Indonesia’s soft drink industry urges policy support amid economic slowdown, falling consumer demand
The Indonesian soft drink sector calls for coordinated policies as slower growth, inflation, and reduced spending hit beverage sales.
INDONESIA – The Indonesian Soft Drink Industry Association (ASRIM) has called for coordinated and evidence-based government policies to support the beverage industry amid signs of an economic slowdown and weakening consumer demand.
The appeal was made during a recent media briefing co-hosted by ASRIM and the Center of Reform on Economics (CORE) Indonesia, where key economic indicators and sectoral performance data were presented.
CORE Indonesia’s Executive Director, Mohammad Faisal, noted that the national GDP growth forecast for 2025 is expected to slow to between 4.8 and 5.0 percent, with a downside risk of 4.6 percent. This is significantly below the government’s 5.2 percent growth target set in the 2025 state budget (APBN).
According to data from Statistics Indonesia (BPS), economic growth in Q1 2025 stood at 4.87 percent year-on-year, while the economy contracted by 0.98 percent quarter-on-quarter.
Faisal highlighted that a combination of soft domestic consumption and rising production costs is likely to place sustained pressure on consumer-oriented industries such as food and beverages.
“These indicators point to upcoming economic challenges. The impact on consumer-facing sectors, including soft drinks, could be substantial,” he stated.
The Producer Price Index (PPI) for accommodation and food services increased by 0.56 percent from the previous quarter and by 2.84 percent year-on-year, potentially pushing up retail prices and narrowing profit margins.
ASRIM Chairman Triyono Prijosoesilo reported a continued decline in soft drink consumption that began in 2023.
NielsenIQ data for March 2025 indicated a 4.4 percent contraction in non-bottled drinking water (non-AMDK) categories, reflecting shifting consumer priorities in response to inflationary pressures and falling incomes.
Faisal cautioned against the introduction of fiscal policies that could reduce consumer purchasing power. “Maintaining household spending is critical. Any new fiscal tools must be carefully designed,” he added.
Despite ongoing economic challenges, the ready-to-drink beverage segment remains an essential part of Indonesia’s fast-moving consumer goods (FMCG) landscape, although overall consumption growth has slowed.
The traditionally strong Ramadan and Idul Fitri season failed to boost sales significantly, with the Real Sales Index (IPR) for food, beverages, and tobacco rising just 1.3 percent in Q1 2025, compared to 7.5 percent during the same period in 2024.
ASRIM emphasized the need for open dialogue between industry stakeholders and policymakers to ensure that public health goals are balanced with economic sustainability and support for MSMEs within the FMCG value chain.
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