SOFT DRINK INDUSTRY GROWTH SLOWS DOWN

Soft Drink Industry Association (ASRIM) believes that a variety of government policies and world economic turmoil become a major factor of the slowing growth of the industry. General Chairman of ASRIM, Triyono, in Jakarta, Monday (October 5), stated that the government cuts fuel subsidies and diverst it to infrastructure cost. It was considered good, but would sacrifice people’s purchasing power, and manufactures are willing to cut their margins, the important thing is that volume of sales is maintained.

Triyono revealed that last year the volume of soft drink production is recorded at 31,525 billion liters with the largest contribution from bottled drinking water as much as 25,606 billion liters, tea (2.13 billion liters), juices (1.16 billion liters) and others. Cumulatively, the growth performance of the industry last year reached double-digit or 11.3% compared with 2013. Triyono is pessimistic that the realization of growth in 2015 was able to reach double digits considering the performance of the first half of this year.

ASRIM recorded that soft drink industry growth is maximum 3% in line with the deterioration of people’s purchasing power accompanied by rising production coast. He said that looking at the performance of various segments until the first half of 2015 that reaches a positive value, it is considered good. According to him, throughout the first half of 2015, the average performance of various types of soft drinks did not experience growth, only bottled water segment which grew double digit and tea which grew 2%-3%.

In line with the growth of the nation economy, and with the support of purchasing power, the average industrial growth from 2005-2014 was approximately 12.5%. Total production in 2005 were 10.925 billion liters, while in 2014 increased to 20.599 billion liters. Triyono said due to the decline in purchasing power, many producers have chosen to hold prices, while production cost increase. As a secondary consumer product, it is reasonable that the soft drink industry is affected. In addition to bottled water and tea, other types of drinks decreased. For example, instant coffee, which is 2-digit minus.

Triyono added that with a slowdown in growth, the government is asked to quickly actualize infrastructure development plan, which until now will affect 120,000 direct workers working in this sector. In addition, 60% of soft drink sales is sold by traditional retailers, including small and medium industries.

Based on these conditions, Triyono said that soft drink industry entrepreneurs strongly rejected the plan to impose excise tariff for soft (carbonated) drinks this year because it can threaten the performance of the domestic soft drink business. He said that the imposition of excise duty on soft drinks will erode the revenue of the industry. If the imposition of excise tariff reaches IDR 3,000 per liter, he said, it will increase soft drink price by 25%.

Triyono believes that soft drinks do not cause a negative impact, both in terms of moral and health, so that carbonated drinks need not be taxed. In addition, he said, the imposition of excise duty on soft drinks will kill large and small & medium beverage industries. According to him, the reason of the imposition of  excise tariff is based on Law No. 39/2007 which is an amendment to Law No. 11/1995 on Excise. (ST) (E)

Business News - October 7, 2015