Indonesia - Conquer the waves
Consumers under pressure
The domino effect of global inflation, an energy crisis and the war in Ukraine, meant that by early September the Indonesia Government decided to raise fuel prices, followed by public transport fares - which are also the biggest contributor to inflation in Indonesia. The increase in fuel costs has had a significant second-round effect on necessities and food prices. Most Indonesian consumers (94%) say they have been impacted by the price increases and they are now more critical and selective when making purchases, especially big-ticket purchases and leisure activities[1]
Indonesian consumers prefer local brands
Local brands dominate Indonesia consumers' preferences, as revealed in our Ipsos Global Trends report which finds most Indonesians are now more likely to choose to buy local products over global products (87%). More than half of Indonesian consumers (59%) do not agree that global brands make better products than local brands;[2] the current price increases have become another opportunity for these local brands.
The competition between global and local brands is no longer on the price and quality of the products, but also on how they engage with consumers, and how their brand equity evolves
Consumers are pushed to compare the value for money of one vs. the another before buying and it’s safe to assume this will be an enduring trend. In 2023, the existence of local brands will provide continued challenges for foreign/international brands. The competition between global and local brands is no longer on the price and quality of the products, but also on how they engage with consumers, and how their brand equity evolves.
The political dynamic - Presidential Election 2024
Indonesia's next presidential election will take place in February 2024 and people are not fully prepared for it. However, the major political parties have started to manoeuvre early to jostle with their candidates well ahead of the election.
2023 will be a difficult time for Indonesia. The global economic situation brings the threat of a recession looming over Indonesia's economic growth, already under pressure from the energy crisis, unemployment, and poverty & social inequality.
Moreover, the political campaign, which of course will entail much agenda-setting from each candidate, provides a new trigger to prompt upheaval in society, bringing with it the risk of further domino effects.
Seoprapto Tan
Learn more about how Indonesia emerged from the pandemic and how digitalisation and local brands have dominated consumer preferences in Flair Indonesia 2022: Connecting the Dots.