Indonesia Sugar Market Outlook to 2028

Indonesia Sugar Market Overview

The Indonesia sugar market reached a valuation of USD 7.5 billion in 2023, driven by increasing domestic consumption, government efforts to boost local production, and the expanding food and beverage industries. Demand for sugar remains high due to its essential use in processed foods and beverages, a segment experiencing robust growth in Indonesias economy.

The key players in the Indonesia sugar market include PT Perkebunan Nusantara (PTPN), PT Rajawali Nusantara Indonesia (RNI), PT Kebon Agung, PT Gunung Madu, and PT PG Krebet Baru. These companies dominate the market through their strong production capacities, well-established distribution networks, and focus on modernizing agricultural and refining technologies to meet growing demand.

Key sugar-producing cities in Indonesia include East Java, Central Java, and Lampung. East Java is the dominant player due to its favorable climate, fertile land, and well-established sugar plantations. The region's long-standing history in sugar production and a strong network of milling and processing facilities further cement its dominance. Lampung has also emerged as a significant sugar-producing region, driven by government initiatives to promote plantation development and investment in modern agriculture technologies.

In 2023, PT Kebon Agung installed a 1 MWp rooftop solar energy system at their sugar factory. This milestone makes Kebon Agung the first sugar company in Indonesia to adopt such renewable energy technology. The installation sets an important precedent for other companies in the industry to follow suit in promoting the utilization of solar power

Indonesia Sugar Market Segmentation

By Product Type: The Indonesia sugar market is segmented by product type into raw sugar, refined sugar, and brown sugar. In 2023, refined sugar dominated the market due to its widespread use in the food and beverage industries, driven by its longer shelf life and versatility in processing. Companies like PT Kebon Agung and PT Gunung Madu cater to this demand with significant investments in refining technologies.

By End-User: The market is segmented by end-users into industrial (food and beverage manufacturers), retail (households), and pharmaceuticals. In 2023, the industrial segment dominated the market due to the high consumption of sugar by food and beverage manufacturers. This dominance is supported by the increasing production of processed food and beverage products, which heavily rely on sugar as a key ingredient.

By Region: Geographically, the Indonesia sugar market is segmented into North, South, East, and West regions. In 2023, East Indonesia led the market due to its optimal conditions for sugarcane cultivation and a robust milling infrastructure. This regions leadership is further supported by government efforts to enhance sugarcane farming through subsidies and modernization of production facilities.

Indonesia Sugar Market Competitive Landscape

Company

Established Year

Headquarters

PT Perkebunan Nusantara (PTPN)

1950

Jakarta, Indonesia

PT Rajawali Nusantara Indonesia (RNI)

1964

Jakarta, Indonesia

PT Kebon Agung

1951

Surabaya, Indonesia

PT Gunung Madu

1975

Lampung, Indonesia

PT PG Krebet Baru

1978

Malang, Indonesia

PT Perkebunan Nusantara (PTPN): In 2023, PTPN V, a subsidiary of PTPN, received three awards at the Indonesia Digital Innovation and Achievement Awards for its successful implementation of Internet of Things (Io T) technologies. This recognition reflects PTPN's commitment to modernizing the plantation industry and improving productivity through digital transformation. The awards included Best Overall Digital Innovation and Best Digital Technology Implementation in Agroindustry, showcasing PTPN V's leadership in adopting advanced technologies to enhance operational efficiency

PT PG Krebet Baru: In December 2023, PT PG Krebet Baru collaborated with RSU Pindad to conduct CSR activities, providing health services to five surrounding villages. This initiative included health screenings and education on issues such as stunting in children, showcasing the company's commitment to community welfare alongside its business operations.

Indonesia Sugar Industry Analysis

Indonesia Sugar Market Growth Drivers

Rising Demand from Food and Beverage Sector: The food and beverage industry in Indonesia, valued at IDR 1,600 trillion in 2023, is one of the major consumers of sugar. The increasing demand for processed foods, beverages, and confectionery items has led to a significant rise in the consumption of refined sugar. With the growth of the processed food industry, sugar consumption is projected to continue rising in 2024, further driving domestic sugar production

Increasing Domestic Consumption: Consumption Growth: Indonesia's sugar consumption rose from 27.67 kg per capita in 2022 to 28.23 kg per capita in 2023. This increasing demand is driven by a growing population and changing dietary habits, particularly in the food and beverage sector.

Influence of Global Supply Dynamics on the Indonesian Sugar Market: The Indonesian sugar market is influenced by global supply dynamics, with imports accounting for a significant portion of domestic sugar supply. In 2022, Indonesia imported 5.7 million metric tons of sugar, and for 2023, the import quota is set at 4.641 million metric tons, including 3.6 million metric tons of raw sugar.

Indonesia Sugar Market Challenges

Inconsistent Sugarcane Yields Due to Climate Variability: Inconsistent sugarcane yields, particularly in regions like Central and West Java, remain a challenge for the industry. Prolonged dry seasons in 2022 and 2023 negatively affected sugarcane growth, leading to reduced harvests. The uncertainty of weather patterns presents a risk to maintaining consistent sugar production levels.

Infrastructure and Logistics Issues: The lack of adequate infrastructure and logistics in some sugar-producing regions, particularly in Sumatra and East Indonesia, has led to supply chain inefficiencies. These bottlenecks result in higher transportation costs and delays in sugar distribution, affecting the market's ability to meet rising domestic demand.

Government Initiatives in the Indonesia Sugar Market

Expansion of Sugarcane Plantations (2023): The Ministry of Agriculture launched a program in 2023 to expand sugarcane plantations by 150,000 hectares by 2025. This project, supported by government subsidies for farmers, focuses on improving raw material availability to meet rising domestic sugar demand.

Revitalization of Sugar Mills (2023): In 2023, the Indonesian government launched a program to revitalize over 30 state-owned sugar mills across Java, allocating IDR 12 trillion for the initiative. The objective is to modernize outdated facilities, improve production efficiency, and increase domestic sugar production by an additional 1.5 million metric tons annually by 2025. This initiative is crucial for reducing the countrys dependence on imported sugar and stabilizing the domestic supply chain.

Indonesia Sugar Market Future Outlook

The Indonesia sugar market is poised for growth over the next five years, driven by government initiatives aimed at achieving self-sufficiency and reducing reliance on imports. With the countrys food and beverage sector continuing to expand, domestic demand for sugar is expected to remain strong.

Future Trends

Adoption of Smart Farming Technologies: Over the next five years, the use of smart farming technologies such as precision agriculture and Io T-based monitoring systems is expected to become widespread among sugarcane farmers. These technologies will help optimize yields and reduce costs, contributing to increased productivity in the sugarcane sector.

Shift Towards Renewable Energy in Sugar Mills: By 2028, many sugar mills in Indonesia are expected to integrate renewable energy sources, such as bioenergy from sugarcane waste, into their production processes. This shift will help reduce energy costs and make sugar production more sustainable, aligning with global sustainability goals.
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