Indonesia is the world’s fourth largest coffee producer and exporter, after Brazil, Vietnam, and Colombia. However, domestic consumption of coffee has until recently remained low, as Indonesians historically preferred tea over coffee. In recent years, coffee has increased in popularity, fueled by the rise of café culture and the changing consumption patterns of the younger generation.
Coffee production and exports in Indonesia
Around the world, the word java is synonymous with coffee. However, in Indonesia, the island of Sumatra is where the coffee is mostly to be found, making up more than 60 percent of the coffee crop growing areas in the country. Almost all of the coffee grown in Indonesia come from smallholder estates scattered around the main coffee-growing islands of Sumatra, Java, Flores, and the Bali islands. More than 70 percent of the coffee grown in Indonesia were of the Robusta variety, which has a lower market value than Arabica beans. Robusta beans, known for its strong and bitter aftertaste, are mainly used in instant coffee production, as well as in espresso and coffee blends.
Rise of café culture and its impact on domestic coffee consumption
The increase in domestic consumption can be attributed to café culture taking root, especially among the younger urban dwellers. With increased affluence and exposure to international consumption trends, younger Indonesians have embraced the fourth wave of coffee culture. Locally sourced, quality coffee, as well as iced milk coffee-based drinks in a wide variety of flavors suited to local tastes, are now in trend. With a Muslim-majority population, coffee shops became the go-to hangout spot instead of bars. In 2019, local coffee chains overtook global brands in terms of market presence.
The COVID-19 pandemic and the future of the Indonesian coffee market
The coffee market in Indonesia could look markedly different in 2020 and beyond, however, due to the impact of the COVID-19 pandemic. The disruptions to the global trading infrastructure would most certainly affect Indonesia’s coffee exports. The economic impact of COVID-19 could also leave the Indonesian consumer questioning on whether to splurge on that next cup of coffee. However, with an average spend of less than 14 U.S. dollars a month on coffee, it might well be a luxury that many could still afford.
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