Indonesia’s top 100: Korean electronics, global brands still dominate

INDONESIA's TOP 100 BRANDS: RANKING ANALYSIS

Despite the best efforts of Indonesia’s current president to rally his country to buy local, consumers in the archipelago nation continue to rank global brands more highly, according to our ranking of Indonesia's top 100 brands. While nearly a quarter (24) of our Top 100 are Indonesian brands, not one of them places inside the top 20. 

On the surface, this may seem puzzling, since current President Jokowi (Joko Widodo) has made a point of wearing Nah Project sneakers instead of Nikes and drinking Kopi Kenangan instead of Starbucks in public, claiming local brands are just as good or better. “Every political candidate in regional elections is competing to be ‘more Indonesian’” one brand consultant told Campaign. 

But as with nearly all cultures, the best global brands adapt and co-exist locally. So many continue to agitate for national pride, batik clothing is still proudly and widely worn and local foods remain the preferred taste for most. Yet global brands remain aspirational and have historically had a reputation for better quality, says Rene De Paus, strategy director at Superunion in Jakarta.

Some of the global brands that saw sizeable gains in our Indonesian rankings this year were Gucci (+6 to #7), Mastercard (+4 to #16), Visa (+4 to #18), McDonalds (+4 to #33) and Nutella (+10 to #35). Thanks to the addition of our new messaging-services category, WhatsApp leapt into the Top 100 for the first time at #22 while Instagram also gained (+9 to #45).

Yet at the same time, we saw notable drops from Pizza Hut (-4 to #11), Carrefour (-5 to #28), Kraft (-8 to #27) and Microsoft (-4 to #28). Japanese brands in particular had a rough ride with Sony (-1), Sharp (-5), Honda (-3), Toshiba (-1) and Yamaha (-12) all slipping.

Korean brands on top

Unlike Japan, however, Korea is hot in Indonesia now, with electronics brands extending their top billing. Not only did Samsung repeat as the number one brand overall, but rival LG moved up from third place this year to supplant Nestle in the number two position.

Samsung’s dominance in Indonesia has been supported by consistent handset marketing according to Bayu Asmara, an independent Jakarta-based brand consultant who leads DKK Consulting. “As mobile phones increasingly become the most used product for the majority of the population, mobile phone brands have increasingly become the brands people have emotional connections with," he says. "Of the top selling mobile phones, most have been perceived as an ‘affordable’ option. Samsung has always consistently communicated their top of the line features and beautiful design instead. With the iPhone being much too expensive for most people, and Apple not having a direct presence in the country, Samsung has become the most relevant product in this category,” he adds.

Add to that Samsung’s supporting infrastructure, such as experience stores, service centers, and its vast network of authorised distributors, says Asmara, and the brand can easily produce the right product options for different Indonesians from the more expensive Galaxy S to the affordable Galaxy A. Rival LG, meanwhile has managed to create a similar ‘high-quality but still affordable’ perception for all other household items, Asmara explains. 

Facing real competition from Chinese brands in Indonesia like Xiaomi, Oppo, Vivo and Huawei, Korean brands have to work very hard to hold their market share. But compared to their Chinese rivals, they’re more skilled at product launches, marketing and promotions, says De Paus, and spend much bigger budgets to do this.

Asmara says he also suspects Samsung and LG may benefit from negative sentiment towards Chinese and American based on mostly irrational fears of these two countries being the new colonial forces. Korean brands, he says, are a more neutral alternative.

Far more beneficial, however is the influence of increasingly popular K-Culture in Indonesia with K-Pop bands and Korean dramas still on the rise, though sometimes falling afoul of regulators. Samsung actively uses boy band BTS and girl band Blackpink in its Indonesia marketing and sells co-branded products. “Numerous companies now contract K-Idols as their brand ambassadors. This is definitely helping Korean brands build their perception as a high-quality option.” 

Slowly but surely: Indonesian brands rising

Multinationals may have an aspirational advantage, but Indonesian brands are continuing to gain favour. Of the 24 Indonesian brands in the top 100, a majority of them (13) moved higher this year, compared to eight decliners and three which held their position.

“I think the rising support for local brands has been achieved gradually,” De Paus says. He suggests Indonesia’s rising middle-class still opts for local brands based on familiarity with those more affordable brands, rather than because of any innovative local branding.

A good example of this may be in the pharma sector, which has been one of the healthier consumer categories this year, given the Covid-19 outbreak. In our survey, two of the largest Indonesian brand gains are from Kimia Farma (+10 to #43), a formerly nationalised pharma company that makes all sorts of remedy tablets, capsules, syrups and creams, and from local headache, flu and cold pain remedy Bodrex (+16 to #44). In contrast, multinational pain killer brand Panadol fell two positions to #48 this year.

Bodrex has been working actively in the past year to broaden its brand image, even teaming up with local fashion brands to create new lines of streetwear (see one example above). The remedy's traditional buyers, however, are more mainstream. De Paus points out that many Indonesians still rely heavily on general trade channels like wet markets to buy treatments, where local branded medications thrive. These treatments usually source ingredients locally and are less susceptible to supply disruptions under Covid.

But no Indonesian brand gained more in our Top 100 survey than a brand in perhaps the most disrupted category—airlines. Lion Air ascended 19 spots to land at #52 this year, still well behind Air Asia (19) but gaining on national full service carrier Garuda Indonesia (46). This is surprising, given that both Air Asia (-2) and Garuda (-3) slipped lower as Covid set in and Lion Air’s reputation has been dogged by a series of accidents in recent years calling its safety record into question. Multiple sources Campaign spoke with suggested that safety remains a drag on the Lion Air brand and its communications still needs work in addressing the issue. It’s main advantage, they suggest, is purely around affordability and availability, as Lion flies the local routes that other airlines will not.

The second highest Indonesian gainer in the top 100 was online ticket seller tiket.com which rose 18 spots to 72nd overall. While this survey was undertaken only in the early stages of Covid, one expects they will be challenged in the post-Covid environment to hold their place next year. Rival Traveloka was not as fortunate and saw its brand position slip this year, along with Indonesia’s other big digital players Gojek, Bukulapak and Tokopedia—which we address in a separate article (See: Indonesia's unicorns face growing pains).