Coffee +Tea+Ice Cream will be successful, why Indonesia?

The Author :
Zhang safeng,
Mater of Technology Management President University

As the largest economy in Southeast Asia, Indonesia has experienced rapid economic growth in recent years. The rise of the local middle class and a relatively young population structure have made Indonesia the largest new tea drink consumer market in Southeast Asia. This may also attract many Chinese new tea drink brands to join, these brands are all around us. Like Mixue, Wedrink, Cooler City’, Momoyo, Ai-Cha, Tianlala, hefkcha, Cotti Coffee, Tomoro Coffee. And how they can compare with the local brand like Kopi Kenangan, Janji Jiwa, Excelso, Fore, Maxx, Jago Coffee dll.
Although the overall local consumption level in Indonesia is still low and there are many local brands participating in the competition, China’s new mid-to-low-end tea brands represented by Mixue has already gained opportunities in the Indonesian market: with low pricing and relatively beautiful appearance With its stores and good dining environment, Chinese fresh fruit tea has gradually become a new option for local consumers in addition to coffee and pearl milk tea.
Why Indonesia ?
It is not a surprise that Indonesia has become the main battlefield for China’s new tea brands. Data show that Southeast Asian consumers a year of new tea consumption reached 3.66 billion US dollars, of which Indonesia accounted for 1.6 billion, reaching 43% of the total market. In recent years, Indonesia’s economy has been in good shape, with its GDP ranking first in Southeast Asia. In 2022, the rupiah became one of the best performing currencies in Asia, with the stock market hitting a record high. Meanwhile, as the world’s largest nickel producer, Indonesia is poised for continued growth amid a burgeoning new energy boom.
Economic development has created a larger middle class. Although different statistical agencies have different definitions of Indonesia’s middle class, it is certain that Indonesia’s middle class is growing and becoming the backbone of the consumer market. According to the Boston Consulting Group survey, the number of middle-class Indonesians exceeds 90 million, reaching 35%, and the monthly daily expenses of middle-class families exceed 2 million Indonesian rupiah.
With a relatively young population and a growing middle class, Indonesia is the largest market in Southeast Asia, and it can be said that it is replicating the economic rise of China in the past – rapid urbanization, from retail goods to e-commerce and restaurant chains, mobile Internet to gain a large number of new users, and consumption is gradually upgraded.
In contrast, China’s domestic market after decades of rapid development, although the market size, but stagnant growth, it is difficult to usher in a wave of rapid growth in the short term. Therefore, whether it is e-commerce or catering, many overseas companies have set their sights on Indonesia.
In 2018, the new tea represented by fresh fruit milk tea is still a symbol of fashion trends, but after several years of development, many brands have carried out market competition, and by 2022, the domestic new tea market has reached the peak of the inner roll. In the business district of any provincial city in China, there are often several different new tea brands within a distance of several hundred meters, and even the same brand will open two stores in adjacent blocks, and competition within the industry is very fierce.
In the face of China’s domestic white-hot competition, it is difficult to receive satisfactory results whether the new tea drink is reduced in price or continues to sink to lower-tier cities. Therefore, going to sea to pursue the second growth curve has changed from a cherry on top option to a must for new tea drinks.
Southeast Asia is close to China’s geographical location, similar culture and consumption habits, and the local high temperature all the year round, consumers have a large demand for cold drinks, many local consumers buy 2 to 3 cups of cold drinks every day, and the beverage industry has broad market prospects.
In Southeast Asia, the affordable brands represented by Mixue chose Indonesia, where the price of customers is low but growing rapidly. Mixue is popping up all over Indonesia, with more than 2,000 stores.
Mixue winning formula is to quickly occupy the market with low prices and local strategies that cater to the local market.
Mixue may not be perfect in terms of ingredients, but it is cheap enough to satisfy the sweet taste of Indonesian consumers.
Fruit is cheap in Southeast Asia, and locals prefer to eat it rather than drink an expensive cup of fresh fruit tea. When buying fruit tea, local consumers care more about the quality of the fruit, but enough sweet and cool enough to cool off. This consumption habit, and China’s domestic preference for low sugar and low-fat, the pursuit of healthy fresh fruit drinks is the opposite. In order to meet the demand of local consumers,Mixue has increased the sweetness of its drinks in Indonesia.
The recent opening of 6 stores in Indonesia Tianlala, in the product composition and business methods are highly similar to Mixue, TianLala plans to open 60 stores in Indonesia by the end of the year. The daily turnover of the single store is more than 6 million IDR.
As a traditional coffee producing and consuming country, Indonesia has a huge coffee market. Starbucks has been working in Indonesia for many years and is still a well-deserved local beverage giant. After 2016, with the growth of Indonesia’s local middle class, a number of local coffee brands also emerged, such as Kopi Kenangan, Fore Coffee, Kopi Janji Jiwa, etc. In the Indonesian market, where the gap between rich and poor is large, this type of local chain brand has filled the “blank space” between Starbucks, instant coffee, and street stalls.
Therefore, it is difficult to accurately define whether this model is successful, so let’s keep an eye on it and keep updating it.

Mr. Zhang Safeng (023202305028) in subject of Strategic Marketing from Class B- Batch 20231
Mater of Technology Management President University, Lecturer Prof. Dr. Jony Oktavian Haryanto