Refrigeration Appliances Indonesia

Refrigeration Appliances - Indonesia

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Refrigeration Appliances Market in  Indonesia

HEADLINES

The economic downturn in 2009 does not negatively affect the performance of refrigeration appliances. Indeed, 2010 sees refrigeration appliances continue to grow in volume terms at a faster pace than in the previous year.

Price increases are lower in 2010 than in 2009, as retailers use unit price discounting to stimulate demand.

Volume and current value sales of refrigeration appliances increase by almost 10% and 17% respectively in 2010.

Aggressive activities by manufacturers help to boost the growth of refrigeration appliances.

Fridge freezers sees the strongest volume growth in 2010, growing by more than 10%.

2010 witnesses moderate price increases for refrigeration appliances.

The leading brands Sharp and LG manage to extend their lead in refrigeration appliances, with a combined volume share of almost 50% in 2010.

Refrigeration appliances is expected to increase by a CAGR of almost 11% in volume terms and a CAGR of 12% in constant value terms over the forecast period.

TRENDS

In 2010, manufacturers were increasingly aggressive in terms of launching new products and promoting their refrigeration appliances via mass media in order to improve their sales. New products included Toshiba The Glass Collection and Sharp The Salsa Series, which were launched in early 2010. These new products were heavily promoted in the mass media, especially on television and in newspapers. Another activity by manufacturers in 2010 was improving their services to consumers, such as LG, which provided FRESH (Fast Response Engineer Service Home) to provide consumers with a rapid service.

In addition to manufacturers’ activities, the volume growth of refrigeration appliances continued to be fuelled by urbanisation and the busier lifestyles of urban consumers, especially middle and high income consumers, who could see the benefits of refrigeration appliances and could afford to buy them. The trend towards smaller household sizes boosted the need for smaller capacity refrigeration appliances; thereby fuelling retail volume growth.

In 2010, fridge freezers enjoyed the fastest growth in refrigeration appliances, with more than a 10% increase in volume terms. While fridge freezers are almost ubiquitous in most households, Indonesians’ increasing incomes made fridge freezers more affordable to the average household, especially urban consumers. There was also tendency of more Indonesians gradually holding back on eating out and cooking more at home, which increased the demand for fridge freezers, which are more suitable for keeping a larger quantity of food fresh for prolonged periods than fridges.

In 2010, the average unit price of refrigeration appliances continued to increase, mostly due to inflation, increasing production costs, especially for products with imported parts, and to a lesser extent due to the growing popularity of more advanced products amongst higher income households.

Freestanding refrigeration appliances overwhelmingly remained the preferred format for refrigeration appliances in Indonesia in 2010, due to the cheaper prices of these products and their perceived convenience over the built-in format. Built-in refrigeration appliances are primarily sold in Indonesia through kitchen specialists, which market and sell them as premium products, and are a necessary part of an aesthetically pleasing kitchen design. These tend to appeal only to the most affluent customers residing in major cities such as Jakarta and Surabaya.

The most popular format for fridge freezers is single door, which accounted for a 68% share of volume sales of fridge freezers in 2010. This format is considered the most affordable type of fridge freezer, and therefore is the most popular amongst most Indonesians who are the middle and low income segments. 2010, however, witnessed a growing trend towards the double door (top freezer) format, which is seen as a more energy-saving alternative to other formats.

The most popular format for freestanding fridges is compact, which accounted for 100% share of volume sales of fridges in 2010. Compact fridges is affordable and need limited storage space that is suitable for smaller-sized households.

Frost-free fridge freezers are the most popular in Indonesia, and the volume share of this format increased by one percentage point in 2010 to 96%. Frost-free fridge freezers, although more expensive for consumers, provide key benefits, including not needing to periodically defrost the freezer compartment, and also helping to preserve the food without compromising on the texture, which is an issue with static fridge freezers.

In 2010, the single door format dominated electric wine coolers/chillers with a 68% share of retail volume sales. This is a niche product category in Indonesia, due to religious restrictions which discourage the consumption of alcohol. Consumers owning electric wine coolers/chillers tend to be affluent non-Muslim Indonesians. Availability is also restricted to specialist retailers, and most products are simple, single door models.

Sales of electric wine coolers/chillers in Indonesia remained small in 2010, and ownership was largely seen as an affectation for the more affluent classes of consumers and expatriates, who tend to be more passionate about wine and can afford to store larger quantities at home. However, with the high taxes on alcohol, and the fact that a large proportion of the population is Muslim, and drinking alcohol is forbidden by their religion, both built-in and freestanding wine coolers will remain niche products for only a selected wealthy, non-Muslim segment of the population.

COMPETITIVE LANDSCAPE

The leading company in refrigeration appliances in 2010 was Sharp Electronics Indonesia PT with its Sharp brand. Sharp has a reputation for having a long brand presence in Indonesia, with a wide network of service centres and after-sales support in the event that there are problems. Sharp’s leadership of refrigeration appliances also owes much to its early entry advantage, as well as its mid-priced positioning. Indeed, Sharp has gained a strong reputation in Indonesia for good quality and affordable consumer appliances, and refrigeration appliances is one of its strongest areas. In 2010, Sharp continued to clearly lead refrigeration appliances with a 31% volume share.

LG Electronics Indonesia PT, which trailed Sharp in second position with almost a 20% volume share in 2010, enjoyed good growth in refrigeration appliances. LG has a more premium positioning compared with Sharp, and therefore a smaller consumer base. LG Electronics actively promoted its range of consumer appliances in 2010, which includes refrigeration appliances, with a combination of television advertisements as well as product displays in the country’s many shopping centres and retail outlets.

Brands within refrigeration appliances are largely differentiated from their competitors through a combination of features, design and after-sales support. Although price remains a critical factor in influencing consumers’ decisions when purchasing refrigeration appliances, Indonesian consumers are spoilt for choice, with a wide range of models of all brands available at competitive prices. Indonesian consumers are reported to instead be more concerned about the reliability of the refrigeration appliance they choose rather than the price, and have shown a willingness to pay for more expensive refrigeration appliances as long as they do not break down often or require much after-sales support.

New product developments in refrigeration appliances during 2010 focused on the health trend. The leading player, Sharp Electronics Indonesia PT, introduced the Salsa range under the Sharp brand, with hybrid cooling technology with plasmacluster ions as the main selling point. Another notable new product launch was Toshiba The Glass Collection with hybrid plasma deodoriser technology to kill bacteria and viruses in the air. These new products with health features are mainly targeted towards health-conscious middle and high income consumers.

Up to 2010, the competitive environment in refrigeration appliances in Indonesia continued to be dominated by foreign companies, mostly from other Asian countries such as Japan and Korea. Throughout the review period, domestic companies still had difficulty in maintaining a strong presence against foreign companies, which benefit from bigger budgets for product development and marketing, and most importantly their early entry to the country.

PROSPECTS

Demand for refrigeration appliances over the forecast period is expected to be driven largely by an increase in property ownership, as well as replacement sales. Household ownership of refrigeration appliances in Indonesia was considered to be rather low in 2010; therefore the product category is still fulfilling its potential in Indonesia, and it has bright prospects for development and growth in the country over the forecast period. Over the forecast period sales are expected to increase by a CAGR of 11% in retail volume terms; faster than in the review period.

Urbanisation and changing consumer lifestyles, especially amongst urban dwellers, are predicted to help to boost the volume growth of refrigeration appliances in the forecast period. Urbanisation will increase the accessibility of refrigeration appliances through the development of an electricity supply infrastructure. Meanwhile, busier lives in urban areas will mean that more urban consumers will cook less frequently and reheat food more frequently; thereby increasing the need to store food in refrigeration appliances. More consumers will purchase frozen food, and, to a lesser extent, chilled food, which will increase the need for and usage of refrigeration appliances.

Freestanding fridge freezers is expected to post the strongest volume CAGR of 12% over the forecast period, as the penetration rate amongst households is expected to rise. Fridge freezers allow consumers to store larger amounts of food, and are affordable by many households. The category will also continue to dominate retail volume sales of refrigeration appliances.

Sales of built-in refrigeration appliances will remain small, despite the growth in apartment living, mostly because of the much higher prices of these products. As the demand for built-in products is likely to remain limited to affluent consumers in major cities such as Jakarta and Surabaya, the category is expected to post a modest volume CAGR of only 1% in the forecast period.

In a bid to improve their margins and fight off competition from cheap imports, players are expected to continue introducing innovative features in their refrigeration appliances. Energy-saving features will be highly attractive, as most Indonesian households still have limited electricity capacity, with the public infrastructure still in need of huge improvement. Refrigeration appliances with odour minimisation and features to ensure that products can be stored for longer will also appeal to consumers.  If you want Dissertations on Refrigeration Appliances in Indonesia, Contact Mahasagar Publications.