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Abstract
Package Drinking Water (PDW) Industry in Indonesia has been developed fantastically during this
forty years and it caused by in factual people awareness on healthy reason as well as practical and simple
way to drink clean water have been answered by the PDW existent. So that , now a day, PDW has to be
un-avoid drinking water in people daily life.
Factually, producers of PDW are the big global players on package drinking water who has been
invested in Indonesia. The rest middle to low players are local companies with profile successful
businessman background.
Remembering to the wide of market, progress of small scale machinery development and water filter
technology so that new comers having big opportunity to have a niche market and growth in PDW and
beverage industry as beginners studying SWOT of the industry.
I. Introduction
a. Description of The Industry
In Indonesia, drinking water is concerned to the peoples life so that things about it is regulated by
government as spirit of mentioned on the 1945 Constitution article 33. In fact, government just able to
provide 16% only of clean water service accesses to the population through PAM (Perusahaan Air
Minum) which is this company is belong to government. The rest demand is provided by citizen
themselves individually by way of sourcing from dip well, river, lake, etc, actually, since people can buy
drinking water, package drinking water (PDW) has shown their growth significantly in Indonesia.
PDW has promising cleanliness, availability, affordability and provided by small, medium and
large scale business companies. From time to time, PDW companies have shown their progress
aggressively in Indonesia until economic crisis come in late 90. This situation red by global players
because this is an opportunity for them to invest in PDW industry in Indonesia, of course, one advantage
for them in this matter is exchange rate wise. All of this has imposed local PDW companies to rethinking
about their business existence among wider and tighter market competition.
Initially, all players are play in the same categories in general but not anymore. In the more tough
market competition, any new comer segmentation RDW (Refilled Drinking Water) driven by progressive
equipment in water treatment technology, now PDW have to compete with them as well. This RDW is
like independent outlet that belong to individual person and there are available in every area as well as in
each nearby places. They are acceptable enough in the low and few middle market. Since the bottle
gallons is belong to PDW companies, but in actual, RDW customers used those bottles in buying water
refilled, there is an interest overlap in this case so that government must do something to regulate it fairly.
Not only about this but including spring water sources, nature conservation, packaging wastage, etc.
Above all of these, PDW companies have to setting the strategy to keep their progress and win as market
leader in Indonesia among global competition that has been touched this country from time to time.
Jurnal Ekonomi dan Bisnis STIE YPN Vol. VII No. 1 Oktober 2014 1
b. Industry Highlights
i. Start of Industry
Package Drinking Water (PDW) Industry in Indonesia has been started since 33 years ago
i.e. in 1973. At that time everyone in Indonesia said it’s crazy thing due to almost everyone had no
planned in their life to buy just water, they boiled them selves at home or it can ask to whoever
freely, no charge, why we have to buy? It was a big question initially. It started by PT Aqua
Golden Mississipi (AGM) to package water by name of product AQUA and sell it commercially in
Indonesia beyond pessimism or even negative response from public society generally.
ii. Growth
Hard to find distributors, whole sellers and even retailers who believe in distribute this
water. AGM had no loss the ideas and they started to bring those PDW to end consumers
themselves at the traffics lights and every crowded areas, very corners of main street in Jakarta.
They offered them to bus drivers, taxi drivers, paddy cabs drivers and traders on the traditional or
wet markets. The result, slowly but sure peoples started to accept this products in their life
following hygiene, practice and availability concept offered. Later this PDW success concept has
followed by the other entrepreneurs in Indonesia and build new one industry that quite acceptable
by the consumers up to now and for the future.
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3. Tirta Sibayakindo, PT
Aqua Group is having about 12,000 employees under 17 factories in all over Indonesia.
Export Markets
Export this PDW in Indonesia as administration registered in Harmonized System
Number (HS No) 22.01.1000 (Mineral water and Aerated water).
During 5 years (2001-2005), PDW export was not happy, it can showed by
decreasing of export volume every year except in 2002, no capture further data’s.
Volume
Year Growth (%)
(KL)
2001 32.514,1
2002 104,002,8 219,87
2003 31,999,0 (69,23)
2004 21,909,6 (31,53)
2005 16,645,9 (24,02)
Volume Share
No Destination
(KL) (%)
1 Singapore 15.444 70.49
2 Japan 2.876 13.13
3 East Timor 2.826 12.90
4 Turks & Caicos 266 1.21
Island
5 Brunai 168 0.77
Darussalam
Import
1. Inputs
Contrast with export. In the 5 years, 2001-2005, ever Indonesia has been
imported PDW products coming in and showing growth significantly as below :
Volume Growth
Year
(Ton) (%)
2001 582.6
2002 307.6 (47.21)
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2003 1.188.2 286.33
2004 1.246.2 4.88
2005 2.042.9 63.93
Average 76.98
Import from or Original countries of this PDW from the big to small rank are
Malaysia, France, Korea, China and Singapore.
iv. Substitutes
Today substitution of PDW is Flavor Water. Like AQUA group, they now having a
very good Flavor Water named MIZONE, a Sport Drink concept, still water but enriched
by some useful vitamins and without color but having fruity tasty. Flavor water is the
closest substitution product for PDW in Indonesia. For the consumers side, the alternatives
drink are bottling tea, Coke, Pepsi, Milk and others beverage.
v. New Entrance
Actually, in the market, many of new players coming while many of old players fall
down and quite from the business. Even some companies have no experience at all with this
industry but they are still seeing good opportunity in the market to play. New prospective
players are form local and overseas investor.
This is a projection of PDW consumption in Indonesia 2009 – 2014 :
Consumption
Projection
Year
(MIO L)
2014 19,000
2015 20,000
2016 21,000
2017 22,000
2018 25,000
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c. Industry Associations
1. Organization
There is an association of PDW in Indonesia that called ASPADIN. This organization
formed in 1973
2. Membership
Number of PDW companies has reached about 1000 companies up to 2013.
Membership of association noted in Aspadin is 183 companies only.
Trade
Since 1983, Government has been done a regulation to cut high cost economics by
reducing importation cost and created Indonesia exporter will be more competitive in
the world market.
STRENGTHS WEAKNESSES
Consumers acceptance level on Gentle Distribution
this PDW is quite good
Brand image High cost of
transportation
Capitals Competition among
national and local players
not balanced
Plant : close to the market Laws enforcement
OPPORTUNITIES THREATS
Wide market nationally Import product
Innovation International players
Easier transferring to Refilling station
beverage industry
Export market potential Decreasing of water resources
Peak demand on Fake products
Lebaran season
Cost gap between Small scale of water packing
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factory and market machines development are
driving by the distance suitable for niche local players
of outer island market
CONCLUSION RECOMMENDATIONS
1. PDW industry market has attracted conglomerate 1. To consider Toll manufacturing in effort of
both local and international to grab the market in improving efficiency by using existing
Indonesia like Danone has took over AQUA, Coca- manufacturers facilities in cutting the fix cost.
Cola bought ADES but lately engaged with Nestle
which is bring in their Pure Life popular brand to
Indonesia.
2. Government need to involve by fair treatment to 2. Export need to see as an opportunity market.
everyone in PDW industry.
3. Competition will continue toward beverage 3. Need to concern with environment issues for
business area. both players and government.
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CONCLUSION RECOMMENDATIONS
4. Still need Laws enforcement in regulating playing 4. See opportunity to active Tap Water
and players especially in big cities to redemption bit
about selling price efficiently
5. Niche players are welcome especially in outer 5. Any potential for Local Drinking Water
island. Companies (PDAM) to come to the market
by differentiate their servicing by producing
PDW products as well.
REFERENCE :
Ricky W. Griffin & Ronald J. Ebert, Business 4th Edition Prentice Hall, New Jersey.
Joan Gillman with Sarah White, 2001, Business Plans that Work, Adam Media, an F+W Publications
Company.
Roberta S. Russell & Bernard W. Taylor III, 2003, Operation Management 4th Edition, Prentice Hall,
New Jersey.
Rhenald Kasali, 1998, Membidik Pasar Indonesia, Gramedia
Willie Tan, 2004, Practical Research Methodes 2nd Edition, Pearson, Prentice Hall.
Revino, 2005, Manajemen Material, Panduan Praktis bagi Industri Manufaktur, Penerbit Djambatan.
Internet : Aspadin
Interview to the management of top five related company.
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