The Coffee Processing Business is More Sexy

JAKARTA – The domestic coffee processing industry has great potential to be developed. This prompted one of the world’s beverage producers CocaCola Company to explore expansion in this segment.

The plan to expand the soft drink producer business to the coffee processing segment was delivered by the Minister of Industry Airlangga Hartanto.

He claimed to have met the CEO of Coca-Cola Company James Quincey in the 2019 World Economic Forum event Annual Meeting in Davos, Switzerland. “Talking with Coca-Cola, they also want to do more product diversification. One of the things they see is very potential in Indonesia is coffee drinks. But they are still open to seeing other products that can be developed in Indonesia,” Airlangga said on Monday (1/28) )

In addition, the Coca-Cola Company through PT Coca-Cola Amatil Indonesia will continue to support sustainable economic programs. “They also strengthen their commitment in the green industry sector, such as encouraging the use of plastic recycle for bottle packaging,” he added.

Until now, Coca-Cola Amatil Indonesia has absorbed a workforce of more than 11,000 people with a 5-year investment value (2012-2017) reaching US $ 445 million. The company also plans to increase its investment to US $ 300 million until 2020. So, what are the prospects for the coffee processing business in the country?

Moelyono Soesilo, Chair of the BPP Specialty & Industry Department of the Association of Indonesian Coffee Exporters and Industries (AEKI), said that in the past 4 years, the development of cafes, coffee shops and restaurants is still strong.

This growth certainly boosts demand for domestic coffee products. Today’s global market demand is still high. “Therefore, the domestic processed coffee industry can still develop. We project that domestic consumption this year will grow 5% -6%,” he said Monday (1/28).

To offset this consumption growth, processed coffee production is expected to grow by 6% -8% this year.

DOMESTIC MARKET

Moelyono said that the absorption of the domestic market for coffee beans is greater than the export market. Over the past year, from production of 600,000 tons, 360,000 tons were absorbed by the local market.

The most consumed processed coffee products are ground coffee, which is 70% -80%, the rest are other products, such as extracts, essences, and coffee concentrates.

Meanwhile, for the export market, many domestic coffee products are sent to countries with high coffee consumption cultures such as the United States, Japan, Britain, Italy and Malaysia.According to him, in penetrating the export market, the application of import duties to several destination countries is a challenge for domestic manufacturers because it can erode competitiveness.

Therefore, trade agreements are expected to be further increased so that the import duty of processed coffee products can be lower. “What the government needs to pay attention is in the upstream sector because the last 5 years and 6 years of coffee production have stagnated,” Moelyono said.

He mentioned many problems faced by the upstream sector, such as the age of plants that are old, and the knowledge of farmers for cultivation and postharvest handling are lacking.

“At present the government’s efforts have begun. Educating farmers to choose the right products, maintaining plants and cutting down good branches needs to be improved,” he said.

Airlangga also mentioned that Indonesia is the fourth largest coffee producer in the world after Brazil, Vietnam and Colombia. This has become a potential development of the domestic coffee processing industry.

“Our coffee production is 639,000 tons in 2017 or 8% of world coffee production with a composition of 72.84%, which is robusta coffee and 27.16% arabica coffee,” said Airlangga.

In addition, Indonesia also has various types of specialty coffee that are known in the world, including Kopi Luwak with distinctive flavors and aromas according to the geographical indications that are the hallmarks of Indonesia.

To date, 22 geographic indications for Indonesian coffee have been listed, including Gayo Arabica Coffee, Toraja Arabica Coffee, Bali Pupuan Robusta Coffee, Koerintji Sumatra Arabica Coffee, Liberika Tungkal Coffee Jambi, and Liberika Rangsang Meranti Coffee.

One of the efforts made by the Ministry of Industry to spur the development of the coffee processing industry is to provide machinery and equipment for coffee postharvest since 2015 to businesses in Temanggung, including coffee fruit peeling machines, coffee bean sorting machines, coffee roasting machines, coffee pulping machines, and espresso coffee machine.

The positive prospect of the coffee processing business also attracts startups. An example is the increasingly expansive Fore Coffee expanding its coffee shop network this year after successfully gaining seed funding from East Ventures last year.

Fore Deputy CEO Elisa Suteja targets the opening of 60 coffee shops until the first quarter of 2019, with locations still centered in Jakarta. At present, in addition to the Setiabudi area, South Jakarta, it has also opened a number of branches in Central Jakarta and North Jakarta. The majority of the locations of the coffee shops that were established were indeed concentrated in business areas, shopping centers, and offices.

For target outlets, we want as much as possible. Now we are targeting 60 per quarter, if we see what will happen at the end of the year, it might be hundreds [of outlets], “he said recently.

According to him, coffee sales, both those that use delivery services and taken in place, are in line with the growth of applications. So far, the Fore Coffee application has been downloaded more than 10,000 times and ranks the top two in the most downloaded free application application category on Google Play.

Elisa explained, the opening of a coffee shop was needed as an effort to overcome the distance of shipments that could not reach all customers. In addition, it is also to pursue the company’s business growth this year.

Elisa stated, Fore Coffee is ambitious to make it easier for Indonesians to get good quality coffee in a practical way.

Technology also helps the company to record the patterns or habits of its customers in ordering coffee. The pattern recorded from the application can be used to improve the delivery system and determine the type of product.

Source: Ministry of Industry Republic of Indonesia