JAKARTA: Brand owners could benefit from targeting Indonesia, where increasing affluence, urbanisation and the rise of digital technology all offer significant growth opportunities, McKinsey has suggested.

The consultancy reported that Indonesia's consuming class – made up of individuals earning $3,600 per year – should contain 85m people in 2020, from a total population of 265m. Such figures stood at 45m and 195m respectively in 2010.

If GDP grows by 5–6% annually to 2030, the number of these shoppers will hit 135m, drawn from a potential audience of 280m. If GDP expands by 7% a year, then 170m people would fall within the consuming class.

"The addition of 90m members to Indonesia's consuming class with considerable discretionary expenditure is an undoubted market opportunity," the study said. "Companies need to accommodate change and more demanding consumer needs and behaviour."

Urbanisation should fuel this process, as the proportion of Indonesia's residents living in cities grows from 53% today to 71% in 2030, as 32m individuals move from rural areas into developed metropolitan centres.

The share of GDP yield by the nation's cities is thus set to rise from 74% to 86%. Small "middleweight" cities with populations of 150k to 2m will grow most quickly, as their share of GDP leaps from 31% to 37%.

"In 2011, 80% of foreign direct investment was confined to Java," the study said. "However, given that cities outside Java are projected to grow faster than Indonesia's capital, this geographically focused approach will no longer capture the full opportunities that Indonesia has to offer."

Alongside a youthful population, digital technology will play an important role. There are currently 220m active mobile subscriptions, and web penetration is predicted to surpass 100m by 2016.

These trends should boost various product sectors. Food and beverage sales are due to rise from $73bn in 2011 to $194bn by 2030, during which time apparel revenues are likely to increase from $22bn to $57bn.

Elsewhere, demand in the telecoms category is pegged to reach $19bn from a starting point of $8bn. Personal items – like hygiene and beauty lines – are anticipated to generate $16bn by 2030, versus $6bn in 2011.

More broadly, the consumer services market could be worth an extra $1.1tr by 2030, standing at $1.5tr if the 7% rate of GDP growth is achieved. Financial services have the greatest potential, the study suggested.

"The fact that the Indonesian market has considerable infrastructure challenges and a highly dispersed customer base means that companies would do well to use new channels such as mobile banking ... and take advantage of trends such as the increasing penetration of the internet," the analysis added.

Data sourced from McKinsey; additional content by Warc staff