TechNode gathered three industry experts at its ORIGIN Indonesia Conference, hosted at the Wild Digital Indonesia Conference’s main stage on November 26, for a discussion on “Serving Fresh Funds: Food trends and innovation.” Eng Seet, the vice president at Openspace Ventures, began the discussion by asking, “How have the shifts in food and agricultural trends influenced the supply and demand?”
“Increased level of digital literacy among rural populations and farmers creates new opportunities in a digitally-driven agriculture ecosystem,” said Pamitra Wineka, the co-founder and president of TaniHub, an Indonesia-based agri-fintech company. “More farmers are selling their products online but face challenges in finding the right market” he added, noting that the intervention of middlemen in the supply chain has led to an inefficient agricultural sector.
Edward Tirtanata, the CEO and co-founder at Kopi Kenangan, an Indonesian grab-and-go coffee chain, said, “The rise of online food order and delivery reflects the changing consumer’s behavior where speed and convenience are the key factors.” Indonesia’s online food delivery industry generated a revenue of US$1,443m in 2019 and it is expected to grow 15.1% annually, hitting a market volume of US$2,536m by 2023.
Brand-driven storytelling
“Making a brand resonate with consumers through stories that they can connect with encourages organic word of mouth discussion,” said Tirtanata. “Kopi Kenangan Mantan,” an Indonesian phrase which is loosely translated as memories of your ex-girlfriend/boyfriend, cited by Tirtanata is an example of an emotionally-resonating drink on his menu. The coffee chain startup rose to fame with organic social media posts despite minimal to zero marketing dollars spent.
“We are encouraging consumers to support local produce and farmers so they can have a better life,” said Wineka. “TaniHub disburses microloan funds to help farmers increase the quality of their produce,” he added, noting that consumers generally prefer grade A produce. Wineka suggested that consumers nowadays buy the stories you tell and brands can leverage this emotional connection.
China trends can’t be 100% replicated in SEA
Southeast Asian companies are increasingly adopting and modifying proven business models in China to plug into the SEA market. “We always benchmark ourselves against one of China’s industry giants,” said Seet. It is not the same in practice as these two ecosystems are largely different, he added, citing the comparison between TaniHub and Meicai, and Kopi Kenangan and Luckin Coffee, as examples.
“China is a nation of tea-drinkers while Indonesia’s obsession with coffee consumption is at an all-time high with 93% of them drinking only instant coffee,” said Tirnata noting that Luckin Coffee’s tea-based beverage line is pulling in more customers for the company.
In contrary to Luckin Coffee’s emphasis on store pick-up with its intensified store density, Kopi Kenangan is riding the food delivery boom to bring sales revenue to its physical stores. “As technology and convenience integrate into consumers’ habits and lifestyles, they get more accustomed to ordering online from a particular store,” said Tirnata. Leveraging the online orders turns the physical store profitable, he added.
“The upside of being compared to a China equivalent is that investors are interested in companies that have a validated business model,” said Wineka. While it may seem both Meicai and TaniHub are connecting farmers to the b2b buyers, he noted that Indonesia’s digital payment ecosystem is largely different from the one in China.
Wineka lauded the highly efficient and integrated digital payment system in China, which he believes is a key factor in Meicai’s rapid growth. “Indonesian farmers generally prefer receiving cash to reduce the time spent on traveling and waiting to collect payments from the banks,” he added. However, Wineka believes that this situation will change as the ecosystem matures, with the introduction of e-wallets in rural areas.