INDONESIA October 2019
 
PepsiCo exiting Indonesian market due to excessive regulatory restrictions
 
US-based PepsiCo has officially announced that it no longer sells its beverages in Indonesia. This comes after its decision to end its agreement with Indonesian partner, PT Anugerah Indofood Barokah Makmur (AIBM) with effect from 10 October 2019.
According to Thomas Darmawan, a representative from Indonesian Food and Beverage Producers Association (GAPMMI), the increasingly stringent regulations on the beverage industry was one of the reasons PepsiCo decided to leave Indonesia. He has identified 4 regulations namely the law on water resources, the required nutritional labelling from the Indonesia Food and Drug Monitoring Agency (BPOM), the Halal certification, and the prohibition of plastic packaging for drinks as reasons for the exit.
Darmawan elaborated that one of regulations that is currently hampering the development of the beverage industry is the BPOM Regulation No.22 of 2019 concerning labelling information on the nutritional values of processed food. The regulation requires producers to include information about salt, sugar, and fat intake on food and beverage labels. In addition, the food and beverage industry is also required to have a Halal certification from the Indonesian Ulema Council (MUI) starting from 7 October 2019.
An ongoing dialogue in the Indonesian parliament on the imposition of excise tax rates on carbonated drinks could have also deterred PepsiCo to supply its products to the Indonesian market.
In contrast, the Industry Ministry Director General of Food & Beverages Industry, Abdul Rochim added that the exit of PepsiCo from Indonesia will not affect the domestic beverage industry and he claimed that Pepsi’s share of the soft drink segment is not that big compared to existing players in the market. He added that Pepsi decided to leave after termination of business contracts from its partners. Nevertheless, the government is now looking into the issues raised to find viable solutions for beverage manufacturers like PepsiCo.
In the first semester of 2019, the Indonesian beverage industry achieved Rp1429.74 billion (US$102 million) from domestic investments and US$68.72 million derived from foreign direct investments.
 
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