Updated on November 30, 2020
Coffee has been an integral part of Indonesians’ lives for decades. The country is the fourth largest producers of coffee beans in the world. Java, an island in Indonesia, is a synonymous with coffee. Luwak coffee, widely known as the most expensive coffee in the world, also comes from Indonesia.
Large coffee chains in the country include Starbucks, Kopi Janji Jiwa, Kopi Kenangan, Fore Coffee, Kedai Kopi Kulo, Excelso, and Maxx Coffee. Rocket Internet is also backing Flash Coffee which has recently launched in Indonesia, Singapore, and Thailand. Unlike Luckin Coffee which has been trying to covert generations of tea drinkers into coffee drinkers in China, Indonesia tech-enabled coffee startups are facing consumers who are much more welcoming.

Image Source: Fore Coffee
Kopi Kenangan and Fore Coffee have proven themselves to be strong challengers to Starbucks in the country. With more than US$275 million invested into Kopi Kenangan and Fore Coffee since 2018, international investors are bullish on the prospect of the industry. Both startups are the leaders in tech-enabled coffee shop business in the country, and to add icing on the cake Kopi Kenangan disclosed that it has been profitable since late 2019.
Why is the coffee shop business attractive in Indonesia?
Growing Appetite for Freshly Brewed Coffee
Since before the rise of coffee startups in the country, Starbucks has been considered a trendy hang out spot by the aspiring middle-class Indonesians. It is a place where people want to be seen in. Young executives would bring their clients to Starbucks for business meetings, and students would spend hours drinking coffee and studying for their finals. A cup of coffee in a Starbucks in Jakarta will cost consumers around US$ 3.50. To put things in perspective, getting daily caffeine fix from Starbucks in Indonesia for a month will cost more than half of the average Indonesian workers’ salary. The average wage in the country in 2019 is US$ 180.

Image Source: Starbucks Indonesia
When consumers in the United States are talking about third wave coffee culture, Indonesians are just starting to drink freshly brewed coffee. Majority of Indonesians have been drinking instant coffee, with the occasional splurge in Starbucks.
Industry player interviewed by M2insights put the number of freshly brewed coffee consumption at merely 7 percent of the total coffee consumption. Increasing income level in the country coupled with growing number of more affordable tech-enabled coffee shops are allowing more Indonesians to indulge in freshly brewed coffee more often, and in many cases daily.
Prices comparison for coffee drink at various coffeehouses in Jakarta, as of November 2020.
Americano (Small Cup) |
Palm Sugar Coffee Latte (Small Cup) |
Coffee Latte (Small Cup) |
Palm Sugar Coffee Latte (1 Liter Bulk) |
|
Kopi Janji Jiwa |
IDR 15,000 (USD 1.06) |
IDR 18,000 (USD 1.27) |
IDR 18,000 (USD 1.27) |
IDR 85,000 (USD 5.99) |
Starbucks Indonesia |
IDR 32,000 (USD 2.25) |
– |
IDR 42,000 (USD 2.96) |
– |
Kopi Kenangan |
IDR 15,000 (USD 1.06) |
IDR 18,000 (USD 1.27) |
IDR 18,000 (USD 1.27) |
IDR 85,000 (USD 5.99) |
Kedai Kopi Kulo |
IDR 12,000 (USD 0.85) |
IDR 15,000 (USD 1.06) |
IDR 15,000 (USD 1.06) |
IDR 65,000 (USD 4.58) |
Excelso |
IDR 37,200 (USD 2.62) |
– |
IDR 47,700 (USD 3.36) |
– |
Fore Coffee |
IDR 22,000 (USD 1.55) |
IDR 20,000 (USD 1.41) |
IDR 25,000 (USD 1.76) |
IDR 85,000 (USD 5.99) |
Maxx Coffee |
IDR 22,000 (USD 1.55) |
– |
IDR 31,000 (USD 2.18) |
– |
Flash Coffee |
IDR 18,000 (USD 1.27) |
IDR 24,000 (USD 1.69) |
IDR 24,000 (USD 1.69) |
– |
It is More Than Just Serving Coffee
In late 2019, Indonesia-based coffee franchise brand Janji Jiwa introduced a new sandwich shop concept called Jiwa Toast. The company subsequently launched its line of consumer-packaged goods, Janji Bumi. In 2020, Fore Coffee introduced Jamu, a traditional healthy herbal drink, on its menu. Jamu is served warm, and it is a concoction of various spices including turmeric, ginger, lemongrass, and cinnamon.
Other areas where Indonesian coffee startups may work on is vertical integration with coffee grower. This can increase the companies’ profit in the long run, maintain quality, and ensure steady supply of the ingredients. Vertical integration with coffee grower will allow Indonesian coffee startups to be very competitive in offering consumer-packaged goods, and these startups could bring Indonesian arabica coffee and luwak coffee to more consumers worldwide.
Unique Selling Points of the New Coffee Shops
Tech-enabled
Fore Coffee launched its mobile app in December 2018. Kopi Kenangan launched its mobile app slightly later in April 2019, and it counts 600,000 monthly active users as of the end of 2020. Janji Jiwa, which did not start as a tech-enabled coffee shop, also jump on the bandwagon, and it launched the Jiwa+ mobile app in September 2020. Since before launching their own apps, the coffee shops have also been working with other technology platforms in Indonesia. These coffee shops are present on online food delivery platforms, Grab and Gojek, and e-commerce platforms, such as Tokopedia and Shopee.

Fore Coffee App
Grab-and-go Model
Kopi Kenangan, Fore Coffee, and Janji Jiwa have been focused on the grab-and-go model; whereas, Starbucks Indonesia is investing in larger spaces with comfortable seating areas. The grab-and-go business model allows the new coffee startups to cut cost on rental and manpower. These allow them to offer cheaper prices, serve more customers, and scale up quickly. The apps which they launched also let consumers order drinks directly from their mobile phones, complete the transaction using mobile wallet, and just pick up the drinks when they arrive at the shops.
Traditionally Non-prime Areas
Janji Jiwa and Kopi Kenangan have more branches in the suburbs where the higher-end coffee shops have not penetrated. These strategies have proven to work better during the COVID-19 outbreak in 2020, because consumers were encouraged to work from home. Kopi Kenangan and Kopi Janji Jiwa are closer to the residential areas. They have branches in shop houses and gas stations. This strategy comes with the added benefit of lower rental cost.

Image Source: Coffee Times ID
Understanding of Local Taste Preference
The most popular drink served by Indonesian coffee startups is milk coffee with palm sugar. This drink was first popularized by a local Indonesian coffee shop Kopi Tuku in 2015. When many countries in the Asia Pacific region were hit with brown sugar bubble milk craze, Indonesians started a slightly different food trend of palm sugar milk coffee, with the occasional topping of bubble.
The coffee startups also serve the traditional coffee offerings found in typical western coffeehouses, such as americano and lattes. Their menus features Thai milk tea, matcha latte, ice durian, ice avocado, and jamu. The Indonesian coffee startups offer drinks for all type of consumers, not just coffee drinkers.

Kopi Kenangan Palm Sugar Milk Coffee | Tiger Sugar Brown Sugar Milk
Scalability of the Business
In 2019, Kopi Janji Jiwa has overtaken Starbucks based on the number of stores in Indonesia. Kopi Janji Jiwa, founded in 2018, has over 800 locations across Indonesia. Kopi Kenangan, founded in 2017, has close to 400 stores in Indonesia as of the end of 2019. Starbucks, which has been in Indonesia since 2002, has 440 outlets as of February 2020.
The grab-and-go model, lower manpower cost, and cheaper rental expense per store has allowed the new players to quickly expand in the market.
First Opening | Outlet and Coverage | |
Kopi Janji Jiwa | 2018 | 800 in 50 cities (April 2020) |
Starbucks Indonesia | 2002 | 440 in 25 cities (February 2020) |
Kopi Kenangan | 2017 | 400 (End of 2020) |
Kedai Kopi Kulo | 2017 | 300 (February 2020) |
Excelso | 1991 | 126 (August 2019) |
Fore Coffee | 2018 | 117 (April 2020) |
Maxx Coffee | 2015 | 83 in 23 cities (April 2019) |
Flash Coffee | 2019 | 8 in Jakarta, Singapore, and Bangkok |
According to the financial report of Starbucks’ Indonesian franchisee PT MAP Boga Adiperkasa Tbk (IDX: MAPB) dated September 30, 2020, its asset relating to the Starbucks Indonesia operations was valued at IDR 2,122 billion (approximately US$ 143 million). This roughly equates to US$ 357,000 per store. As comparison, Kedai Kopi Kulo and Kopi Janji Jiwa allows franchisee to open a store with as little as IDR 150 million (approximately US$ 10,700). Based on M2insights’ survey of Indonesian industrial kitchen suppliers, the average capital expenditure for other coffee startups are below IDR 300 million (approximately US$ 31,400) per store, excluding rental cost.
What is next?
The COVID-19 pandemic has slowed down the number of stores opening and forced the startups to rethink its expansion strategy.
In November 2019, Fore Coffee announced that it would be opening 1,000 locations across Indonesia through a strategic partnership with Traveloka-backed hotel chain Airy. By the end of May 2020, Traveloka has closed the Airy hotel chain due to the pandemic. In May 2020, Kopi Janji Jiwa stated its sales has gone down by as much as 50 percent due to the pandemic, and the company was working to ramp up its online sales.
In 2020, consumers are seeing more Kopi Kenangan branches opening in residential area. All the coffee startups have also adapted to the change in consumer behaviour by introducing its drinks in 1 liter bottles, to allow consumers who work from home to stock up on their caffeine needs.
In 2021, the coffee startups are expected to innovate by introducing more consumer-packaged goods and other food and beverage options in their stores. Starbucks has been successful in offering its consumer-packaged goods line in collaboration with Nestle. The coffee startups could follow this playbook by offering ground coffees to their loyal consumers.
The growth in number of stores is also expected to increase as Indonesia recovers from the pandemic. With large number of stores opening in the country, these new coffee shops can offer other food and beverage options, start cloud kitchen service, or even leverage on its strategic locations to become a distribution point for FMCG products.

Janji Bumi | Jiwa Toast
Image Source: Janji Jiwa
The Current Players in Indonesia
Starbucks
Starbucks (NASDAQ: SBUX) is the world’s largest chain of coffeehouses that was established in 1971 in Seattle, Washington. As of early 2020, there are over 30,000 Starbucks locations across 70 countries. The company also provides consumer-packaged goods through a licensing deal with Nestle.
Indonesia-listed General Atlantic-backed company PT MAP Boga Adiperkasa Tbk (IDX: MAPB) is the Indonesian franchisee of Starbucks. MAP Boga and its Indonesia-based affiliate and majority shareholder PT Mitra Adiperkasa Tbk (IDX: MAPI) prides themselves as the number 1 lifestyle retailer in Indonesia where the group of companies runs department stores and distribute foreign fashion merchandises. In the food and beverage space, the group is the Indonesian franchisee for Domino’s Pizza, Krispy Kreme, Burger King, Cold Stone Creamery, and other international brands. The Indonesian group has worked with Starbucks since at least 2002, and it currently operates around 440 Starbucks across 25 cities in Indonesia.
Based on MAP Boga’s quarterly financial report dated September 30, 2020, the company’s total assets are valued at IDR 2,612 billion (approximately US$ 176 million), and 81 percent of the assets are related to its Starbucks operations. MAP Boga recorded a total revenue of IDR 1,457 billion (approximately US$ 98 million) for the nine-month ending September 30, 2020, a decline of almost 35 percent compared to the same period in 2019. MAP Boga has a market capitalization of around IDR 2,970 billion (approximately US$ 211 million) as of end November 2020.
Indonesians’ love affair with Starbucks is unique. Starbucks has found it difficult to win the Vietnamese market, due to the strong local coffee culture. In fact, in the top five coffee producing countries in the world, Starbucks appears to perform best in Indonesia. Brazil, the top producing coffee nation, with slightly smaller population, but higher disposable income level, only has 119 Starbucks locations.
Fore Coffee
Fore Coffee is an Indonesian chain of tech-enabled coffeehouses that was established in 2018. The company sources, roasts, and develops its own espresso blend using 100 percent arabica beans. Fore Coffee operates 117 outlets across Indonesia as of April 2020.
The company was incubated by Indonesia-focused venture capital East Ventures to test how robust the country’s new digital infrastructure can be. It taps into other unicorn companies’ ecosystems, including Grab, Go-Jek, Tokopedia, and Traveloka, to get its coffee out to consumers. East Venture’s managing partner Wilson Cuaca stated, “Fore is our model for ‘super-SME’ — SME done right in leveraging technology and digital ecosystem.” Fore Coffee was founded in 2018 and has raised US$39.50 million from global investors, including East Ventures, Pavilion Capital, and Insignia Venture Partners.
Fore Coffee was the first in Indonesia to differentiate itself from Starbucks with its online application launched in 2018, where users can order for drinks to be picked up or delivered to them. The startup also sells coffee subscription and coffee in bulk packaging for home consumption. To cater to local taste, the company has launched ice durian, ice avocado, and jamu drinks.
In May 2020, Tech In Asia reported that Fore Coffee has closed 16 out of its 133 outlets due to the Covid-19 pandemic. The company has earlier announced in 2019 that it would be opening 1,000 stores at Traveloka-backed Airy hotel chain. Traveloka has closed Airy as of May 2020 as part of its restructuring.
Kopi Kenangan
Kopi Kenangan is an Indonesia-based tech-enabled grab-and-go coffeehouse that was established in 2017. It operates close to 400 locations around Indonesia as of November 2020.
The startup has raised over US$230 million as of May 2020 from global investors, including GIC, Horizon Ventures, Sequoia Capital, and B Capital. Various angel investors, including Jay-Z and Serena Williams, have also reported invested in the company. The startup’s CEO and co-founder, Edward Tirtanata, has stated to the media that the company has seen positive EBITDA since the end of 2019. The company wants to expand regionally, and an IPO is planned for 2022.
Kopi Kenangan opened its first branch at the Standard Chartered office building in Jakarta in 2017, on a 100 square feet space across Starbucks. On its first day of operation, the small stall sold 700 cups of coffee. The company quickly expanded its operation by opening more branches, and each branch was able to recoup its initial capital expenditure within five months of opening.
The company received US$ 8 million seed investment from Alpha JWC Ventures in 2018, and it ended the year with 22 stores. In April 2019, Kopi Kenangan launched its app after receiving Series A investment from Sequoia Capital. By the end of 2019, the company has 233 stores across Indonesia. When the coffee startups were hit by the pandemic, Kopi Kenangan shifted its focus from opening branches at the central business districts to opening more branches near the residential areas to serve consumers who are working from home. Kopi Kenangan is expected to have close to 400 branches across Indonesia by the end of 2020.
Flash Coffee
Flash Coffee is a Southeast Asian tech-enabled chain of coffeehouses founded in 2019 with investment from Rocket Internet and Flash Ventures. Flash Coffee claimed that it offers affordable coffee curated by award winning latter art champions. As of November 2020, Flash Coffee operates seven coffeehouses in Jakarta, Singapore, and Bangkok.
Flash Coffee is the first coffee startup to branch out of Indonesia. Its menu resembles other Indonesian coffee startups, with palm sugar coffee latte and avocado latte.
Kopi Janji Jiwa
Kopi Janji Jiwa is a coffeehouse franchise that was established in 2018 and is based in Indonesia. After the success of Kopi Janji Jiwa, its parent company Jiwa Group launched a chain of sandwich shop in Indonesia named Jiwa Toast. Jiwa Group subsequently launched a range of snacks, named Janji Bumi, made from sweet potato.
No information was found to suggest that the company has received any outside investment since its inception. As of the end of 2019, the company was selling 5 million cups of coffee per month from 700 locations across 50 cities in Indonesia. Although the company saw a decrease in sales by as much as 50 percent in April 2020 due to the pandemic, it has been reported that the number of locations has grown to 800 during the year. It has also followed other Indonesian tech-enabled coffeehouses by launching its own Jiwa+ mobile app in September 2020.
Kopi Janji Jiwa allows anyone to open a store with as little as IDR 150 million (approximately US$ 10,700). According to media reports, franchisee can expect to recoup its initial investment within 6 to 12 months of opening.
Kedai Kopi Kulo
Kedai Kopi Kulo is an Indonesian coffeehouse franchise started at the end of 2017. There are 300 Kedai Kopi Kulo branches across Indonesia. Kulo Group, the coffee chain’s parent company, has since introduced other food and beverage concepts, including Japanese food chain, Korean barbecue chain, and bubble tea store chain.
No information was found to suggest that the company has received any outside investment since its inception. As of 2020, there are 300 Kedai Kopi Kulo branches across Indonesia. Franchisee can open a small Kedai Kopi Kulo booth with an investment of around IDR 150 million (approximately US$ 10,700).
Kedai Kopi Kulo opened its first store in the Cikajang district of South Jakarta at the end of 2017 with seed capital of less than IDR 100 million. On its first day, the company sold less than 20 cups of coffee. Through direct marketing to friends and offices in the vicinity, the stall managed to increase its sales to around 300 cups of coffee per day. Within four months of its founding, the company’s founding team decided to offer franchise system to grow the number of branches. In 2020, a Kedai Kopi Kulo sells an average of 250 to 300 cups of coffee per day, and the company is targeting to have 500 branches by the end of 2021.
Maxx Coffee
Maxx Coffee is an Indonesian coffeehouse chain founded in 2015. The company operates around 83 stores in 23 cities across Indonesia. The company also operates two stores in Singapore and is planning to open another four stores in the city state. Maxx Coffee was a subsidiary of Indonesia-based conglomerate Lippo Group.
Maxx Coffee is arguably the first Starbucks challenger from Indonesia, which was founded before the ice coffee drink trend picked up in the country around 2018. Maxx Coffee operates in Lippo-operated shopping malls in various cities across Indonesia. In the first quarter of 2020, Singapore-listed affiliate of Lippo Group, OUE Limited (SGX: LJ3), acquired 88.43 percent stake in Maxx Coffee for US$16.36 million.
Doing business in Indonesia
M2insights has extensive business experience and on-the-ground market research capabilities in the largest economy in Southeast Asia.
Looking at other markets
M2insights offers market research and consulting services to businesses looking to expand or invest in Southeast Asia