Coffee shops in Indonesia are lively and noisy. They serve as perfect spots for “nongkrong,” where people come together, sip coffee, and enjoy each other’s company.
For Indonesians, it’s more than just enjoying coffee. Nongkrong involves gathering with friends, talking, and sharing stories. It is about spending hours discussing everything and nothing at all—often over coffee. While foreigners might find it surprising, Indonesians cherish these unimportant conversations. The joy lies in the camaraderie, laughter, and shared moments.
Indonesia is currently witnessing the Fourth Wave of coffee business evolution. Ready-to-Drink (RTD) packages and grab-and-go stores are significantly reshaping the coffee experience for Indonesians. Coffee shops in Indonesia have tripled in number. In 2022, there were approximately 8.870 cafés and bars in Indonesia, according to a report by Hanadian Nurhayati-Wolff in 2023. And as the trend continues, foreign brands can tap into this expanding market.
Indonesia’s coffee culture is a blend of tradition and modernity, fueled by passion and camaraderie. Indonesia ranks as the fourth-largest coffee producer and the fifth-largest coffee consumer globally, according to a retail data report by Deloitte in 2023. The coffee industry in the country has seen significant growth, with a surge in retail coffee businesses and evolving consumption patterns.
The retail coffee market in Indonesia is dynamic, with several emerging trends. One of the results of Fourth Wave evolution is Indonesian customers are increasingly seeking high-quality, specialty coffee. In addition to that, sustainability focused business practices such as ethical sourcing and more eco-friendly retail design and packaging are increasingly in demand and becoming a consideration for customers when they choose a coffee place to nongkrong at.
Adoption of tech-enabled coffee chains is also on the rise. Companies like Flash Coffee (a Singaporean chain) and Fore Coffee are leveraging technology, namely mobile based application to make and track orders online. These proprietary mobile applications appear to be gaining traction among consumers. According to a survey by Deloitte, more than 38% of their respondents are familiar and have used such mobile applications between 1 and 10 times for the purchase of products. Another sizeable proportion, 19% of them, have used such mobile applications more than 10 times.
This evolution of customer behavior presents exciting opportunities for foreign companies looking to invest. There are several points of interests that foreign investors can tap into;
- Supply Chain Enhancement: Investing in coffee plantations, processing facilities, and logistics can improve supply chain efficiency.
- Branding and Marketing: Foreign companies can leverage their expertise to build strong coffee brands.
- Technology Adoption: Innovations in coffee production, distribution, and retail can create competitive advantages. Proprietary mobile applications for tech-enabled coffee retail chains are increasingly popular as well.
- Export Potential: Indonesia’s coffee exports offer growth potential, especially for specialty coffees and “slow coffee” bars.
In summary, Indonesia’s coffee industry is ripe for investment, and foreign companies can tap into its vibrant market by understanding local dynamics, embracing sustainability, and leveraging technology.
As Indonesia ranks as the fourth-largest coffee producer and the fifth-largest coffee consumer globally, foreign brands have an excellent opportunity to invest in this dynamic market, where coffee is more than a beverage—it is a way of life.