Indonesia is another of Asia’s wine import hot spots. According to International Wine and Spirit Research, imports to the world’s fourth most populous nation and the world’s largest Muslim-majority country grew 114 percent from 2006 through 2011.
Although volumes are still only a fraction of the imports seen in more mature markets, real import volumes are suspected to be much higher with punitive importation tariffs encouraging a flourishing black market that many observers believe dwarfs declared customs figures.
Indonesian demand for wine is driven by a thriving tourist industry in places such as Bali and a burgeoning middle class across the country’s metropolitan areas. “Wine has a lot of cache socially in Indonesia, as in the rest of Asia, and consumption is only going to rise in the future,” said Richard Irving, marketing manager at PT Dima International Wines.
The challenge in Indonesia for importers is remaining competitive when the tax burden is more than $7 a bottle. This can mean a bottle of wine that might cost $6 to $10 in its origin market can cost $20 to $30 in Indonesia. A standard bottle of Jacob’s Creek chardonnay white wine, for example, would usually be priced in a restaurant at $40 to $75 in Bali, and even in a supermarket can cost as much as $30.
Parent company Dima Group, a longtime distributor of wines in Indonesia, recently launched a joint venture to import high-quality grapes from Australia’s renowned Margaret River wine-growing region to produce Indonesia’s first “ultra-premium” wine brand called Cape Discovery. The project is designed to plug the gap in the middle to low end of the market created by high import tariffs. By importing the grapes into Bali, Cape Discovery is not subject to the import duty on alcohol and the saving on importation and production overhead is passed on to the customer.
The company is also better able to support and control its supply chain to ensure storage and transportation is conducted according to strict temperature-control criteria, a process not always possible, or even attempted, by importers of low-quality imports. “Because we produce locally, we don’t have to worry about our product sitting in dock or outside a warehouse going off in the sun,” Irving said.
“This is also one of our advantages in being part of the Dima Group, which has a large distribution business for Guinness and other imports,” he said. “They have a fleet of refrigerated trucks, a brand new warehousing facility in Jakarta purpose-built for wine storage and distribution, and another warehouse facility under construction in Bali.”
Getting the distribution right in Indonesia is critical because temperatures are so hot that even leaving a warehouse door open can affect quality, Irving said.
The real advantage of producing in Indonesia could become more apparent in 2015 when the ASEAN Economic Community is scheduled to open trade by removing most cross-border tariffs and creating a single market of some 600 million consumers.
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