Indonesia’s food and beverage (F&B) industry, a core pillar of national economic activity contributing 7.23% to GDP in 2024, is projected to face stagnation in 2025. Industry leaders now expect growth to plateau around 5%, a decline from the earlier 6% target. Several key dynamics underpin this outlook: weakening domestic purchasing power, particularly in the beverage segment, compounded by external disruptions such as the imposition of U.S. tariffs.
This article presents a critical review by CRIF Indonesia of the industrial trajectory through end-2025, exploring structural and policy gaps, external shocks, and the necessary realignment of public and private sector strategies. The analysis draws from sectoral GDP contributions, trade dynamics, government performance indicators, and strategic policy frameworks.
1. Domestic Pressures and Weakening Consumer Demand
According to CRIF Indonesia’s consumption index tracking, the beverage segment contracted by 1.3% in early 2025, a concerning signal for an industry heavily reliant on volume growth and discretionary spending. Declining household purchasing power, driven by stagnant wage growth and rising living costs, is a central factor.
While food products remain resilient due to their essential nature, the industry’s beverage arm is more vulnerable to economic shocks. Smaller players in ready-to-drink, carbonated, and lifestyle beverage categories are already experiencing margin erosion due to promotional dependency and slower turnover.
This demand compression underscores the F&B sector’s vulnerability to broader macroeconomic fluctuations, emphasizing the need for producers to reassess their pricing structures, packaging formats, and consumer segmentation strategies.
Source: Central Bureau of Statistics in Indonesia (BPS), reprocessed by CRIF.
Indonesia’s food and beverage (F&B) industry, which once experienced consistent growth in the range of 7–9% annually prior to the pandemic, is entering a more cautious phase. CRIF Indonesia forecasts a moderated growth of 5.00% in 2025, falling short of the 5.90% rebound projected for 2024. This stagnation is primarily driven by a decline in domestic purchasing power, particularly in the beverage segment, which contracted 1.3% in early 2025. As inflation and household budget constraints persist, consumer behavior is shifting toward more affordable and essential goods, placing additional pressure on producers to manage volumes without sacrificing margins.
Source: Central Bureau of Statistics in Indonesia (BPS), reprocessed by CRIF.
In 2024, the Agriculture, Forestry, and Fisheries sector recorded the highest contribution to Indonesia's GDP at 13.18%, followed by Wholesale and Retail Trade (excluding vehicles) at 11.41%, and Construction at 10.54%.
The Food and Beverage Industry secured 5th position, contributing Rp1,531.4 trillion or 7.23% to the national GDP. This underscores the sector's significant role in supporting domestic consumption and economic resilience, despite mounting challenges such as rising input costs and trade barriers. Its contribution is greater than that of other important sectors like Transportation and Warehousing (6.41%), Information and Communication (4.53%)
These figures show that the food and beverage industry continue to be a vital pillar of the Indonesian economy, both as a value-adding sector and a major employer.
2. Trade Barriers and the Impact of US Tariffs.
The U.S. government has officially confirmed that a 32 percent import tariff on selected Indonesian products will take effect starting 1 August 2025, despite Indonesia’s earlier diplomatic efforts to seek exemption. This development intensifies the pressure on Indonesia’s food and beverage (F&B) sector, which in 2024 contributed IDR 1,531 trillion or 7.23% to national GDP, making it the fifth-largest contributor to the economy. With the policy now finalized, temporary uncertainty has shifted into a confirmed structural challenge for export-oriented businesses.
CRIF Indonesia underscores that the enforcement of will face immediate price disadvantages compared to similar products from Vietnam, Thailand, and Mexico—countries that enjoy more favorable trade arrangements with the United States. This not only jeopardizes existing contracts but may also shrink market share for Indonesian exporters in one of their most valuable destinations.
Using CRIF’s export impact model, a sustained tariff of 32% is projected to reduce Indonesia’s F&B exports to the U.S. by % in the fourth quarter of 2025. The impact will be especially acute for small and medium enterprises (SMEs), many of which lack the scale or resources to diversify markets or renegotiate supply agreements quickly. As the tariff becomes a reality, the industry must now shift from contingency planning to immediate execution of mitigation strategies, including cost restructuring, regional market expansion, and accelerated input localization, to navigate this externally driven disruption.
3. Industrial Strategy and Missed Policy Opportunities
A. The Need for Business Realignment
CRIF Indonesia recommends that companies adopt several proactive strategies to mitigate both domestic and international pressures:
- Expand Export Destinations
Reducing dependency on imported inputs is vital. This can be done by investing in partnerships with domestic suppliers, contract farming, and supporting cooperatives that produce organic and halal-certified ingredients.
- Reposition Product Lines
Businesses should reformulate and repackage products to reflect evolving consumer preferences. Items with reduced sugar, plant-based ingredients, and clean-label claims continue to show strong demand in both domestic and regional markets.
B. Policy Gaps in 2025 Government Planning
Although the F&B sector is classified as one of the nine priority industries in national planning documents, several gaps remain. The 2025 performance agreement of the Ministry of Industry does not include a target for Domestic Content Level (TKDN), despite its inclusion in the 2024 plan with a target of 53 percent.
At the same time, the 2025 target for the ratio of imported raw materials stands at 38.1 percent. While these figures may not be directly comparable, the absence of a TKDN goal raises concerns about declining support for local upstream integration. As the F&B sector depends heavily on input commodities, the lack of a structured localization target could hinder the development of supporting industries such as agriculture.
4. Supply Chain Pressures and Investment Slowdowns
The industry is facing not only export risks but also volatility in input costs. CRIF Indonesia estimates that continued dependence on imported inputs, combined with exchange rate pressures, could drive up production costs by up to 5 percent by the end of 2025.
Alternative sourcing strategies from countries such as Brazil, Canada, and the European Union will require time, new agreements, and logistical adaptation. These changes also bring risks such as inconsistent product quality, delayed shipments, and import licensing barriers.
Investor confidence is beginning to reflect these risks. Plans for expansion in cold chain infrastructure, distribution hubs, and processing automation are being delayed or revised. In export-oriented regions such as West Java and East Kalimantan, job growth may stall or even decline by 1.2 to 1.5 percent in packaging and processing roles.
The delayed implementation of U.S. tariffs until August 1, 2025 offers temporary relief. However, CRIF Indonesia asserts that this window should be treated as a strategic opportunity. Businesses must pivot from short-term reaction to long-term planning. Structural issues such as export dependency and supply chain rigidity must be addressed immediately.
Stronger coordination between public institutions and private stakeholders is essential. By realigning priorities, reducing vulnerabilities, and building resilience through domestic integration and regional expansion, Indonesia’s food and beverage industry can chart a more stable and competitive path forward.
