MARKET SNAPSHOT l BEEF & SHEEPMEAT

Indonesia is Australia’s largest export market for cattle and beef

Indonesia
offal and fifth largest market for boxed beef. Total red meat and
livestock export value to Indonesia in the 2020 fiscal year was
AU$1.2 billion, representing 6% of Australia’s total export value.
Indonesia possesses great growth potential thanks to its large
population with a rapidly expanding, digitally connected middle-class, steady economic growth and continuing urbanisation. Australia
is well-placed to capture opportunities in the Indonesian market, underpinned in part by close bilateral trade relations between the two
countries and particularly the entry into force of the Indonesia-Australian Comprehensive Economic Partnership Agreement (IA-CEPA)
in July 2020.

Household number by disposable income2 Meat consumption

Population1 
(thousands) per capita3
US$35,000+ US$75,000+ 2% 1%
274 284 5%
million
million 17%
3,193 552
60
kg
75%

Grocery spend4
1,139
174

A$
716
per person
2020 2024 2020 2024 2020 2024
(+4% from 2020) (+180% from 2020) (+217% from 2020)

Australian beef exports

Australian boxed beef Australian boxed beef Australia’s share of

Australian exports – value5 exports – volume6 exports – value7 boxed beef imports8
0.1% 1%

1% 1% 12%
10% Live cattle 6%
Chilled grass
Boxed beef Australia
Chilled grain Chilled
54%
Sheepmeat
Frozen grass Frozen 46% Other
countries
35% Beef offal
92% Frozen grain
Other 88%

Total A$1.2 billion Total 57,629 tonnes swt Total A$416.1 million

Australian sheepmeat exports

Australian sheepmeat Australian sheepmeat Australia’s share of Key distribution channels

exports – volume6 exports – value7 sheepmeat imports8 of Australian sheepmeat 9
1% 3%
0%

49% Chilled lamb 39%

100%
37%
Chilled mutton Lamb Retail
Frozen lamb Mutton Foodservice
50% 63%
Frozen mutton Other
58%

Total 1,725 tonnes swt Total A$15.0 million

Data source for charts: 1,2 Fitch Solutions, 3 GIRA 2020, 4 IGD 2019 (defined as the total annual grocery retail market turnover in a given year, divided by the population for the same year),
5
ABS/IHS Markit (FY 2019–20), 6 DAWE (FY 2019–20), 7 ABS/IHS Markit (FY 2019–20), 8 IHS Markit (FY 2019–20), 9 MLA market intelligence.

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 1

 Beef
CONSUMERS
• With over 85% of the population practising Islam, beef Important attributes when Indonesian consumers’
represents an important source of protein in the Indonesian Indonesian consumers select associations with beef
diet. Per capita beef consumption in Indonesia is relatively low, between meats
at around 2.9kg compared to the South-East Asia region’s
My/my family’s favourite meat The most superior meat
average of 4.7kg. However, it is growing at the fastest rate,
which is estimated to be approximately 7% year-on-year by Willing to pay a bit more for this
Easy and convenient to prepare
2024. meat

• The island of Java is home to more than 50% of the Indonesian Easy and convenient to purchase Tastes delicious
population. It accounts for approximately 70% of the country’s Can be used in many different
total beef consumption. The majority of Australian beef (about The animal is well-cared for
meals
70%) is consumed in the Greater Jakarta region.
Consistent quality standards My/my family’s favourite meat
• Beef is regarded as the most superior meat, with many strong Source: MLA Global Consumer Tracker Indonesia, 2020
associations, such as delicious taste and consistent quality
standards. Compared to neighbouring countries, beef is seen
as a more versatile meat in Indonesia.
Proportion of average serves in past seven days by protein
• Due to religious reasons, Halal is an important determinant for
beef purchases in Indonesia. Beef consumption typically spikes
during the festive seasons, particularly around the months of 17%
Ramadan and Idul Fitri. Ramadan dates are based on a lunar 8%
Beef
calendar and migrate throughout the seasons. Subsequently, Chicken
the timing for beef demand changes every year. 8% Fish
24% Seafood
• Freshness is also a significantly important factor influencing
Indonesian consumers’ purchasing decisions. Not only is beef 6% Mutton
Lamb
associated with freshness but also with safety, naturalness and Goat
quality (Source: MLA Global Consumer Tracker Indonesia, 2018).
14%
23%

Source: MLA Global Consumer Tracker Indonesia, 2020

FOODSERVICE
• Indonesia’s foodservice sector is highly fragmented, with Which type of cuisine do affluent Jakarta consumers prefer
almost 95% of the market dominated by small, local when dining out*?
independent restaurants. These restaurants typically utilise
Local 69%
fresh beef from local and Australian cattle or frozen imported
meat, including Indian buffalo meat. Japanese 62%
Chinese 42%
• Dining out is becoming an increasingly integral part of modern
Korean 26%
Indonesian life due to changing lifestyles and the growing
presence of foodservice venues. Indonesia is home to European 23%
approximately 320 shopping malls where most modern Other 21%
restaurants are located and are growing in popularity as Source: MLA Attractive Cities Study Jakarta, 2018
destinations for social interactions among many consumers. * Affluent: annual incomes of US$28,000 or above ; Multiple response

• Large cities across the country are seeing a growing number of • Tourism is also an important growth driver for the foodservice
chained restaurants including steakhouses, with HolyCow, sector. Indonesia is a popular tourist destinations in Asia,
Pepper Lunch and Yoshinoya among popular chains. New food attracting more than 15 million tourists a year, with Bali as a
hubs offering a wide range of choices from affordable to dominant destination. In conjunction with the Indonesian
premium are emerging in large cities, especially in Greater Government’s Long-Term National Tourism Development Plan
Jakarta. (RIPPARNAS) for 2010–25, the tourism sector has expanded to
• Millennials make up about one-third of the Indonesian other destinations such as Borobudur (Central Java), Mandalika
population. They are the key driving force for the foodservice (West Nusa Tenggara), Yogyakarta and the Riau Islands.
sector. In line with global trends, this consumer segment is
aspirational and more interested in experiences than Indonesia’s major hotel chains
commodity (Source: Savills Indonesia). When it comes to eating out, International chain groups Domestic chain groups
Indonesian millennials are interested in experimenting with
new food trends or cuisines from different cultures (Source: MLA
Accor 22,800 Archipelago 16,354
Attractive Cities Study Jakarta, 2018).
Swiss-Belhotel Int. 10,254 Santika Indonesia H&R 12,118
Marriott Int. 8,517 Tauzia Hotels 8,920
IHG 4,769 Metropolitan Golden Mgt. 4,773
Best Western 2,237 PT.HIN 3,509

Source: Horwath HLT, Asia Pacific Hotels & Chains Report 2018

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 2

RETAIL
• Indonesia’s retail sector is also highly fragmented, with • Online grocery retail is growing at an exponential rate, with
traditional channels making up approximately 85% of the sales value estimated to increase tenfold by 2024 (Source: IGD).
market. Online beef retail is still relatively small but growing,
• Wet markets are an important distribution channel for beef in accelerated in part by COVID-19 as more consumers are trying
Indonesia. Consumers purchase beef most frequently from wet online channels for their grocery shopping (Source: McKinsey).
markets. This is partly driven by the perceived freshness of This habit is expected to continue with the younger affluent
beef sold in wet markets and Indonesian consumers’ consumers as they are digitally savvy and favour convenience.
preferences for hot meat and their habit of cooking from fresh
ingredients purchased on the day. The majority of beef derived Indonesian grocery retail market shares and growth rates
from Australian cattle imported to the country is channelled by channel
into wet markets as hot carcases, with around 10% sold into
100
modern retail outlets.
• In Greater Jakarta, consumers generally visit multiple retail 80
channels, from modern to traditional, to purchase beef.
Australian boxed beef is sold across a range of different retail 60%

per cent (%)

channels, with supermarkets and hypermarkets being the most 60
common places of purchase.
• Indonesia is undergoing rapid urbanisation, with the number of 40
modern retail outlets increasing across the country. The
expansion of modern retail to second-tier cities such as 20
7% 8% 7% 7.4%
Surabaya, Bandung and Semarang offers a chance to further 4%
grow Australian beef beyond the Greater Jakarta region. 0
• There has been an emerging trend towards ‘modernisation’ al ce ets ets ine er
ition nien ermark ermark Onl Oth
Trad Conve y p u p
and ‘premiumisation’ in the meat retail space across Greater H S
Jakarta, driven by a number of leading meat importers and
Market share (2019) Growth rate (CARG 2019–24)
distributors opening up their own butcher shops and offering a
range of high quality meat products including both locally Source: IGD

slaughtered and imported beef products.

COMPETITIVE LANDSCAPE
• The Indonesian beef industry comprises both local production Indonesia beef imports
and live cattle and beef imports, with imports contributing to
200
approximately 70% of total beef consumption, equivalent to
about 375,000 tonnes shipped weight (swt)1. Australia and
India are the leading suppliers of beef imports to the country. 150
• Competition has intensified following the entry of Indian buffalo
‘000 tonnes swt

Other
meat and the introduction of the Indonesian Government’s Brazil
retail beef price ceiling policy2 since 2016 as part of its efforts 100 New Zealand
to stablise high beef prices and diversify beef supply sources. US
• Australia plays an important role in meeting growing demand 50
India
for quality beef in Indonesia. Combining boxed beef and live Australia
cattle exports, Australia contributes approximately 45% to
Indonesia’s total beef demand (see ‘Australian Live Cattle 0
Exports’ for more details on live exports). It remains the most 5-16 2016-17 2017-18 018-19 019-20
201 2 2
resilient trade partner, especially during the COVID-19
outbreak. Source: IHS Markit, Australian Fiscal Year

• The significant impacts of COVID-19 on the economy, tourism, • Indonesia’s allocation for Indian buffalo meat for 2020 is
foodservice, logistics and consumer incomes, as well as the around 170,000 tonnes swt, but due to COVID-19 disruptions
depreciation of the Indonesian Rupiah, have all adversely only 5,000 tonnes had been realised as at June 2020. The
affected demand for beef imports. Total beef imports in the first market is expected to see more Indian buffalo meat coming in
half of 2020 dropped 35% year-on-year to 52,300 tonnes swt during the rest of the year.
(from 81,400 tonnes swt).
• Brazil has regained access for frozen beef to Indonesia since
August 2019. Similar to Indian buffalo meat, importation of
Brazilian beef is undertaken by state-owned enterprises.
Allocation for Brazilian beef in 2020 is 20,000 tonnes swt,
however, there were no import records for the first half of the
year.
• Imports from the US and Spain have increased at rapid rates of
37% and 89% per year, respectively. US and Spanish beef
products compete with Australian boxed beef in modern retail
and foodservice channels.
1
Included beef and beef offal, 2 Ref: MoT regulation 7/2020

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 3

AUSTRALIAN LIVE CATTLE EXPORTS
• Indonesia is the largest market for Australian live cattle Australian live cattle exports to Indonesia
exports, accounting for approximately 45% of the market share.
800
Australian live cattle are estimated to represent approximately
25% of total beef consumption in Indonesia. 700
• Beef derived from Australian live cattle in Indonesia is mostly 600
utilised through wet markets – an increasingly competitive 500

‘000 head
channel due to the growing penetration of cheaper products,
400 Feeder
including Indian buffalo meat. Wet market sellers are typically
Slaughter
profit-oriented, and due to price competitiveness, there are 300 Breeder*
more of them favouring frozen Indian buffalo meat over fresh
200
beef for better profit margins (Source: APDI/MLA Survey, 2018).
100
• Economic impacts of the COVID-19 pandemic, combined with
fluctuating cattle prices from Australia and the weakening 0
Indonesian Rupiah have softened Indonesia’s demand for 5-16 2016-17 2017-18 018-19 019-20
201 2 2
cattle imports. Shipments for the year-to-August declined 27%
Source: DAWE
year-on-year to 336,313 head (from 458,148 head). * included breeder and productive cattle as per DAWE’s classification

• As part of the Indonesian Government’s effort to increase local

beef production, the government imposed a ‘5% breeder-
feeder’ import policy, which requires importers to import 5%
breeders on total feeders imported. However, the policy has
been temporarily halted due to COVID-19.

AUSTRALIAN BEEF OFFAL EXPORTS

• Beef offal is also popular in Indonesian cuisine, widely used Indonesia beef offal imports
across the household, foodservice and manufacturing sectors.
80
Tongue is among popular cuts used in a variety of Indonesian
dishes, while tongue root is widely used to make processed 70
foods. 60
• Indonesia is the largest export market for Australian beef offal 50
‘000 tonnes

products, with export volumes growing constantly at a healthy Other

rate of 17% annually. 40 New Zealand
• Overall demand for beef offal has surged in recent years. 30 US
Australia, the US and New Zealand are key suppliers of beef Australia
20
offal to Indonesia. Imports from Spain have also grown rapidly,
10
albeit off a small base.
0
5-16 2016-17 2017-18 018-19 019-20
201 2 2
Source: IHS Markit, Australian Fiscal Year

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 4

Market access overview
Trade agreements Import tariffs Competitors Volume restrictions Technical access
ASEAN – Australia New Boxed beef – 0% India (buffalo meat): Volumes managed Highly regulated
Zealand Free Trade except 2.5% for frozen India-ASEAN FTA. by the Indonesian market, with complex
Agreement (AANZFTA) with bone-in, removed 5% tariff Government’s import import conditions and
Indonesia-Australia by 2023 Brazil: No FTA. 5% tariff permit system regulations
Comprehensive Live cattle – 0% The government
Economic Partnership 0% for male cattle within controls type of meat
Agreement (IA-CEPA) quota (281,215 head, and offal products that
reset on 1 January 2021), can be imported into
2.5% out of quota; 0% the country
for all other product lines

Best access Major challenges

Source: Trade agreements, DFAT, WTO

Australian beef exports to Indonesia – summary table

Volume – in tonnes swt 2019–20 % of 2018–19 % of five-year average % of change 2019–20
total total (2014–15 to total vs five-year average
2018–19)
% in tonnes swt

Total 57,629 54,417 52,352 10 5,276

Chilled 3,986 7 4,502 8 3,743 7 6 243
Storage
Frozen 53,643 93 49,915 92 48,609 93 10 5,034
Grassfed 56,693 98 53,324 98 51,357 98 10 5,337
Meat type
Grainfed 936 2 1,093 2 996 2 -6 -60
Chilled grassfed 3,457 6 4,042 7 3,209 6 8 248
Chilled grainfed 529 1 460 1 534 1 -1 -5
Storage/meat type
Frozen grassfed 53,236 92 49,282 91 48,148 92 11 5,089
Frozen grainfed 407 1 633 1 462 1 -12 -55
Source: DAWE

Value – in A$ 000 % in A$ 000

Total 416,057 322,373 300,296 39 115,761

Chilled 49,448 12 48,459 15 42,757 14 16 6,691
Storage
Frozen 366,609 88 273,915 85 257,539 86 42 109,070
Source: ABS/IHS Markit

Volume – by major cut (in tonnes swt) % in tonnes swt

Manufacturing 17,364 30 13,674 25 22,898 44 -24 -5,533

Thick flank/knuckle 7,187 12 7,536 14 5,018 10 43 2,169
Brisket 6,741 12 7,678 14 4,312 8 56 2,430
Other 26,336 46 25,529 47 20,125 38 31 6,211
Total 57,629 54,417 52,352 10 5,276
Source: DAWE

Australian beef offal exports to Indonesia (in tonnes swt) % in tonnes swt

Manufacturing 13,320 36 11,286 33 6,893 32 93 6,427

Heart 6,169 16 5,461 16 3,572 17 73 2,598
Lungs 4,903 13 3,508 10 1,964 9 150 2,940
Other 13,121 35 13,945 41 8,838 42 48 4,283
Total 37,513 34,201 21,266 76 16,248
Source: DAWE

Value of Australian beef offal– in A$ 000 % in A$ 000

Total 120,779 102,365 56,119 115 64,660

Source: ABS/IHS Markit

Australian live cattle exports to Indonesia

Volume – in head 632,188 663,363 602,943 5 29,245

Value – in A$ 000 650,427 687,856 614,005 6 36,422
Source: DAWE, ABS

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 5

 Sheepmeat
CONSUMERS
• Sheepmeat is a niche protein in the Indonesian diet, generally Reasons Indonesian consumers don’t buy lamb
consumed on special occasions, especially during religious
festivals. Demand for sheepmeat in Indonesia typically spikes Don’t know how to cook lamb
during the Islamic festive seasons, particularly around the Didn’t grow up eating lamb
months of Ramadan and Idul Fitri. Lamb is not available where I shop
• However, sheepmeat remains unfamiliar to many Indonesian Don’t cook at home, but eat it when dining out
consumers, with ‘don’t know how to cook the meat’ being the Don’t like the smell of lamb
key barrier to purchasing and cooking sheepmeat at home.
Don’t like the taste of lamb
• A small portion of consumers (26%) say they do not cook Lamb is too expensive
sheepmeat at home but do consume it when they dine out.
Don’t like to eat baby animals
• Affluent millennials (aged 25–40 in particular) tend to Lamb is too fatty
appreciate sheepmeat more than other demographic groups.
This consumer segment shows a stronger interest in eating 0 5 10 15 20 25 30 35 40
sheepmeat and in learning how to cook more exciting %
sheepmeat dishes than other segments (Source: MLA Attractive Cities Indonesia average Global average
Study Jakarta, 2018). Some indicate that they would try to buy and Source: MLA Global Consumer Tracker Indonesia, 2019

cook sheepmeat if they have tried it out in a restaurant, are

given a free sample or provided with recipe ideas.

FOODSERVICE
• Foodservice remains a strategic channel to grow sheepmeat What motivates affluent Jakarta consumers to eat
consumption as consumers prefer eating sheepmeat out of sheepmeat* when they dine out?
home rather than buying and cooking it. In addition, eating
experiences from restaurants may inspire consumers to try Variety of dishes offered 81%
cooking sheepmeat at home. Enjoy it 79%
• Tourism is another important factor driving growth for Better value for money 72%
sheepmeat sales in foodservice. Enjoy certain dishes that are difficult to cook at home 69%
• Australian sheepmeat exports to Indonesia are typically Difficult to cook at home 68%
utilised in mid to high-end restaurants. Don't like the smell permeating the home 63%
Difficult to find to cook 61%
Source: MLA Attractive Cities Study Jakarta, 2018
*includes goatmeat

RETAIL
• Indonesian consumers purchase sheepmeat from multiple retail Top five factors influencing Indonesian consumers’ lamb
venues, including both modern retail outlets and traditional purchase decisions*
markets. However, modern retail is the main place of purchase for
1 Halal certification
imported products.
• Roast, grill, barbeque, and soup are the most popular ways of 2 100% natural
cooking lamb at home (Source: MLA ASEAN Attractive Cities Study Jakarta, 3 Quality grading or guarantee
2018).
4 Use/sell by date
5 Organic
Source: MLA Global Consumer Tracker Indonesia, 2017
*when they are selecting lamb at a retail outlet

COMPETITIVE LANDSCAPE
• Indonesia has a relatively large local sheep and goat Indonesia sheepmeat imports
population in the South-East Asian region, with about 17.8
3,000
million head of sheep supplying 97% of total sheepmeat
consumption in the country (Source: BPS, GIRA). 2,500
• Australia is the key supplier of imported sheepmeat to 2,000
tonnes swt

Indonesia. New Zealand has a very small presence in 1,500 Other

Indonesia, however, there haven’t been any imports from New 1,000 Australia
Zealand in the last two years due to supply constraints and
500
increased demand from other markets such as China.
0
5-162016-172017-18 018-19 019-20
201 2 2
Source: IHS Markit, Australian Fiscal Year

MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 6

Market access overview
Trade agreements Import tariffs Competitors Volume restrictions Technical access
ASEAN – Australia New Under IA-CEPA: 0% New Zealand: 5% for Zero Indonesia maintains
Zealand Free Trade except 2.5% for frozen most products import regulations in
Agreement (AANZFTA) products (excluding accordance with Halal
Indonesia-Australia frozen lamb), removed requirements
Comprehensive by 2023
Economic Partnership
Agreement (IA-CEPA)

Best access Major challenges

Source: Trade agreements, DFAT, ITC

Australian sheepmeat exports to Indonesia – summary table

Volume – in tonnes swt 2019–20 % out 2018–19 % out five-year average % out change 2019–20
of total of total (2014–15 to of total vs five-year average
2018–19)
% in tonnes swt

Total 1,725 2,211 2,328 -26 -603

Chilled 23 1 25 1 27 1 -17 -5
Storage
Frozen 1,703 99 2,186 99 2,301 99 -26 -598
Lamb 876 51 1,045 47 1,071 46 -18 -195
Meat type
Mutton 850 49 1,166 53 1,258 54 -32 -408
Chilled lamb 23 1 25 1 27 1 -17 -5
Chilled mutton - 0 - 0 0.4 0 -100 0
Storage/ meat type
Frozen lamb 853 49 1,021 46 1,044 45 -18 -190
Frozen mutton 850 49 1,166 53 1,257 54 -32 -408
Source: DAWE, figures are rounded

Value – in A$ 000 % in A$ 000

Total 14,961 17,080 14,737 2 224

Lamb 9,375 63 11,442 67 9,287 63 1 88
Storage
Mutton 5,586 37 5,638 33 5,450 37 2 136
Source: ABS/IHS Markit

Volume - by major cut (in tonnes swt) % in tonnes swt

Leg 406 46 529 51 466 44 -13 -60

Carcase 141 16 108 10 153 14 -8 -13
Lamb
Rack 127 14 172 16 184 17 -31 -57
Other 202 23 235 23 267 25 -24 -65
Total 876 1,045 1,071 -18 -195
Carcase 621 73 868 74 968 77 -36 -347
Rack 105 12 44 4 22 2 374 83
Mutton
Leg 75 9 159 14 172 14 -56 -97
Other 48 6 95 8 95 8 -49 -47
Total 850 1,166 1,257 -32 -408
Source: DAWE

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MLA INDUSTRY INSIGHTS BEEF AND SHEEPMEAT INDONESIA November 2020 7