.7

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 12 % volume growth

Forecast Off-trade Sales of RTD Tea by Category: % Volume Growth 2010-2015

2014/15 Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2010-15 CAGR 7.2 7.0 10.5 7.0 7.2

2010/15 TOTAL 41.9 40.2 64.7 40.2 41.9

6.3 6.0 9.5 5.0 6.3

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 13

Forecast Off-trade Sales of RTD Tea by Category: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Still RTD Tea - Asian Still RTD Tea - Still RTD Tea Excluding Asian Carbonated RTD Tea RTD Tea
Source:

2010/15 TOTAL 51.5 50.3 72.3 68.5 51.6

8.7 8.5 11.5 11.0 8.7

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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