Grace Nirang, Jakarta – Indonesian farmers may be fed up with the low prices they get for their coffee but young people in the world's fourth most populous country can't get enough of the trendy bean.
Farmers in the world's fourth largest producer desperately want out of coffee, but plans are brewing in the big cities for even more trendy cafes serving the stuff.
The Coffee Bean opened in one of Jakarta's glitziest malls in January and the world's largest coffee chain, Starbucks, has announced plans to expand into Indonesia.
Home-grown modern cafes with Italian or French names dot almost every mall, although foreign coffee chains are just entering the Indonesian market. For investors, the draw is obvious: Indonesia's growing middle and upper classes.
The world's most populous Muslim nation may still be in crisis, but don't tell that to customers lounging at The Coffee Bean (TCB) in upmarket Plaza Senayan in south Jakarta. "Sure, the coffee is expensive, but it's the lifestyle that we've bought," accountant Tri Wahyu Sampurno said, as he sipped his tall mochachino.
There's a strong demand for "the modern yuppie lifestyle" and drinking coffee is part of it, TCB managers say. "The coffee business is booming. It's a matter of getting the right concepts and tapping into what the middle class wants," said Arifian Gustiandi, operations manager at TCB franchisee PT Tiga Satu Tiga Dwima (TSTD).
A regular mocha-ice-blended drink at TCB costs 25,000 rupiah ($2.62) – more than a day's wage for the average Indonesian factory worker.
Perth-based chain Dome opened its second outlet in Jakarta last year, less than a year after starting up. Lukman Hakim, assistant manager at TCB, said: "It's trendy to be seen at our shop. It's not just the coffee, it's the idea of drinking expensive coffee too."
Ambition and challenges
Over the next five years, TCB plans nine more outlets in the country's biggest cities. Some may think that a touch ambitious for a vast archipelago more accustomed to exporting its coffee than drinking it. But there's no shortage of optimism in the sector.
"Indonesia has a strong coffee culture, but it has been much more focused on the growing side. We hope we can contribute to develop the local side of consumption, help convince the local consumer that quality coffee tastes good," said a manager at Starbucks's partner, Mitra Adiperkasa.
Yet Indonesia still has a long way to go before it can rival Japan as Asia's largest coffee consumer. Even before the economic crisis of the late 1990s, Indonesia's annual domestic coffee consumption was just half a kg (1 lb) per person, or about 120,000 tonnes every year.
The Indonesian Coffee Exporters' Association (AEKI) estimates consumption at 100,000 tonnes, a slight recovery after hitting 80,000 tonnes at the worst point of the crisis in 1998. Only a few years ago, consumption of gourmet blends was close to non-existent.
But thanks to home-grown cafes that have mushroomed since the late 1990s, many youngsters – flush with pocket money from their parents – now prefer to drink cappuccinos, mochachinos and cafe lattes rather than tea or colas.
For upwardly mobile professionals such as Sampurno, Jamaican Blue Mountain and Sumatran Mandheling are names of gourmet beans, not simply tourist resorts.
Imported beans
The irony is that TCB and Starbucks buy mostly arabica raw beans from producing nations and process them in the United States or elsewhere before bringing them back for sale at inflated prices. "So far, I see no positive impact from the producer side. Those coffee chains serve imported beans, they rarely serve our robustas," AEKI Executive Secretary Rachim Kartadibrata said.
The country's coffee output has been falling in the past three years as weak prices – robusta at 30-year lows last year – deter farmers from planting coffee and maintaining plants. Indonesian grade four robusta beans now sells at 4,000 rupiah/kg, just enough to buy one kg of rice.
But the new coffee culture could bring a glimmer of hope to domestic producers – who grow 90 percent robusta and 10 percent arabica – through the possibility of a share of the growing market, by encouraging consumption of domestic blends.
"We have a lot of gourmet varieties, some of them have never even been heard of in the international market," said Litha Brent, who runs Sulawesi-based CV Gumer trading house. "Our good quality robustas have appealing and acceptable taste characteristics ... I don't see any reason why it can't be sold in international chains," one trader said.