Since its introduction to the islands at the end of the 17th century, coffee has played a vital role in the economy of Indonesia.
Indonesia is the fourth largest exporter of coffee in the world. Notably, its island of Java has become one of the most recognisable colloquialisms for coffee – irrespective of the coffee’s actual origins.
Until recently, domestic consumption remained relatively low, as many Indonesians prefer tea. However, the rise of cafe culture and the changing consumption patterns of younger generations is seeing coffee rise in popularity.
For the first time in the country’s history of coffee production, 2019 saw the beans held back for domestic markets outweigh those exported to other nations. For roasters in the neighbouring country of Australia, the rising popularity of specialty coffee in Indonesia opens up many opportunities to expand.
To learn more about the boom in Indonesia’s coffee scene and how Australian coffee roasters can benefit, I spoke with the cofounder of Expat Roasters, Shae MacNamara.
Growing coffee consumption in Indonesia
The change in Indonesia’s coffee market may have been helped, in part, by the successful introduction of the Starbucks coffee chain.
As of 2022, there are 487 Starbucks stores located across the Indonesian islands. That said, it isn’t just big chains who have succeeded in replicating Western coffee culture in the country.
Notably, the majority of coffee consumers prefer to support locals in fusion shops. These shops retain the traditional indigenous coffee culture, while borrowing aspects from the West.
Shae’s aim at Expat Roasters is to foster the coffee and barista community in Bali, and he has spent seven years working within the coffee industry in Indonesia.
“I’ve seen it grow so much,” says Shae, who is also the head barista at Expat Roasters. “From an instant and kopi tubruk driven culture into a much bigger range of coffee being consumed and accepted by the market. That said, traditional coffees still play a big part.”
Kopi tubruk is a traditional Indonesian-style beverage made from boiling finely ground dark roast coffee with solid sugar. This results in a thick drink that is very similar to Turkish coffee.
“I would say the industry is now being driven by the growth in the es kopi susu market,” Shae says. Es kopi susu refers to ice coffee served with milk and brown sugar. In some cases, it could be considered similar to cold brew coffee.
The move to barista-prepared pour overs and espresso-based milk drinks is predominantly taking place in the developing middle class – which is steadily growing along with the nation’s GDP and love affair with specialty coffee.
“Coffee is consumed day and night by all age groups,” Shae says. “The older generations still prefer traditional instant coffee and kopi tubruk, but the younger generation – those under 35 years of age – are driving the iced coffee market.”
He adds that the specialty coffee market is sitting in a more affluent middle age group.
Research conducted by the United States Department of Agriculture (USDA) confirms domestic consumption has risen to 144% more than that of its Australian neighbours, and 28% more than the UK.
What are the opportunities for Australian roasters?
Australian coffee professionals are in a unique position to profit from the booming Indonesian market.
They can combine the benefits of their geographical location with their experience of a well-established coffee industry and culture.
Shae agrees the proximity and ease of travel between Australia and Indonesia makes the country the best candidate to tap into the opportunities in the emerging market.
Notably, the Indonesian specialty scene is learning a lot from the deep roots of its Australian cousin.
“Australia is still a leader in the specialty coffee market,” Shae says. “So being at the forefront of the industry is great. Indonesia is becoming more saturated with roasters, however, the standards and trends are often not at the same level as other parts of the world.”
As bellwethers of the global coffee scene, it is logical for Australia to share the benefits of its experience: a sentiment to which Shae can relate.
“I think the standard of coffee in Australia and the knowledge around roasting makes it the best in the world. Australia not only sets trends but also the standards for a lot of the world.”
With the growing domestic coffee scene in Indonesia, this is the ideal time for Australian roasters to expand north-west.
The key to success in this market is for roasters to keep updated on developing trends within Indonesia.
Things roasters need to consider
As with any expansion, there will be risks and pitfalls associated with entering a new market.
One of the first things roasters need to consider is whether the business has the resources and capacity required to expand.
As far back as Sun Tzu’s The Art of War, the wisdom to avoid spreading oneself too thin still holds true. Therefore, for roasters who take the leap, it is essential they research the peculiarities of the Indonesian market.
It is important to note that what consumers are demanding may not be exactly what roasters want to supply.
“There are challenges that come with doing business here. Currently, most coffee in the market and what the industry is looking for is a lower standard and cheaper style of coffee.
While the premium and specialty markets are growing, it is still a small part of the market. It can be difficult when you know coffee can taste better, but it’s not appreciated or wanted.”
It is paramount that roasters recognise the importance of catering to the demands of the current market. Roasters should embrace the eccentricities, rather than expecting it to conform to what they want it to be.
This is perfectly expressed in advice once given to Shae during his first venture into Indonesian coffee: “Indonesia won’t change for you, you need to change for Indonesia.”
AT MTPak Coffee, our Education Centre is a free resource that helps roasters stay ahead of current industry trends and learn about developments and coffee cultures in different parts of the world.
Additionally, it covers topics such as roasting, sustainability, and packaging trends to help keep roasters updated on consumer expectations.
Furthermore, we offer sustainable, high-barrier coffee packaging made from renewable materials such as kraft and rice paper, and lined with polylactic acid (PLA). Our high-quality coffee pouches will perfectly preserve the freshness and distinct qualities of your coffee.
Our recent investment in the HP Indigo 25K, allowing us to custom design and digitally print coffee packaging with just a 40-hour turnaround and 24-hour shipping time.
We can offer low minimum order quantities (MOQs) of packaging, no matter what size or material.