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The Company is also the exclusive distributor of Marlboro cigarettes in Indonesia. The Company distributes Marlboro pursuant to a long-term distribution agreement with PMID.
N. INDUSTRY OVERVIEW Macroeconomic Overview
Indonesia is the fourth largest country, by population in the world, with a total population of approximately 253 million and a population of persons older than 20 years of approximately 159 million, as of 2014. The population of persons
older than 20 years is projected to grow by 1.4 CAGR from 2014 to 2019, according to Oxford Economics. With nominal GDP per capita in Rupiah that is expected to increase at a CAGR of 9.2 from 2014 to 2019 and disposable
income per capita at a CAGR of 4.2, according to Oxford Economics, rising income levels and positive consumer confidence are expected to drive an increase in consumer spending in Indonesia.
Table 1: Indonesian Macro-Economic Data.
Description Units
2010 2011
2012 2013
2014 2015E
2016E 2017E
2018E 2019E
Real GDP growth 6.4
6.2 6.0
5.6 5.0
4.9 5.7
5.7 5.6
5.5 Nominal GDP per
capita
1
US 3,136.8
3,660.2 3,718.4
3,662.7 3,514.5
3,476.7 3,951.2
4,592.7 5,141.4
5,660.7 Nominal GDP per
capita
2
Rupiah 28,474
32,076 34,851
38,066 41,643
45,861 50,151
54,663 59,474
64,620 Real personal disposable
income per capita
3
Rupiah 21,357
22,471 23,019
23,599 24,573
25,273 26,513
27,678 28,906
30,190 Inflation
5.1 5.4
4.0 6.4
6.4 6.5
4.5 4.2
4.1 4.0
Total population billion
241 244
247 250
253 256
259 262
264 267
— Population 20+ bilion
148 151
153 156
159 161
164 166
169 171
Unemployment rate 7.1
7.1 6.1
5.9 5.8
5.8 5.6
5.3 5.2
5.2
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Source: Oxford Economics, July 2015 Note: E refers to estimates
1 Reflects gross domestic product in U.S. dollar divided by total population. 2 Reflects gross domestic product in local currency divided by total population.
3 Reflects real personal disposable income in local currency divided by total population
.
Table 2: Indonesian Consumer Confidence
Description For the six months ended June 30
For the year ended December 31 2015
2014 2013
2012 2011
2010
Consumer confidence Index 111.3
116.5 116.5
116.4 116.6
109.3 ____________________
Source: Bank of Indonesia Note: Consumer confidence index measures consumers expectations about: current income and job availability against prior six months, appropriate time
to buy durable goods and general economic conditions and job availability expectations over the next six months.
The table below illustrates Indonesia’s economic outlook based on population, nominal GDP per capita and consumer confidence compared to other countries.
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Figure 1: Indonesia’s Economic Outlook
_________________
Source: Oxford Economics as of July 2015 and Statistics Bureau of Countries
1
Consumer Confidence Index, as reported by individual countries’ statistics bureau
The Indonesian population is also becoming more affluent: according to BCG, middle-class and affluent consumers MAC, defined as consumers with a monthly household expenditure of Rp2 million and above, represented
approximately 30 of the Indonesian population in 2012, and is expected to grow to 53 of the population by 2020, and consumer spending is expected to increase correspondingly. Close to 80 of Indonesias MAC population reside in Java
and Sumatra. BCG expects the MAC population to remain concentrated in Java and Sumatra in the near future. Figure 2: Indonesias MAC population 2012
– 2020
_________________
Source: BCG Population and Household Expenditure Database 2012; BCG analysis; Indonesian Government Statistics Office BPS. 1Monthly household expenditure numbers are stained in real 2011 terms adjusted for inflation and include regular household expenditures such as food, utilities,
transportation, communication, and regular household supplies and exclude discretionary spending such as entertainment, restaurant dining and similar categories. Note that the expenditures level is based on data from BPS, which uses regression analysis to remove irregular expenditures. The spending
levels used to define wealth classes in this model may offer from those used by market research agencies to define socioeconomic status levels because of different data-collection methodologies and models.
Indonesia Tobacco Market Overview
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According to PMI, Indonesia is the largest cigarette market in the world, excluding China, with sales volume of approximately 314 billion units in 2014. Among the top three cigarette markets, the Indonesian cigarette market is the
only one registering positive volume growth. The Company believes the market will continue to show a positive volume growth of 1-3 in the next few years.
Figure 3: Top 40 Cigarette Markets 2014
_________________
Source: PMI estimates. Markets selected represent 80 of total industry volumes excluding China, US and Duty Free.
Table 3: Market Volume Growth
in billion units
Top 10 Markets Top 10 Growing Markets
No. Market
Volume 2014
2010 – 2014
