Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Large kitchen appliances; Small electrical appliances
Executive summary
DEA sales up despite challenges
Growing demand for DEA occurred due to the rising aspirations of Indonesian
consumers, wishing to own refrigeration, home laundry, air treatment and small
kitchen appliances. This took place despite the political transition in 1998
and subsequently dramatic shifts in fiscal policy leading to inflation and the
removal of domestic fuel subsidies in 2005. Growth occurred in the face of
natural disasters and security concerns.
Improvements in distribution, specifically the growth of modern retail outlets
offering DEA, were instrumental in growing sales volumes. Outlets increasingly
offered convenient access and better price and payment systems. Other factors
that helped bolster demand included the reduction of luxurious goods' taxes
for certain DEA items from 20% down to 10%. This particularly boosted washing
machines, refrigeration appliances, and some types of cookers, where the
government plans a switch from kerosene-based-cookers to gas-based-cookers.
2006 value growth led by home laundry and refrigeration
The number of home laundry and refrigeration appliances delivered to household
in 2006 showed a relative increase over the review period. Freestanding
refrigeration units are the most popular and dominated by one-door formats.
Consumers are still seeking value-for-money for food storage, as the economy
has not yet fully recovered. The performance of refrigeration appliances in
value terms improved slightly in 2006 and this is expected to continue over
the forecast period, as consumers accept the benefits of modern food storage.
Seasonal demand for DEA generally remained unchanged. Sales shifted away from
consumer electronics to DEA in the second half of the year, largely due to
religious fasting and the peak of hot climate. During that period of time,
most of the daily needs' prices such as meat and vegetables will increase,
thus most people opt to stock basic consumption needs. Additionally, hot
season will encourage the consumer to find better ways in storing their food.
Significant demand in Indonesia and indeed Asia resulted in LG using Indonesia
as its production base in 2006 for domestic and regional supply.
Home laundry appliances to remain buoyant
Within the forecast period, home laundry appliances is expected to enjoy
growth. Growth will be fuelled primarily by replacement sales of automatic
washing machines within Indonesia' s first tier cities and by new sales in
second tier cities in Indonesia. Growth will remain good due to low household
penetration for automatic home laundry appliances and replacement sales for
semi-automatic and twin-tub home laundry appliances. These remain particularly
popular in urban Indonesia, with consumers still suffering inflation from
rising fuel prices in 2005 and taking advantage of the availability of cheap
domestic workers.
Lifestyle changes drive urban demand for small appliances
An increase in the number of single and elderly households, together with more
working couples, led to a rapid rise in demand for microwaves in 2006.
However, the widening availability of packaged ready meals, ready-to-consume
food and drink and instant meals constrained growth in food preparation, small
cooking and kitchen appliances. The availability of instant and canned coffee,
as well as growth in cafés, kept demand for coffee machines subdued, while
Indonesian consumers generally do not purchase food processors,
smoothie-makers, citrus pressers and electric knife sharpeners. Room and split
air conditioners meanwhile performed well, as the number of new housing units
grew steadily in urban cities and rising disposable incomes and falling unit
prices made air conditioners more affordable.
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