Hi South East Asia

27 – 29 March 2018
Jakarta International Expo
Reviewing the market

Slide 2
Reviewing the market
The Health & Wellness (H&W) market is made up of
segments that lie along a spectrum from food to
supplements to medicine

Source: L.E.K. Research & Analysis

Slide 3
The case for health ingredients
in South East Asia

Slide 4
The case for health ingredients
in South East Asia

• H&W food sales in Asia Pacific1 have seen tremendous growth in recent years. It is the world's largest market for
functional foods (US$97bn in 2016) and for vitamins & dietary supplements (US$41.8bn).

• South East Asia2 is an important growth driver in the region, with an overall H&W market of US$30.7bn (2016).

• Functional foods have seen rapid growth across South East Asia since 2011, and are now the largest H&W
segment worth $17.4bn (2016). 9% CAGR is forecast between 2015 and 2020.

• Vitamin and dietary supplement (VDS) sales are also set to rise in South East Asia. Worth $4.8bn in 2016, CAGR of
9% is predicted to 2020.

1 China, Japan, South East Asia, South Korea, Taiwan, India

2 Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam

Sources: Euromonitor, L.E.K. Research & Analysis; Future Market Insights

Slide 5
What’s driving growth for health
ingredients in South East Asia?
Demand-side drivers

• As economies develop, eating habits are changing. More people can afford Western-style fast food, which is
associated with social status, leading to a rise in lifestyle diseases like obesity, cardiovascular disease and cancer.

• Thanks to information campaigns, there is growing awareness of the link between food and health.

• Consequently, the emerging middle class is also the major growth driver for H&W foods. More consumers are
spending their disposable incomes on foods that may prevent, or address the root causes of, lifestyle- and age-
related diseases.

Supply-side drivers

• Companies are investing in R&D and production capacity to meet demand. As well as catering to the middle
class, new concepts are needed to lower the price barrier for lower-income consumers with healthy intentions.

• Health and wellness products are now widely available in supermarkets and hypermarkets – and online retail
channels are developing fast and are predicted to become as important as ‘bricks and mortar’ outlets.

Sources: Euromonitor, L.E.K. Research & Analysis; Mintel; FoodNavigator Asia; Future Market Insights.

Slide 6
Health ingredients companies
also face challenges in SE Asia

• Uneven regulatory landscape. Harmonisation of supplement regulations for ASEAN countries, expected in 2015, has
been delayed, meaning companies must deal with a different framework for each market.

• Permitted health claims also vary between countries (see slide 19), meaning companies may need to make
multiple submissions for the same ingredient.

• Raw material supply chain issues are affecting growth for some ingredients, particularly those that face competition
from the wine, beer, baking and fermentation industries (e.g. beta glucan, derived from yeast, which is also
required in baking and fermentation).

Sources: Future Market Insights.

Slide 7
Indonesia is in
the top 10 global
markets for
health and
wellness

Slide 8
 Indonesian vitamins & dietary
Indonesia is in
•
supplements market is one of the
largest in SE Asia and expected to grow

the top 10 global at 12% CAGR between 2015 and 2020.

Indonesian functional foods market is

markets for
•
one of the largest in SE Asia, worth an
estimated US$253.4 in 2016 and

health and expected to grow at 4.5% CAGR to

2026.

wellness • Indonesia is one of the four South East

Asian countries that publishes permitted
health claims publicly.

• Functional food claims are permitted.

• Regulation uses the term ‘functional

foods’ and provides specific
requirements for use of the term.

• Disease risk reduction claims permitted

(higher level health claims)
Sources: L.E.K Research & Analysis; Future Market Insights; Drug and Food Supervisory Agency (BPOM), Indonesia

Slide 9
 Indonesia at a glance

Sources: CIA World Factbook, World Bank, Boston Consulting Group

Slide 10
 Growing consumer awareness and concern
about healthy living in Indonesia, significantly
greater than the regional average

Source: Herbalife health awareness online survey 2015 (*c. 800 participants, mainly in Java)

Slide 11
 The Indonesian functional food market is
largest in SEA and experiencing strong growth

Source: L.E.K. Research & Analysis

Slide 12
 Indonesia is one of the largest & fastest
growing regions for vitamin and dietary
supplements (VDS)

Source: L.E.K. Research & Analysis

Slide 13
 Significant growth forecast in functional foods
ingredients in Indonesia

Forecast growth – all functional

food ingredients
450
400
350
300
CAGR of 4.5% to 2026
US£ million

250
200
150
100
50 Incremental market
0
2015 2016 2017 2018 2019 2020 2021 2026
opportunity of US$140.9
_
(a) (e) (f) (f) (f) (f) (f) (f) between 2016 and 2026
Value 241.7 253.4 264.4 277.3 289.2 305.5 319.3 394.4

Source: Future Market Insights

Slide 14
 Vitamins, omega-3 and probiotics have
highest value and predicted growth in
Indonesia to 2026

Indonesian vitamin
market worth US$71.4m
Growth trajectory by ingredient type
140
in 2016. CAGR of 5.3% Vitamins
to 2026 120
Minerals
100
Indonesian omega-3
Prebiotics and dietary
market worth US$53.5m US$ millions 80 fibre
in 2016. CAGR of 5.5% 60
Probiotics
to 2026
40 Carotenoids
Indonesian probiotics
20 Protein
market worth US$45.3m
in 2016. CAGR of 3.9% 0 Omega-3
2015 2016 2017 2018 2019 2020 2021 _ 2026
to 2026

Source: Future Market Insights

Slide 15
 Functional dairy/dairy-based products
represent the biggest opportunity in Indonesia
by application

Growth trajectory by application

180
160
140
Indonesian
120
Beverages functional dairy/
US$ million

100
Dairy and dairy-based dairy based
80
Infant food products market
60 Bakery and confectionery worth US$69.6m in
40
2016. CAGR of
20
5.3% to 2026
0
2015 2016 2017 2018 2019 2020 2021 _ 2026

Source: Future Market Insights

Slide 16
 Key insights on Indonesian consumer trends

Around 50% of functional foods

Weight management products promote benefits including high
(e.g. functional meal calcium.
replacements and dairy yoghurts)
are popular with mid-to-high Other key positioning includes
income urban consumers, sugar-free, low calorie, weight-
especially younger females. loss/management, and body
building.

High income VDS customers drive

Middle-to-low income VDS
growth in fish oils and omega-3
customers focus on improving
fatty acids.
immunity/ preventing illness.
There is increased awareness of
Affordability and manufacturers’
perceived benefits for
promotional efforts drive vitamin
cardiovascular function, brain
sales.
function and joint health.

Source: L.E.K. Research & Analysis

Slide 17
Functional foods in Indonesia | Samples

Slide 18
Allowance of health claims per country –
Indonesia compared to rest of South East Asia

Sources: Drug and Food Supervisory Agency (BPOM), Indonesia; Ministry of Health Malaysia; FDA Malaysia; FAO Codex Alimentarius; FDA
Philippines; Singapore Sale of Food Act, Chapter 283; Thai FDA; Vietnam Ministry of Public Health

Slide 19
Allowance of health claims per country –
Indonesia compared to rest of South East Asia

Slide 20
Evidence to substantiate new health claims –
Indonesia compared to South East Asia

Sources: Drug and Food Supervisory Agency (BPOM), Indonesia; Ministry of Health Malaysia; FDA Malaysia; FAO Codex Alimentarius; FDA Philippines; Singapore
Sale of Food Act, Chapter 283; Thai FDA; Vietnam Ministry of Public Health

Slide 21
Evidence to substantiate new health claims –
Indonesia compared to South East Asia

Slide 22
Unique Selling Points
Hi South East Asia

Slide 23
Unique Selling Points
Hi South East Asia
• Event focus on food health ingredients • The event features a 3 day Health
for nutraceuticals, functional food and ingredients South-East Asia conference
vitamins and dietary supplements
• Supported by GAPMMI, IUFoST,
• Annual event in Indonesia, providing International Society of Functional Foods
access to the largest South-East Asian and Nutraceuticals, SEAFAST CENTER,
market for functional food ingredients PATPI, Badan POM National Agency of
and one of the largest markets for Drug & Food Control etc.
vitamins and dietary supplements
• The event is co-located with CPhI SEA,
• The health ingredients market is the leading pharma ingredients
expected to growing over 11% annually exhibition in South East Asia

• Indonesia offers clear health claim • The event offers matchmaking and
regulations and acknowledges certain networking opportunities, pre-show and
disease risk reduction and functional onsite
food claims

Slide 24
Pan – Asia:
Maria Lioe: Maria.Lioe@ubm.com

Rest of the world:

Federico Fiorilla: Federico.fiorilla@ubm.com

Don’t delay! Act today.

Contact our team. Slide 25