National Economy Slows Down, Light Drink Industry Faces Pressure

Light drinking industry (between)

JAKARTA Indonesia is faced with a slowdown in the national economy, this is reflected and confirmed by a number of institutions and initial data from the Central Statistics Agency (BPS).

Meanwhile, Indonesia is estimated to have economic growth in 2025, in the range of 4.8 percent to 5.0 percent, even potentially heading 4.6 percent-4.8 percent in certain scenarios, slightly below the target of the State Budget of 5.2 percent.

To note, the Central Statistics Agency (BPS) reported that Indonesia's economic growth in the first quarter of 2025 only reached 4.87 percent year-on-year (YoY), slowing down compared to the same period last year of 5.11 percent (yoy).

BPS data also shows that the accommodation sector's Manufacturer Price Index (IHP), the supply of food and beverages experienced the highest price pressure, in the first quarter of 2025 it rose 0.56 percent to the fourth quarter of 2024 (qtq) and rose 2.84 percent to the first quarter of 2024 (yoy) which could have an impact on consumer prices and the margin of business actors in the sector in 2025.

Executive Director of CORE Indonesia Mohammad Faisal stated that this initial data shows that there are economic challenges that we need to anticipate together.

According to him, weakening domestic demand can have implications for consumption sectors such as food and drinks. In addition, the industry also faces cost pressures in terms of production.

"Therefore, it is important for the direction of policy to focus on maintaining people's purchasing power and carefully consider the implementation of new fiscal instruments so that they are in line with efforts to recover the economy," he said in his statement, Wednesday, May 14.

Faisal said that based on NielsenIQ data, which projects that the fast-food beverage sector will continue to be the main driver of the growth of the fast-food consumption sector (FMCG) in Indonesia.

According to him, although consumers are more careful in spending, they still consider ready-to-eat beverage products as an essential category and contribute significantly to total FMCG spending. However, rising prices (32 percent) and weakening the economy (27 percent) are the main concerns of the community.

The Association of Light Drinks Industry (ASRIM) revealed that weakening in the soft drink industry has actually shown symptoms since 2023, where it noted a decrease in sales volume in several categories of non-AMDK drinks.

"This situation became more challenging in early 2025, along with the realization of national economic growth in the first quarter of 4.87 percent which was below expectations. Market data in March 2025 from Nielsen confirmed that the non-AMDK beverage sector was still contracting by around 4.4 percent. This is a strong signal that the industry needs conducive policy support to survive and grow again," said ASRIM Chair Triyono Prijosoesilo.

He conveyed that based on CORE Indonesia data, Ramadan and Eid, which usually raise public consumption, this year is not visible. On the other hand, the Real Sales Index (IPR) for the Food, Drink and Tobacco group only grew 1.3 percent in the first quarter of 2025, far below last year's growth which touched 7.5 percent.

He said that this weakening is feared to have an impact on people's purchasing power and the light beverage industry sector, so that appropriate policy synergies are needed to maintain stability.

Triyono emphasized that his party believes that open dialogue and collaboration between the government and industry players are becoming more crucial.

He added that his party is ready to become a constructive partner for the government, provide industrial data and perspectives in a transparent manner, to jointly formulate policies that are not only effective in achieving public health targets, but also carefully consider their impact on industrial sustainability, employment, and the MSME ecosystem which is an important part of our supply chain.

"Compensive and data-based approach will produce the best solution for all parties," he said.

Director of the Investment, Tobacco Products and Refreshing Materials Industry of the Ministry of Industry, Merrijantij Punguan Pintaria, emphasized the government's commitment to maintaining the business climate of the food and beverage sector through relevant and adaptive policies, including fiscal and non-fiscal facilitation.

"The government also always reviews the impact of implementing the policy, is open to dialogue, and learns the best transitional schemes in order to maintain the performance and competitiveness of the industry," he said.

He conveyed that his party believes that through collaboration and mutual understanding between the government and business actors, the light beverage industry can continue to grow sustainably and contribute positively to the national economy through the challenges of 2025.