The Indonesian Zero Waste Market: a promising niche market with the potential to accelerate

How the Indonesian Zero Waste Market is a promising niche market that is ready for growth and becoming a sustainable gamechanger towards plastic pollution on the long-term

In between mountains of natural beauty and trash
Indonesia is home to some of the richest and most unique terrestrial and marine biodiversity areas. Mangroves, wetlands, rainforest, endemic plants and vertebrates, volcanoes, and a similarly rich underwater world characterize the beauty of Indonesia as a top three biodiversity hotspot ^​1​. However, Indonesia is one of the most depleted habitats with only 7,8% of its primary vegetation remaining ^​1​. Among other things, plastic pollution is a key threat for the environment that is being increasingly challenged by future urbanization, growing coastal populations, low policy enforcement and in particular increasing plastic littler in mangroves, rivers and eventually the ocean^​2​. All things considered, Indonesia is estimated to be the second biggest polluter of plastics into the ocean^​3​ with its coral reefs being the most plastic-ridden in the Asia-Pacific^​4​, Citarum river (Java) being one of the most polluted rivers in the world, the Bantar Gebang being the largest open landfill site in the whole of South East Asia^{​5​ ​6​}.

Urbanization increases the demand for packaged food
Modern’ consumption is on the rise in Indonesia. Traditional markets are still serving a majority of the population, but the trend of the amount of mini-markets shows a steep increase in in the last years. Today, 59% of Javas population lives in urban areas and this is expected to reach 78% in 2035 ^​7​. Urbanization is associated with an increasing consumption of packaged food ^​8​. In a business-as-usual scenario, the demand for packaged goods is projected to rise in Indonesia, while single-use plastics leak into the environment and oceans already today.

Zero Waste: A new market on the rise

We can’t assume that our oceans are capable to deal with the truckloads of plastics entering it every minute ^​9​. But we can fix it. And the emerging zero waste market in Indonesia is a sign of hope. Four key aspects are driving this new market: Firstly, Indonesia’s political leaders show a strong commitment to cut plastic pollution. Secondly, the country sees an economical opportunity to support a tech start-up scene, a chance that could help zero waste entrepreneurs to thrive as well. Thirdly, the tourism sector is threatened by the increasing plastic pollution. Fourthly, switching single-use plastics to reusables unlocks new markets and is economically attractive.

Political will to cut plastic pollution and support tech start-ups

Today, continuous growth and investments project a positive outlook for a further growing trend of its economy (World Bank, 2018). Social awareness among consumers is growing as Indonesia’s plastic pollution is on the agenda of local and global NGOs. The record as a second biggest polluter also puts Indonesia in the global spotlight. The good news: political will is also rising locally. Indonesia’s president Joko Widodo announced: “Indonesia is to reduce wastes through reduce-reuse-recycle up to 30% until 2025, and targeting reduction of marine plastic debris as much as 70% by 2025“ ^​10​ Additionally, the country’s goal is to create new 1,000 tech startups by 2020 ^​11​. A positive set-up to also drive momentum in the zero waste entrepreneurial ecosystem.

Diving in a plastic soup threatens tourism sector
Concern in local media is rising that plastic pollution is also an increasing threat for the tourism sector on Bali ^​12​ and Indonesia’s fishing industry. The tourism sector is a major economic driver and accounts for 5,8% of GDP in Indonesia, peaking at islands such as Bali.

“This means that when the coastal environment is destroyed, tourism will be destroyed and the economy of Bali will also be destroyed.”

_{Bali Tribunal, based on research by Hendrawan}

The potential economic losses deriving from environmental degradation therefore create a business case to reduce single-use plastics, especially in the view of Indonesia’s strategy to exponentially grow their tourism sector and attract 20 million tourists this year (2019)^​13​. Paradoxically, the sector itself also drives an increase in demand of single-use plastics. Thus, this also offers an opportunity to stand out and reimagine a zero waste tourism and restaurant experience.

Switching single-use plastics to reusables is economically attractive
Modernization of markets, hectic lifestyles of busy professionals and rising disposable income fuel more plastic packaged goods and lead to a growth prediction of 8% annually for the plastic packaging market^​14​ . As explained earlier in the previous blog this is a multi-billion market globally, and an estimated a $500 million market in Indonesia alone ^​11,15​.

Amount of zero waste enterprises is growing, but early stage

Let’s discover and explore the currently active zero waste entrepreneurs and start-ups that already capture the market opportunity and reduce single-use plastics at the source.

Within the Zero Waste Living Lab we thoroughly examined the entrepreneurial space in Indonesia, Java, in terms of business, and met inspiring start-ups and pilot projects that aim to reduce single-use plastics.

The plastic-free, (social) entrepreneurs on Java
All together about 54 entrepreneurs are identified that enable the reduction of single-use plastics through a zero waste shopping experience, alternative material solutions or refill and reuse systems. Main hotspots for zero waste entrepreneurs emerging are Jakarta, Bandung, Bali and Surabaja, with Surbaya being less crowded.

Zero waste stores: the new, old shopping experience
The most prevalent zero waste shopping opportunities are through local and online zero waste and bulk food stores, with about one third of the zero waste entrepreneurs on Java and Bali. The product offering from the store ranges from dry food, spices, to reusable zero waste kits to bakery products and fresh foods. Items selling well are reusable straws, zero waste kits and dry foods, such as chia seeds, that are cheaper in some than in common grocery stores because of bulk sales.
Another business trend that is emerging are zero waste farmers markets. Four farmers and community markets could be identified in this research that are committed to a plastic-free consumption. The markets are usually not just a pure shopping experience, but rather has an event character. People meet, enjoy a fresh drink and snack and alongside shop products.

Zero waste restaurant and travel experience
Holistically sustainable restaurants and travel experiences strive to be zero waste as well. Inspiring for the consumer is the wholeness of the experience. In example, on the island Pulau Macan, tourists may not bring plastics, but instead are invited to enjoy a zero waste holiday. Complete with harvested and filtered rain water, a stay in a hut of locally, recycled materials, the joy of a fresh sea breeze instead of an air conditioning and completely skip any sort of sachets that are typically widespread in the hospitality sector. This experience is not just about the weight of single-use plastics reduced, but can lead to long-term lifestyle changes, for the better.

Reusable & home maker products
This category encompasses about 20% of the scouted social entrepreneurs and is rather diverse. Social entrepreneurs in this field range from a professional manufacturing of affordable water filters to reusable food delivery bags or reusable diapers. Emerging more and more are also home-made textiles such as a bags, beewax wrapping and home-made cosmetics such as soaps and shampoo bars. Soaps and shampoo bars are mainly distributed ‘naked’, without packaging. One shampoo bar for example has the impact potential to reduce 3-4 bottles of shampoo. And, depending on the brand, cheaper than conventional shampoo.  

Personal care products are currently limited in their scalability
We identified various entrepreneurs working in the business of personal care products. Starting from a home production and delivery, mostly with natural and organic ingredients, they serve on average about 300 customers per month through the social media and online channels. Many of them expressed the challenge of scaling, mainly limited by the access to capital and a license to operate a proper production.

Refill and reusable systems are all still in pilot mode
Revolv, Hepi Circle and Kecipir are currently the only piloting refill and delivery systems that could be identified on Java. Deposit Schemes for bottles (Heal Beverages) or food containers (Kommunal 88) are operated on a very small scale through businesses of their own but not yet in a service-system manner. Taksu (piloted by Plastik Detox Bali) is rental service based on a deposit scheme for reusable cutlery and tableware for festivals and events. This segment shows a huge potential to ideate, create and build new service-product systems with a great impact potential.

Still a niche market, but rising amounts of zero waste entrepreneurs

Evaluating the development of the current zero waste entrepreneurs over time, we can observe an exponential growth since 2018, with a positive trend also at the start of 2019. As mentioned, entrepreneurs in the field see an increasing opportunity in the zero waste market, with zero waste not being a trend, but becoming a lifestyle.

However, let’s also bring this in relation to the context of Java or Indonesia as a whole: with a population of 264 million people, it quickly becomes clear that the movement is still small and fragmented serving only a highly limited fraction of the population.

In terms of accessibility of the presented business solutions, it is visible that a large share of the businesses only operates on a very local level. With the ambition in mind to mainstream zero waste and a single-use plastic free lifestyle, the reach has to be scaled drastically.

#PlasticPollution going viral fuels Indonesian social entrepreneurs to turn this challenge into a chance

Along with a rising global concern of plastics entering the ocean in Indonesia, a rising engagement of local consumers in Indonesia becomes apparent on social media. The mentioned iconic whale full of plastic at Indonesia’s coast in November 2018, and the British diver swimming in an ocean of plastics in Bali earlier in 2018 went viral on social media. Instagram followers are growing exponentially on a daily basis, ranking Indonesia as the second highest social media outreaches for #zerowaste and #plasticpollution, after Vietnam, showing that more and more consumers are looking for zero waste opportunities.^​*​

“Since mid of 2018, people start asking if they could have a delivery without plastic. I think the picture of the whale full of plastic that went viral really made people rethink.”

_{Farm-to-fork businesse Kecipir Founder Tantyo}

The phenomena of Instagram entrepreneurs
Starting in a very lean way, without much business infrastructure like an office, an interesting phenomenon is rising in Indonesia: zero waste Instagram entrepreneurs. Instagram and WhatsApp are key communication channels in Indonesia. In Indonesia, Instagram counts 62 million monthly users which is about one fourth of Indonesia’s population and ranks Indonesia fourth in a global comparison ^​16​. Instagram is for free and an easy platform to test and launch new ideas, products and services. More and more zero waste entrepreneurs can be discovered that offer home-made products such as soaps, reusable cotton pads or bags.

Barriers that challenge zero waste innovation in Indonesia

As we are interested to identify the market opportunities to bring the zero waste market to maturity, we need to understand the key challenges and barriers that zero waste innovations face. Zero waste innovations are in competition with single-use plastics that currently provides many benefits for people. Let’s understand the perceived benefits and habits of single-use plastic packaging in the local context of Indonesia.

Single-use plastics are cheap, lightweight and convenient
Competing with plastics is not an easy battle. Single-use plastics are cheap and therefore mostly given for free to customers. Switching to reusables usually demands a bit more financial investment such as a reusable cup or bag and sometimes an extra effort as one has to bring the cup always. How might we design systems that reward this new habit, ensure convenience and attach a personal value to reusable items?

Cupped water and small bottles part of the service culture and kindness
Single-use plastics are a cheap packaging that serves as a service gesture by the vendors. Plastic bags are understood as a kindness by both sellers and consumers. Usually, Indonesian are hesitant to reject kindness from other people. “No, no, you have to take the bag.” It is part of the baraka, in Arabic, meaning blessing, for them to give you. And people who receive it will be like, “Oh I don’t like him to feel hurt or unaccepted. It is not easy in Indonesia to say no.” ^​†​ Offering a plastic bag to one’s customers at the warung or a cupped water to a visitor is a service. Even the taxi-driver or the airline has 150ml bottles of water available for its travelers. So, how might we design reusable services that enable stakeholders to keep or enhance their culture of kindness and service? How could this local habit be a driver to skip single-use plastics?

High trustworthiness associated with plastic packaging
The devil lies in the details: An additional plastic sealing for the bottles water ensures a customer’s feeling of hygiene, that it has not been opened before. Receiving the cutlery in plastic packaging in restaurants strengthens the trust in the cleanliness of the place. Single-use plastics are not just a matter of convenience, but they have managed to communicate a deep feeling of trustworthiness.

Opportunities that enable zero waste innovation in Indonesia

The Indonesian culture provides a variety of opportunities and chances that enable to reduce single-use plastics and switch to more sustainable innovations. Let’s reveal some insights and trends of the local context on Java that could help boost zero waste innovations.

Religious quotes to reduce plastic bags
A PhD research revealed that plastic bags are perceived as convenient and a “status statement of modernity”. Key learning of this research is that giving out reusable bags for free through NGOs “had no effect on plastic bag reduction”. Still, the researcher argues that it may yield higher results if the bags are distributed through Balinese shop owners instead of the NGO ecoBali. “Customers who received a reusable bag with the printed quote by the Religious Authority reported a reduction of 10 plastic bags per week.”^​17​

Health concerns and beauty are drivers to go zero waste
Personal concerns about the effects of plastics on the health or the health of the family have been identified as drivers to adopt a zero waste lifestyle. Health and beauty, and in some cases cost-efficiency, have been mentioned as the main drivers that draw people towards a zero waste lifestyle. Concern about the environmental impact of plastic pollution has been mentioned as well in some cases. New zero waste innovations can use these drivers as vehicles in their communication to reach their target audiences.

Indonesian millennials are going zero waste
Social media engagement shows that concern about plastic pollution and an interest in zero waste is mainly deriving from millennials. A high engagement can be discovered from people ranging between 18-24 years with a university degree. From age 35, the engagement on social media drops. With the young generation boosting this new paradigm they can greatly serve as early adopter for zero waste innovations.

Innovation is already happening, and eco-system support could enable the scattered and small-scale entrepreneurs to create systemic impact and change

The momentum in Indonesia is rising: the business opportunity to reduce single-use plastics is visible a global level, and also on a local level in Indonesia. The political will and desire to reduce single-use plastics is expressed by the president and more and more also by local authorities. On a consumer level, the interest for zero waste is growing. Zero waste entrepreneurs are on the rise, but are still scattered, small scale and lack a supporting eco-system. Redesigning externalities, policies and levies to incentivize businesses to reduce plastic packaging could speed up a shift towards product delivery and services where valuable materials stay in the loop over a longer period of time. Social entrepreneurs would enter a fairer price competition with single-use plastics which are very cheap today. To create systemic impact and change, the zero waste entrepreneurs need scaling support. Moreover, in some areas, new solutions still need to be developed in order to reduce problematic plastics such as disposable diapers and sachets.

So, let’s take on the opportunity, responsibility and reimagine the way we produce and consume without single-use plastics. Discover in our next blog post in more detail how social enterprises are bottom-up market developers that have the potential to make impact while being financially self-sufficient and rapidly scalable.

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All photos and graphics by Zero Waste Living Lab, a program by enviu and Plastic Solutions Fund.