The delicious Jumbo Turnover of Processed Food

Along with increasing public consumption of processed food, the market value of this industry is increasing.

KOMPAS/TOTOK WIJAYANTO (TOK)

Visitors are buying instant noodles at the KKV Indonesia retail store in Central Park Mall, West Jakarta on Thursday (14/1/2021). KKV provides a dedicated space to showcase instant noodle collections from several countries such as Japan, South Korea, Thailand, Singapore, Vietnam, and of course, Indonesia.

Every morning, when the newly-risen sun shines, Rina's house is already filled with activity. In the midst of getting ready to go to the office, this 38-year-old mother also has to prepare breakfast for Tommy, her 7-year-old only child.

One of the mainstay breakfast menus is fast food and processed drinks. Just open a sachet of processed food, add hot water, stir until evenly mixed, fast food processed food and drinks are ready to eat.

Not only instant meals that often fill Tommy's breakfast, on other days Rina also fries ready-to-eat frozen foods like potatoes, chicken nuggets, and sausages. Sometimes her husband, who is also an office worker, takes turns making instant noodle breakfast for the three of them.

"Instant processed foods like this are very practical for career women without domestic assistants who still have to take care of children going to school every morning," said Rina when met at her home in Ciputat, South Tangerang, on Saturday (25/5/2024).

KOMPAS/PRIYOMBODO

Instant noodle and canned sardines are filling the shelves in a retail supermarket in the Bintaro area of South Tangerang on Tuesday (14/3/2023). Sales of frozen and instant food products show an increasing trend due to their popularity.

Rina recognizes that the nutritional content of processed fast food is not as good as fresh food. However, according to her, it is better than her family getting stomach problems from not eating breakfast. Only on weekends or holidays does Rina cook fresh food for her family.

Also read: Organic Fast Food Food and Drinks are Starting to Be Popular

Rina's family is a glimpse of the fact that ready-to-eat instant processed food has become a part of urban modern society. Instant food and drinks, frozen potatoes, and instant noodles are some types of ready-to-eat processed food commonly found in urban family kitchens.

The level of society's consumption of processed foods continues to rise. This is reflected in the decreasing consumption of fresh staple foods.

Quoting data from the Ministry of Agriculture as reported by Switzerland Global Enterprise (SGE), the level of fresh staple food consumption by the Indonesian community in 2022 is projected to reach 93.9 kilograms per capita per year, a decrease compared to 2018 which was 96.6 kilograms per capita per year. The decrease in fresh staple food consumption is replaced by processed food consumption.

BENEDIKTUS KRISNA YOGATAMA

Indonesian Processed Food Industry Import Market Portion 2023. Source: Central Statistics Agency as processed by Switzerland Global Enterprise (SGE)

The trend of society's consumption of processed food is a great potential market for entrepreneurs. Citing data from the Central Statistics Agency (BPS), as quoted by SGE, the value of Indonesia's processed food market in 2023 reached 17.9 billion US dollars (Rp 286.40 trillion). The processed food industry also contributes to the growth of the national gross domestic product (GDP) from the food and beverage sector, which reached 849.39 billion US dollars last year.

Processed cereal and flour food markets are the most consumed food with a contribution of 33 percent of the total value of the processed food market. In addition, there is processed sugar food contributing 18 percent of the total market value, processed vegetable fat food contributing 13 percent, and egg-based and dairy products contributing 9 percent. As for other types of processed food, they contribute 27 percent of the total value of the processed food market.

The market value of Indonesian processed food in 2023 will reach 17.9 billion US dollars (Rp. 286.40 trillion).

The research released by SGE entitled "Food Sector in Indonesia Imported Processed Food Market", which was released in January 2024, indicates a trend of increasing consumption of processed food based on the needs of modern urban communities who want everything to be fast. The fast-paced and rushed lifestyle of city dwellers demands convenient and quick ready-to-eat food. This need has been successfully fulfilled by processed food.

BENEDIKTUS KRISNA YOGATAMA

Indonesian Processed Food Industry Market Share 2023. Source: Central Statistics Agency as processed by Switzerland Global Enterprise (SGE)

Big cake

Indonesia is a "big cake" of processed food market which is contested by many parties with strong competition. In 2022, there are 7,498 medium to large-scale food and beverage manufacturing companies in the country. In addition, there are also 530 licensed importers operating in the processed food industry. They are local, national, and multinational companies.

As for the import of processed food, they come from, among others, the United States, the European Union, India, China, Japan, South Korea, Malaysia, Thailand, and the Middle East region.

The increasing trend of processed food consumption is not only happening in Indonesia, but has become a global phenomenon. Citing Rentokill's 2018 research, the global processed food industry market value reached 2 trillion US dollars, consisting of 400,000 processed food manufacturer companies spread throughout the world.

The research states that the increase in processed food consumption is driven by several factors, such as climate change, demographic changes in the world's population, the growth of emerging market economies, the establishment of trade partnerships between countries, and predictions of world population growth.

These factors are intertwined and change consumption patterns of people who tend to prefer processed foods that are practical and fast.

However, this global phenomenon is not always good news. The global supply chain for processed foods has become more complex in recent years compared to previous years. Consequently, there is a competition for supply of agricultural, cereal, and livestock products that serve as raw materials for the processed food industry.

"This is a challenge to continually ensure food security," said Jack Lyons in Rentokill's research entitled "7 Global Trends Impacting Food Processing."

Also read: Why are ultra-processed foods bad for your health?

Certainty in the supply of raw materials is one of the main conditions for food and beverage manufacturing to run smoothly. This is often stated by the Chairman of the Indonesian Food and Beverage Entrepreneurs Association (Gapmmi) Adhi S Lukman on various occasions. According to him, guaranteed supply of raw materials is vital.

Because, this industry is not only looking for profit, but also to fulfill human primary needs, namely food.