Indonesian Coffee Trend 2020 English Version

2020
BREWING IN INDONESIA:
Insights for Successful
Coffee Shop Business
INSIGHTFUL DATA:
Gathered from All The Stakeholders
and Business Players in Indonesia.
22
LIST OF CONTENT
The New Emerging 5

Business
4 Waves of Coffee Shop 10

Industry
Coffee Shop Business 17

Prospect 2020
Coffee Shop Consumers 22

Insights
The Key Success Factors of 38

The Recommendations 40
The Glossary 55
Coffee Shop Consumer 58
Journey
3
FACTS
Coffee shop business market value is
IDR 4.8 trillion/year

Forecast of domestic consumption in 2020
is 13,9%
6 out of 10 customers love popular coffee-milk
39% consumers bought their coffee
in “coffee to-go shop”
10 keys to build coffee shop business
7 things that drive coffee shop business
7 types of coffee shops in Indonesia
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4
The New Emerging
Business
22
5
Coffee Shop, New Emerging
Business in Indonesia
Strong consumer demand for fresh
coffee roasted, soluble and Ready to
Drink (RTD) products in Indonesia.
(Indonesia Coffee Annual Report 2019,
Global Agricultural Information)
Indonesia Coffee Domestic

Consumption
250.000 ton
2015 / 2016
258.000 ton
2018 / 2019 Growth
13.9%
294.000 ton
2019 / 2020
(Source: Indonesia Coffee Annual Report 2019,

Global Agricultural Information Network)
6
Indonesia’s Annual
Per-Capita Consumption
still at a Low Level
Indonesia’s per-capita coffee
consumption is relatively low compare
to other countries at only 1 kg in 2018.
Countries with lower income such as
Vietnam recorded a higher coffee
consumption of 1.5 kg in the same year.
We are also left far behind the
coffee-producing countries such as
Brazil, with a per-capita coffee
consumption is 6.5 kg.
From the business side, coffee Ready to

Drink (RTD) has experienced a very
significant sales record in the last six
years and it continues to grow. In 2013,
the retail sales volume of RTD was 50
million liters, however, in 2018, this
number has reached nearly 120
million liters.
7
Figure 8: Fresh Coffee Consumption 2003 - 2017
4.2 100 0%
144% 800 %
600 %
2.8 400 %
Million 60-kg bags

200 %
0%
268%
1.4
43%
-200%
306% -400%
865% 215% 154%

-600%
0.0 -800%
China Philippines Taiwan India Korea, Rep. ofVietnam Indonesia
Source: ICO and Euromonitor International - Hot Drinks, 2018 edition.

ICO calculations
Figure 11: Soluble coffee consumption 2003 - 2017

2.8 600 %
229%
400 %
372%
2.1 200 %
Million 60-kg bags
0%
1.4 2%
220% -200%
455%
0.7 279%
-400%
-600%
-31%
0.0 -800%
Taiwan Indonesia Vietnam India Korea, China Philippines

Rep. of
Source: ICO and Euromonitor International - Hot Drinks, 2018 edition.
ICO calculations
Indonesia RTD Coffee Retail Sales

Volume 2013-2018 (million liters)
130
100
70
40
2013 2014 2015 2016 2017 2018
Source : Euromonitor Passport (March, 2019)
8
3x Growth in the Last 3 Years:
Number of Coffee Shop Outlets
in Indonesia
2016: 1083 outlets 2019: >2937 outlets
Coffee Shop Outlets in Indonesia 2019

First Number First Number
Brand of Brand of
Opening Outlets*) Opening Outlets*)
Anomali 2007 13 Maxx Coffee 2015 74

Bakoel Koffie 2001 2 McCafe 2005 40
Bhumi Kopi 2017 2 Olala Cafe 1990 16
Coffee Bean 2001 108 Ombe Kofie 2015 6
Coffee Toffee 2006 100 Segafredo Zenneti 2002 3
Common Grounds 2013 8 Starbucks 2002 421
Djournal Coffee 2013 21 Tahta Coffee 2019 7
Dunkin 1985 200 Tanamera 2013 13
Excelso 1991 126 The Gade Coffee 2018 34
Filosofi Kopi 2015 3 & Gold
First Crack 2012 4 Tuku 2014 7
Fore 2018 100 Upnormal Coffee 2016 20
Harvest 2004 66 Roaster
Janji Jiwa 2018 500 Warunk Upnormal 2014 87
Jco Donut & Coffee 2005 273 Listed Kopitiam **) 42
Kopi Kecil 2016 6 in Zomato
Kopi Kenangan 2017 175 Coffee Shops owned ***) 10
Kopi Soe 2017 150 by Celebrity
Kulo 2018 300
*) As of August 2019, excluded independent coffee shop and mobile coffee-shop

**) Kopitiam is generic name for Chinese-style traditional coffee shops
***) These are independent coffee shops with no chains
9
4 Waves of Coffee
Shop Industry
10
22
Indonesia Coffee Shop Industry
MILESTONES
The coffee shop players in Indonesia divide the history
of coffee shop industry into 4 parts. This was along with
the momentum of big brands entrance to the industry.
1st WAVE 2nd WAVE 3 rd WAVE 4th WAVE

1000
11
900
800
700
600
500
4
400
5 10
300
1
200
2
3 6 9
100 8
7
1985 1990 1991 2001 2002 2004 2005 2006 2007 2012 2013 2014 2015 2016 2017 2018 2019
1 : Dunkin 5 : J.CO Donuts & Coffee, McCafe 9 : Tuku

2 : Excelso 6 : Coffee Toffee 10 : Kopi Kenangan
3 : Coffee Bean 7 : First Crack 11 : Janji Jiwa, Kulo, Fore
4 : Starbucks 8 : Tanamera
Indonesia is currently entering the fourth wave of the

coffee shop industry, in which the market size of the coffee
shop business has grown significantly. The numbers of
coffee shops that offer delicious Ready-to-Drink (RTD)
coffee with affordable price are increasing.
11
4 Waves of Indonesia
Coffee Shop Industry
1st WAVE 2nd WAVE 3 rd WAVE 4th WAVE
THE FIRST WAVE THE SECOND WAVE

First wave marks the important era of The drinking coffee habit has shifted
traditional coffee shops, locally known as from functional to emotional need.
“warung kopi” where they served customers Drinking a glass of coffee in the
with Ready-to-Drink (RTD) coffee. There were Starbucks or Coffee Bean have been
only few modern coffee shops that provided part of high-end lifestyle.
the same menu, such as Olala and Excelso.
When Dunkin first came to Indonesia, it was
known more as a donuts outlet than as a
coffee shop.
THE THIRD WAVE THE FOURTH WAVE

In the third wave, the customers started to Fourth wave : The market size has
consider coffee as artisanal products rather grown bigger. More coffee customers
than a commodity. The customers are enjoying grow as the result of the cafe style RTD
on how the coffee shops brew their coffee. This coffee’s popularity, which was
has led to the growing trend of manual brew, introduced by more affordable
specialty coffee, and artisanal coffee shops such coffee to-go shop.
as Tanamera (launched 2013). A unique coffee
machine has become a visual attraction
for customers.
12
1st Wave of This was the earliest adoption of
coffee into hang out culture, where
Indonesia people enjoyed Ready-to-Drink
Coffee Shop (RTD) coffee in a traditional coffee
shop or called warung kopi. In the
Industry big cities, the coffee shops were a
bit modern such as Dunkin (1985),
(Started in 1985)
Olala (1990) and Excelso (1991).
In this period, Indonesians enjoyed

instant coffee (in sachet) that was
produced by at least four national
brands i.e Kapal Api (1927), Kopi ABC
(1985), Nescafe (1971), and Torabika
(1977).
13
2nd Wave of The habit of drinking coffee in a
cafe has shifted into an emotional
Indonesia need rather than a functional need.
Coffee Shop Drinking coffee at the Starbucks or
the Coffee Bean can be used to
Industry increase the prestige.
(Started in 2001)
The market of RTD coffee in this
wave was tilled by international
chains such as Starbucks (2002),
Segafredo (2002) and Coffee Bean
(2001). Local shop, Anomali, entered
the market in 2007, followed by
Kopitiams (coffee shops a’la
Chinese descendant).
14
3rd Wave of Indonesia
(Started in 2013)
The consumers appreciation to the coffee drinking
culture is continuously increasing. It was marked with
the launching artisan Tanamera coffee in 2013. At this
stage, customers were not only enjoying coffee in the
cafe, but they began to be interested in how a cup of
a coffee was made. The presence of coffee machine
became a visual reference for the customers.
In this stage, more people noticed the potential of

coffee shop business in Indonesia with more brands
coming to Indonesian market. Hair stylish Johnny
Andrean opened his coffee business through J.CO
Donuts & Coffee in 2013. McDonald’s entered the
market through McCafe (2014) and Lippo Group
introduced its coffee shop chain, Maxx Coffee (2015).
15
4th Wave of Indonesia
(Started in 2016)
In this period, the market sizes of coffee shops were
growing. Many new players entered the market and
aggressively expanded by adopting coffee to-go shop
(take away) as the concept for their newly opened chains.
Some notable coffee shop brands in this wave were Kopi
Kenangan, Janji Jiwa, Fore, and Tuku. They were
considered as the pioneers of coffee to-go shop.
There were more beginners of coffee consumers along

with the booming of promotion of quality cafe style RTD
coffee by coffee to-go shop with affordable price.
At this stage, various innovations were introduced to the

market:
1. Flavors variation of coffee-milk.

2. Online purchase through apps, delivery order by ride
hailing and digital payment.
3. Innovation in marketing strategy including progressive
retail marketing and influencer marketing.
16
Prospect 2020
17
Indonesia's The forecast of coffee shop business in
Indonesia in 2020 will increase as the
Coffee Shop domestic coffee consumption is also
Business: rise. In 2019 / 2020 the domestic coffee
consumption is 294.000 ton or
The 2020 increasing 13.9%. In 2021, the domestic
Prospect coffee consumption is predicted to
370.000 ton.
“ I am sure that market is still strong. This is based

on the research I did in the last five years that shows
the consumption of coffee RTD increase three
times. So this is a very emerging business.”
(Andreas Chang, CEO Tahta Coffee)
“ Local and small coffee in rural

areas in Indonesia have been a
parameter on how big the business
is. The growth could be at a double
digit. This is why we entered the
market by launching Harvest
Express.”
(Edison Manalu, CEO Harvest Group)
18
Market Size
Projection
The numbers of coffee shops across
Indonesia are at least 2.937 stores. The
estimated market size of coffee shop
business in Indonesia more than
IDR 4.8 trillion per year.
This number is based on forecast

turnover each coffee shops that use to
sell 200 cup per day with average price
per cup is IDR 22.500 (interviewed 13
biggest coffee shops). However, the
actual market size could be higher
because those numbers exclude sales in
street coffee vendors (warung kopi) and
mobile coffee vendors.
Average Coffee Sales per Day in Indonesia
CUPS
1200
1000
800
600
400
200
19
7 Engines That Drive
The Growth of Coffee Shop
Business in Indonesia
1 Hang out and drinking coffee lifestyle.
The increase of buying power, the growing of

2 middle class and affordable coffee drinks price.
The Indonesian youths who create new style of

3 drinking coffee.
Social media as a tool for business owners to

4 promote his/her coffee shop business.
Ride-hailing platform (GrabFood and GoFood)

5 has offered an easy way for customers who
want to enjoy a coffee drink.
Low entries barriers that enable new players to

6 build the new business and supported the
available stock coffee machine, ingredient and
human resources such as barista.
7 High Margin.
20
Generation Z and Y’s Consumption
Pattern Drives the Growth
The growth of coffee consumption in Indonesia is

driven, by the high consumption of young
customers or Z generation (10-24 years old).
However, the Y generation (25-39 years old) also
contribute in driving the growth consumption.
The characterized of these generation connected by

technology. This is an opportunity for coffee shop
industry players in to provide alternative order,
delivery and online transactions to capture these
segments.
INDONESIA DEMOGRAPHIC PROFILE

Source : Bappenas, 2018
70.000.000
60.000.000
50.000.000
40.000.000
30.000.000
20.000.000
10.000.000
Gen Z (10-24) Gen Y (25-39) Gen X (40-54) Baby Boomers (55-74)
Male
Female
21
Coffee Shop Consumers
Insights
21
Coffee-Milk Product
Development: The Most
Important Feature
for Gen Y and Z
“ Popular coffee-milk has made the coffee

shops market bigger.”
(Alvinta Purba, Founder Kopi Kecil)
“ To be talk of the town, we need twist

through innovating in the new
menus which based on Limited Time
Offer (LTO). This is part of our effort to
trigger the word of mouth so our
consumers keep talking, keep
coming and keep experiencing us.
The uniquely Indonesian taste is
important.”
(Sarita Sutedja, Founder Upnormal

Coffee Roaster)
23
Coffee-Milk Product
Development: Most
Important Feature
for Gen Y an.”d Z
“ The popular coffee-milk is important

for us to grab new customers in the
youth segment.”
“ The iced coffee-milk is a trend

that loved by everyone.”
(James Prananto, COO Kopi Kenangan)
“
the
The coffee-drinkers at this time
are not only adult, but also loved by
the students. Therefore, no wonder
coffee-milk has grown
massively in Indonesia.”
(Ferdy F. Martono, Founder Good Ride Bike)
24
6 Out of 10
Generation Y & Z
Love Coffee-Milk Blend
Arround 60 % of
22.58%
coffee customers
6 out 10
Indonesians prefer
Extremely Preferred
from generation
POPULAR
COFFEE-MILK
44.19%
Preffered Y and Z. Most of
Two of them
extremely preferred
31.61%
Neutral
them love
1.29%
milk-coffee
because of the
Dislike
0.32%
Exremely Dislike
taste and a lot
*n=310, survey period: October 2019 (online) discount for this
product.
CONSUMERS LOVE POPULAR COFFEE-MILK BECAUSE

THEY CAN EXPERIENCE WITH THE NEW FLAVORS
Reasons to Buy Popular Coffee-Milk?
48.06% 27.74% 18.06%

Experience The Taste They Got
New Flavors Suit Me Promos
4.52% 1.61%
It Went As Social
Viral Media Feeds
*n=310, survey period: October 2019 (online)
25
The Taste is The Most
Important Attribute in
Buying Decision Process
The service and the tasteful coffee are the main reason
customers choose to drink coffee at the coffee shops.
Affordable price, convenience place, variety products

and special promo are also part of the buying process.
Recommendation from friends and the attractive

design interior became the last reasons people choose a
coffee house.
A GOOD QUALITY COFFEE TASTE IS THE MAIN REASONS

TO CHOOSE A COFFEE SHOP
Reasons You Would Go to A Coffee Shop
They serve my
79,35% They serve good
coffee taste 44.19% favorite coffee
The price is
They have
73.87% affordable 38.71% WiFi
The place is
62.90% convenient 35.48% Fast service
The place have a

53.23% lot of variety 34.52% Instagrammable
premise
of menu
They have Friends

50.32% interestring sales 27.74% recommendation
promo
Coffee shop that
23.55% go viral on
social media
26
Coffee-Milk Flavor
Preferences 2020
PALM SUGAR AND COOKIES & CREAM
Iced coffee-milk with

ARE THE MOST FAVORITES
The Most Preferred Coffee-Milk Flavor

palm sugar is the most
36.77% 18.71%
1 7
Palm Sugar Cheese
preferred coffee-milk
34.52%
Cookies & Cream 2 15.81%
Pandan 8 flavour of the year,
3 28.71%
Avocado 9 15.81%
Regal chosen by Gen Y and Z,
27.42%
Matcha 4 14.19%
Soy Milk 10 and followed by its
21.6% 10%
cookies & cream flavor,
5 11
avocado, matcha and
Yogurt Coconut Milk
18.71%
6 1.61%
12
Grass Jelly Others
yogurt.
In 2020, cookies &

cream is expected to be
the most preferred
flavor, and surpasses
COOKIES & CREAM,
NEW STAR FOR 2020 coffee-milk with palm
The Most Preffered Coffee-Milk Flavor for 2020
sugar. Coffee with
38.71%
Cookies & Cream
18.39%
Regal coconut milk is
34.52%
Palm Sugar
18.06%
Grass Jelly
surprisingly the least
30.32% 16.77% preferred, aside from
Avocado Pandan
cheese flavor, regal
27.10% 12.90%
Macha Soy Milk
biscuit flavor, grass jelly,
22.90% 11.94%
Yogurt Coconut Milk pandan and soy milk.
22.26%
Cheese
27
Indonesian Traditional
Flavored Coffee Milk,
Tantalizing
Traditional coffee-milk such as cendol, klepon, es
doger, bringing a new interest. Around 85% of
Gen Y and Gen Z are interested to try it, while it’s
only 1.61% of respondents who said the
opposite.
CENDOL, THE MOST PREFFERED

TRADITIONAL FLAVOR FOR COFFEE-MILK
85.48%
INDONESIA Interested
What is the Most Preferred Traditional Flavor for TRADISIONAL
Coffee-Milk that You Would Want to Buy in 2020?
Flavors Attract
Coffee Drinkers
46.13%
Cendol
Are You Interested
12.90%
Probably Would /
to Buy Coffee with Would Not
36.77% Traditional Flavor?

Doger
13.23%
Klepon
1.61%
Not
3.87% Interested
Others
*n=310, survey period: October 2019 (online) *n=310, survey period: October 2019 (online)
28
Classic Coffee-Milk Flavors,
First Choice Gen Y and Z
Although the new trend of coffee-milk is booming, but the
classic flavors such as caramel, vanilla, chocolate, hazelnut,
are still the most commonly purchased. Around 27.74%
of respondents choose to buy classic coffee-milk in the
past year. While only 13.55% respondents who bought
the popular coffee-milk.
Cappuccino ranks second as the most purchased

coffee-milk in the past year. Meanwhile coffee-milk
chocolate and coffee-milk caramel are classical variant
which more like by the customers than vanilla and
hazelnut.
TRENDY COFFEE-MILKIS BOOMING,

BUT CLASSIC COFFEE-MILK IS STILL THE FAVORITE
What Kind of Coffee Blend do You Buy THE FOUR MOST FAVORITES
the Most in the Last One Year?
CLASSIC COFFEE FLAVORS
Classic
27.74% Coffee-Mik
30.97% 22.58%
Chocolate Vanilla
16.13% Cappuccino 6.77% Espresso
13.55%
Popular
Coffee-Milk 5.81% Machiatto 28.39% 18.06%
Caramel Hazelnut
10.32% Latte 3.23% Americano

7.74% Mochaccino 0.97% Flat White
7.10% Kopi Tubruk 0.65% Cold Brew
29
Classic Coffee-Milk
Still Favorite in 2020
Nearly 100% of consumers agreed that
coffee-milk with a classical flavor will still be
the favorite in 2020, despite the growing
trend of new flavors including Indonesia’s
traditional taste.
DO YOU AGREE THAT CLASSIC

FLAVOR WILL STILL BE THE FAVORITE IN 2020?
98.71%
Agree
1.29%
Disagree
30
Coffee To Go, Current Favorite
In the last one year, almost 40% of the respondent bought
their coffee in a Coffee-To-Go shop.
The development of technology has allowed consumers to

buy coffee in the coffee shops by online using mobile apps,
ride hailing and digital payment.
COFFEE TO-GO SHOP, THE MOST FAVORITE

COFFEE SHOPS IN INDONESIA
39.03%
Coffee To-Go Shop
In the last one year
where did you buy 30.32%
International
your coffee drinks? Coffee Chain
17.10%
Local Coffee Chain
8.39%
Bakery & Pastry
2.90%
Independent Coffee Shop
2.26%
Speciality Coffee Shop
31
6 Types of Coffee Shops
American Coffee Chain

These type includes the coffee
shop from American brands such
as Starbucks, Coffee Bean, McCafe
and Costa Coffee.
Italian Coffee Chain

The Italian coffee shop from
Italian brands of Segafredo
and Illy Coffee.
sumber : https://www.foodbev.com/news/mzbg-set-to-open-80-segafredo-zanetti-coffee-shops-in-indonesia/
Local Coffee Chain

These are for example Djournal
Coffee, Upnormal, Fore, and
many others.
32
Coffee To-Go Shop
The coffee shop is so small
where people usually only
buy the coffee and go. Koppi,
Kopi Kenangan, Janji Jiwa are
among the type of coffee
to-go shop.
Specialty Coffee Shop

This type of coffee shop only
serves premium-quality
coffee. Tanamera, Ombe and
Common Ground are typical
Specialty Coffee.
33
Independent
Coffee Shop
This type of coffee shop only
has one shop such as
Klinik Kopi.
Bakery & Pastry

This is a bakery shop in which
coffee is only a compliment.
This type of shop are Harvest
and J.CO Donuts and Coffee.
34
Gen Y & Gen Z
Mostly is Value for
Money Consumers
Gen Y and Gen Z are the consumers value
for money. This means they want to enjoy
high quality coffee but with the cheap
price. The survey shows that 86.45 %
respondent spend no more than IDR
200.000 per month for leisure at
coffee shops.
RESPONDENT SPEND LESS THAN Rp. 200.000

TO BUY COFFEE IN THE COFFEE SHOP
How Much is Your Budget?
86.45% 10.97%
Less than Rp. 200.000 Rp 200.001-Rp 500.000
1,61% 0.97%
Rp 500.001-Rp 1.000.000 >Rp 1.000.000
35
Types of Coffee Drinkers
in Indonesia
TYPES OF COFFEE DRINKERS
Caffeine Addict The Instant Coffee Drinkers

Those who could not live without Those who prefer cheap price and
coffee. simplicity in serving.
Social Drinker The Coffee Snob

Coffee as beverage when hangout The premium coffee drinkers that
with friends. only enjoying coffee at coffee shop
artisan.
Latte Art Hunters The Traditional Coffee Lovers

The ability of the barista to paint a Those who loves coffee that made
latte that has been a selling point to traditionaly such as the coffee beans
invite customers. proceed into the powder.
Milk-Coffee Lovers Manual Brew Big Fan

The typical customers who come Those who focus on coffee
the coffee shop to enjoy the serving.
atmosphere of the coffee shop and
drinking the iced sweet coffee.
ONE OF FOUR COFFEE DRINKERS

IS SOCIAL DRINKER
Drinking Coffee Habit
Social
24.84%
Drinker 9.35% Caffeine Addict
The Instant Latte Art

22.26% Coffee Drinkers 6.45% Hunter
Milk-Coffee Manual Brew

21.29% Lovers 2.90% Big Fan
Tradisional
10.32% Coffee Loverst 2.58% The Coffee Snob
Coffee
36
Consumers
Survey SURVEY METHODOLOGY
RESPONDENT PROFILES
Respondent 100% Gen Y dan Z
Methodology Online survey in 10-11

October 2019 use research
application and responded
<16
16-19
0.00%
6.45%
by 310 respondents. The
survey used methodology 20-25 33.55%
Non Probability Sampling
with margin error 6%.
26-29 26.13%
30-35 29.35%
36-39 4.52%
PROFILE RESPONDENT
Mostly in Java Island
>40 0.00%
More Than 50%
Respondent are Employees
38.06% West Java Elementary School *n=310, survey period: October 2019 (online)
0.97%
27.74% DKI Jakarta
Junior High School
8.71%
12.90% Eat Java
Senior High School
9.03%
11.29% Banten
University Student
North
5.48% Sumatera
17.74%
Employee
South
2.90% Sulawesi 53.54%
Central Java
1.61% and Jogjakarta
RESPONDENT PROFILE
0.02% Others
More than 50% Respondent Mostly of Respondents are
are Employees Gathered from Upper
Economic and Social States
Employee
Upper 1
53.54%
12.90%
University Student Upper 2
17.74% 31.29%
Business Owner Middle 1

10.97% 39.03%
Middle 2
Stay at Home Mom
13.87%
9.03%
Lower 1
Jobless 2.90%
8.71%
Lower 2
Coffee
0.00%
*Survei online diselenggarakan pada awal Oktober 2019, n=310
37
The Key Success
Factors of Coffee Shop
Business
34
1. Providing innovative
products according to
The 6 Key consumers taste.
Success
Factors 2. Value for money, yet
competitive.
of Coffee 3. Strategic locations.
Shop
Business 4. Convenience place.
5. Smart marketing and

promotion strategy, such as
use an influencer
marketing.
6. Innovation in sales and

distribution use ride hailing
platform could be an option.
35
39
The Recommendation
34
The Power of Product Innovation
“Keep innovating is the key to our success.

However, we are preserving our signature coffee
drinks which is the original Kopi Soe.”
(Sylvia Surya, Founder Kopi Soe)
“The diversity of our flavors is very important in

order to reach all segment of our consumers,
and in turn will attract new customers. However,
our iced coffee-milk is still our backbone, and is
the choice of 60% of our customers. The rest
choice our original coffee (20%) and other
menus (20%).”
(James Prananto, COO Kopi Kenangan)
41
The Power of Product Innovation
“McCafe has always wanted to increase our

customer visits by consistently release new
menus 3-4 times within a year. This is how we
create a condition where our customers are
waiting for something new from us.”
(Yunita Hidayanti, Associate Director of
Operation & Brand Extension McCafe)
It's very crucial to develop new kind of flavors or

menus periodically. This is because we can't
always predict what the market wants, however
one thing to be sure is they always want
something new.
(Toffin Insights, 2019)
42
Product Development
References 2020
Beverage with local taste like milk-coffee

palm sugar, klepon, kopyor and
chocolate-banana will become the new
tastes and trend in 2020 based on high
demand of those ingredients.
Coffee shop players are preparing a lot of

variation menu for 2020, and the beverage
with local ingredients will be the favorite.
(Toffin Insights, 2019)
43
The Power of Innovation
in Sales and Distribution
“Fore is targeting consumers with an

active lifestyle who are mostly
smartphone users. This segmentation
just suits us since we created an apps
that they can use to order as well as an
efficient way to buy our products.”
(Elisa Suteja, Co-Founder Fore)
“By using the apps, our customers don’t need to

queue to order and pay. Moreover, the application
could prevent lost order due to long queues, and it
can also be used to collect and analyze data.”
(James Pranoto, COO Kopi Kenangan)
44
Location, Location, Location
“Location is one of the most important

factors for people to visit a coffee shop.”
(Alvinta Purba, Founder Kopi Kecil)
“Location is crucial because customers

prefer to buy coffee with the nearest
location. Ours strategy is to go big by
reaching customers as close as possible.”
“Business district, campus, and

transportation hub such as train station
are the strategic locations. In order to get
the economic scale, traffic in those
locations should be 3.000 orders per day.”
(Edin Manalu, CEO Harvest Group)
45
Innovative
Marketing &
Promotion
Strategy
is Important
“Customers would not only think the taste and price, but
also product concept and value. For examples Kopi
Kenangan dan Janji Jiwa that use the emotional concept
(baper-baperan). Renaming menu such as coffee
Ex-Boy-Friend (Kopi Kenangan Mantan) and the interesting
packaging will drive new customers. The design interior and
WiFi will also impact the customer’s decision. Gen Z usually
buy the coffee not only to drink but take the photo of it
before drinking and uploading (to social media).“
(Sarita Sutedja, Founder Upnormal Coffee Roaster)
46
Innovative
Marketing &
Promotion
Strategy
is Important
“We have special team to handle digital content. Every

day at lunch time and after office hours, we post
discount menu in social media, particularly to our
250.000 Instagram followers.”
“We want to use low cost strategy. We collaboration a

lot with the Key Opinion Leader and put
advertisement in Facebook and Instagram ads.”
(Elisa Suteja, Co-Founder Fore Coffee)
47
Coffee Machine is
the Heart of Coffee Shop
A Coffee Machine will bring
benefit to :
QUALITY
To make a good quality product you
need the good coffee beans, a coffee
machine and supporting tools,
especially for beverage that use
espresso as the main ingredient. A good
coffee machine will help to produce
tasteful coffee.
PRODUCTIVITY
Coffee shop with high intensity must
have a good coffee machine that can
speed up the job of
barista.
48
“Coffee machine has important role in
production capacity. We choose the supplier
coffee machine by considering the long term
cooperation, after sales guarantee and not
urge us to buy coffee beans from them.”
“Coffee machine is crucial. However, we are

not only need the best machine, but also the
best barista.”
(Mehdi Zaidi, CEO Maxx Coffee)
49
“A coffee machine can be a key success when
a company want to maintain the quality and
taste of the products, in particular our coffee
shop must produce the huge capacity
everyday.”
(Ferrianto Surya, Owner Kopi Soe)
“One of the biggest investment in a coffee shop is

buy a good coffee machine. The Owner must
know the specification and his need in order to
reduce operational risk and business risk.”
(Elkana Arlen Riswana, Founder El’s Coffee)
50
“It is impossible for Kopi Kenangan
can still exist without using a great
coffee machine that produce
tasteful coffee and high calibration.”
(James Prananto, COO Kopi
Kenangan)
A coffee machine can keep the taste

consistency of the coffee we made in
one time and big capacity. The coffee
machine is to support the customer
order, in terms of quality and
quantity.”
51
Tips
to Choose
a Coffee
Machine
1. Quality. Choose the

brand with international
reputation.
2. Fit it with your capacity

and need of your coffee
shops.
3. Guarantee shipment and

guarantee after sales.
4. Choose trusted vendors.
52
10 Formula in Creating
in Indonesia
1. Concept. Identifying brand and strategic marketing

(positioning, differentiation and targeting) because this
will influence the model and concept of the coffee
shops.
2. Location. Location is a part of the key success in this

business. Despite the online order is booming in
Indonesia, but the customers who come to the coffee
shops are still high. Therefore, the location of a coffee
shop should be strategic and fit with the target market,
for example campus or shopping mall.
3. Invest in Coffee Machines & Other Equipment

The model of the coffee shop will influence the type
of coffee machines and other equipment.
The investment in coffee machine and other

equipment should be fit with the budget. Choose
the assets smartly.
The trustworthy vendor is the key for the sustainable

business. The vendors must have a good track
record, networking and guarantee after sales
including the availability of the spare parts.
Brand awareness and brand image shows the

quality of the coffee machine that support the
operational and image of the coffee shop.
53
4. Human Resources. Skilled barista and experienced
strongly support the operational of a coffee shop.
5. Product development. Partnership in order to assist

to development and transfer knowledge.
6. Raw materials. You need suppliers / partners that can

guarantee the availability of the raw material as well as
the security of the ingredients such as the coffee
beans, milk, syrup, etc.
7. Pricing. You need suppliers / partners that can

guarantee the availability of the ingredients and have a
good networking.
8. Selling. How do you sell the products? Offline or online

(ride hailing).
9. Promotion & Branding. Promotion and branding to

invite customers, for example collaboration with the
influencer or launch a special discount.
10. Interior. Interior will sway mood of the customers.
54
The Glossary
GLOSSARY
Ready to Drink (RTD) Coffee: Packaged
coffee beverages are ready for consumpton
such as canned coffee drinks.
Kedai Kopi Artisan: A coffee shop that serve a

premium coffee with brewing technique and
use high quality coffee beans.
Coffee To-Go Shop: A tiny coffee shop where

people buy the RTD coffee to take away.
Ride Hailing: Services that use online

enabled platforms to connect between
passengers and local drivers using their
personal vehicles. In most cases, they are a
comfortable method for door - to - door
transport.
e-Money: Digital payment that use internet

connection and banking computer system to
facilitate the transactions.
Retail Marketing: Activities related to selling

products to the customers through channels
such as shops, department stores, kiosks and
vending machines.
56
GLOSSARY
Influencer Marketing: A form of marketing
that focuses on targeting key opinion leaders
to drive brand messages and awareness to a
specific market of consumers on social media.
Y and Z Generation: The demographic cohort

born between 1980-1994 (generation Y) and
between 1995-2015 (generation Z).
Popular Coffee-Milk: Variety of coffee-milk

flavors that has been driven by millennials
coffee craze in Indonesia where many coffee
shop added coffee with grass jelly, matcha,
avocado, and many others.
Limited Time Offer: A ready coffee to drink

that sell seasonal or in a certain time period.
57
Coffee Shop
Consumer
Consumers Decision
Journey
Considerations
54
Additive Material SUPPLIERS
Consumer Decision
Variant Blended Technique BARISTA
Considerations Flavor
Coffee Machine SUPPLIERS
Outlets Ambience Quality Blended Technique

COFFEE SHOP
OUTLETS
of Taste
Facilities (WiFi, etc) Coffee Machine Variety of
Coffee Bean
Post-Harvest
Coffee Bean
Technique
Pricing
Roasted Technique Storage
Simple Delivery Technique
(Ride Hailing)
Packaging COFFEE TO GO
Coffee Shop
Location COFFEE BEAN
Simple Order
(Ride Hailing, FARMER
Apps) CONSUMERS
IN SOCMED
Influencer
Recommendation COFFEE ADDICT
REVIEWER
KEY OPINION
LEADER
Payment
Method
59
54

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2020

The New Emerging 5

4 Waves of Coffee Shop 10

Coffee Shop Business 17

Coffee Shop Consumers 22

The Key Success Factors of 38

IDR 4.8 trillion/year

Indonesia Coffee Domestic

(Source: Indonesia Coffee Annual Report 2019,

From the business side, coffee Ready to

Million 60-kg bags

865% 215% 154%

China Philippines Taiwan India Korea, Rep. ofVietnam Indonesia

Source: ICO and Euromonitor International - Hot Drinks, 2018 edition.

Figure 11: Soluble coffee consumption 2003 - 2017

Taiwan Indonesia Vietnam India Korea, China Philippines

Indonesia RTD Coffee Retail Sales

Source : Euromonitor Passport (March, 2019)

Coffee Shop Outlets in Indonesia 2019

Anomali 2007 13 Maxx Coffee 2015 74

*) As of August 2019, excluded independent coffee shop and mobile coffee-shop

1st WAVE 2nd WAVE 3 rd WAVE 4th WAVE

1 : Dunkin 5 : J.CO Donuts & Coffee, McCafe 9 : Tuku

Indonesia is currently entering the fourth wave of the

THE FIRST WAVE THE SECOND WAVE

THE THIRD WAVE THE FOURTH WAVE

In this period, Indonesians enjoyed

In this stage, more people noticed the potential of

There were more beginners of coffee consumers along

At this stage, various innovations were introduced to the

1. Flavors variation of coffee-milk.

“ I am sure that market is still strong. This is based

(Andreas Chang, CEO Tahta Coffee)

“ Local and small coffee in rural

(Edison Manalu, CEO Harvest Group)

This number is based on forecast

1 Hang out and drinking coffee lifestyle.

The increase of buying power, the growing of

The Indonesian youths who create new style of

Social media as a tool for business owners to

Ride-hailing platform (GrabFood and GoFood)

Low entries barriers that enable new players to

The growth of coffee consumption in Indonesia is

The characterized of these generation connected by

INDONESIA DEMOGRAPHIC PROFILE

Gen Z (10-24) Gen Y (25-39) Gen X (40-54) Baby Boomers (55-74)

“ Popular coffee-milk has made the coffee

“ To be talk of the town, we need twist

(Sarita Sutedja, Founder Upnormal

“ The popular coffee-milk is important

(Andreas Chang, CEO Tahta Coffee)

“ The iced coffee-milk is a trend

CONSUMERS LOVE POPULAR COFFEE-MILK BECAUSE

Reasons to Buy Popular Coffee-Milk?

48.06% 27.74% 18.06%

*n=310, survey period: October 2019 (online)

Affordable price, convenience place, variety products

Recommendation from friends and the attractive

A GOOD QUALITY COFFEE TASTE IS THE MAIN REASONS

Reasons You Would Go to A Coffee Shop

The place have a

They have Friends