I. Executive Introduction and Methodology
1.1. Executive Summary
Indonesia, an archipelagic nation blessed with abundant natural resources, holds a historically significant and contemporary role in the global coffee trade. Strategic analysis indicates that Indonesia currently ranks as the world’s fourth-largest coffee producer, fiercely competing with Brazil, Vietnam, and Colombia. However, a structural challenge persists: Indonesia ranks tenth globally as a coffee exporter, and the value of its exports per unit is generally hampered by low-quality issues.
This report concludes that a strategic transition toward thespecialty coffee market is an economic imperative. The key to this transition lies in strengthening six main premium Arabica coffee clusters—namely Gayo Coffee, Mandailing Coffee, Java Preanger Coffee, Kintamani Coffee, Flores Bajawa Coffee, and Toraja Coffee—through the protection of Geographical Indications (GI) and strict quality standardization, specifically achieving Grade 1Green Bean standards. These clusters, possessing uniqueterroir and having achievedexcellent category cupping scores, are the primary drivers for increasing export value and global competitiveness in the premium market segment.
1.2. Background and Urgency of the Report
Coffee has been designated as one of fourteen national strategic commodities by the Ministry of Agriculture, reflecting its vital role in the agricultural economy. In addition to its historical significance, coffee is now widely traded, holding the position of the most important commodity after petroleum in global commerce.
The urgency of this report is based on contradictory export data observed in the last decade. Although the volume of coffee production in Indonesia increased between 2011 and 2021, the export value actually decreased. In-depth analysis links this condition to two main factors: the generally low quality of Indonesian coffee and low plantation productivity. Therefore, this report serves as an analytical roadmap to address this quality gap, focusing on the development of Arabica clusters proven to havespecialty potential.
1.3. Research Methodology
This report is compiled using a qualitative-analytical approach. Secondary data was collected and analyzed from credible and authoritative sources, including comparative data from the International Coffee Organization (ICO), official publications from the Directorate General of Intellectual Property (DJKI), leading academic journals (e.g., from IPB and Undip), and industry-specific research reports, such as studies on Geographical Indications and sensory profiles. The use of these verified sources ensures the validity and objectivity of the findings presented in the report.
II. Indonesia’s Strategic Position in the Global Coffee Market: Dynamics and Challenges
2.1. Indonesia’s Historical and Contemporary Role
Indonesia has long been known as one of the world’s important coffee suppliers. Contemporarily, Indonesia ranks as the fourth-largest coffee producer by volume, following Brazil, Vietnam, and Colombia. However, when measured by export performance, Indonesia is only the tenth-largest coffee exporting country globally.
There is a striking difference between the large production volume and the resulting export value. Data shows that Indonesia’s coffee export contribution to the total world raw coffee export is 69.43%, and the majority is still in the form of raw green beans. This high reliance on raw bean exports implies that Indonesia has not fully succeeded in converting high production volumes into premium export value. This underscores the urgency for Indonesia to diversify value-add, shifting from a volume-focused commodity market to aSpecialty Coffee market that emphasizes quality and product differentiation. The development of premium Arabica clusters is a key step in achieving this structural transformation.
2.2. Quality and Productivity Gap Analysis
Analysis of data from the 2011 to 2021 period shows a contradictory situation, where an increase in production volume was not accompanied by an increase in export value, which tended to decline. Information from the International Coffee Organization (ICO) and related research suggests that one of the main factors hindering the increase in export value is the generally low quality of Indonesian coffee, in addition to the issue of low land productivity.
This condition is further exacerbated by post-liberalization market dynamics. In late 1989, coffee became the first commodity to be liberalized, ending the quota system previously enforced (1963–1972, 1980–1986, and 1987–1989). The implication of this free market mechanism is increasingly high and frequent price fluctuations. In this context, Robusta coffee is often classified as low-quality orsecond-class coffee due to its bitter taste, which is less favored compared to Arabica.
The high price volatility after market liberalization clarifies why product differentiation initiatives such as Geographical Indication (GI) protection are crucial for the sustainability of premium Arabica clusters. The GI mechanism serves as a non-tariff shield and quality recognition that allows Arabica clusters to operate outside the dynamics of commodity composite prices. By establishing a clear and legally protected cluster identity, producers can create market differentiation, which will ultimately stabilize prices and increase sales value, regardless of global commodity price movements.
III. Legal Framework and Premium Coffee Bean Quality Standards
3.1. Geographical Indication (GI) as a Pillar of Cluster Credibility
Geographical Indication (GI) protection is a crucial legal instrument to secure the reputation and quality of Indonesian Arabica coffee in the international market. GI provides formal protection for products whose quality, reputation, or characteristics are essentially determined by geographical factors, including the natural environment and human skill (terroir).
Indonesia, as a member of WIPO and WTO, implements GI protection through provisions governed in the Paris Convention and TRIPs. The scope of GI protection is extensive, not limited only to raw coffee beans, but also covering wet-processed coffee, dry-processed coffee, and honey coffee. Specifically, products for which GI protection is sought can be coffee beans (green bean orcoffee bean), roasted coffee (roasted bean), and coffee powder (coffee powder).
Geographical Indication functions as a formal quality control mechanism that binds producers to comply with strict requirements books. For example, Merapi Merbabu Magelang Arabica Coffee, whose GI protection announcement was published in August 2022, has a commitment from the Geographical Indication Protection Society (MPIG) to maintain prime quality in accordance with the requirements book. This shows that GI is not merely a branding label, but a legal obligation to maintain quality consistency, which is an absolute prerequisite for competing in thespecialty market. An example of a cluster that has successfully obtained GI protection is Flores Bajawa Arabica Coffee, which was officially registered in 2012.
3.2. Standardization of Premium Green Coffee Bean Quality
The quality of raw coffee beans (green bean) is the main determinant of the selling price in thespecialty market. Quality classification is based on a grading system that counts the total number of defects (physical flaws) in a bean sample.
Premium quality orSpecialty Coffee standards are represented by:
- Grade 1: Coffee beans considered premium/specialty, having a maximum of 11 total defects.
- Grade 3: Total defects between 26 and 44.
- Grade 5: The highest total defects, ranging from 81 to 150.
To achieve Grade 1 quality, post-harvest supervision must be extremely strict. This process includes selecting only ripe red cherries, chemical-free processing, and standardized drying processes, such as sun drying for 9 to 11 days to reach an ideal moisture content between 12.5% and 13.5%.
Green bean quality that meets Grade 1 standards must intrinsically have acupping score above 80 points. Gayo Arabica Coffee, for instance, has achieved a total flavor score between 82.75 to 85.25 points, which categorically places it asspecialty coffee (excellent).
The physical quality of the coffee bean is highly influenced by the growing environment. Studies in the Gayo Highlands show that coffee grown at altitude S2 (1500–1750 meters above sea level) produces superior physical bean quality and flavor profile compared to S1 (1000–1500 masl). The more optimal altitude (such as in Flores Bajawa, which grows above 1,700 masl) produces denser beans and a more complex flavor character. This confirms that to ensure Grade 1 achievement, producers and GI regulators must focus source verification on optimal land altitude.
Table 1: Summary of Geographical Indication (GI) Status and Focus for Selected Arabica Coffee Clusters
| Coffee Cluster | Primary Origin/Location | GI Status/Registration Year | Primary Coffee Type | GI Product Scope | GI Reference Source |
| Flores Bajawa Coffee | Ngada, East Nusa Tenggara | Registered (2012) | Arabica | Green and Processed Coffee Beans | 1 |
| Merapi Merbabu Arabica Coffee | Magelang, Central Java | Announcement (Aug 2022) | Arabica | Wet Processed, Dry Processed, Honey | 2 |
| Sleman Robusta Coffee | Sleman, DIY | Officially Registered | Robusta | – | 3 |
| Gayo Arabica Coffee | Central Aceh & Bener Meriah | International Specialty Reputation | Arabica | – | 4 |
| Java Preanger Coffee | West Java | Historical Reputation & SCAA Winner | Arabica | – | 5 |
IV. Comprehensive Profile of Indonesian Specialty Arabica Coffee Clusters (The Core Clusters)
Indonesian Arabica clusters have uniqueterroir that results in vastly different sensory profiles, forming the basis of their recognition assingle estate andorigin coffee.
4.1. Gayo Coffee (Aceh)
Gayo Coffee, originating from the Gayo Highlands (Central Aceh and Bener Meriah), is globally renowned for its high standard of production, processing, and presentation. Gayo Coffee is generally processed using theSemi-washed method. The growing altitude ranges between 1100 to 1500 masl.
Scientific research validates the superiority of Gayo Coffee quality, with a total flavor score reaching 82.75 to 85.25 points, confirming it asspecialty coffee. Physically, Arabica Gayo coffee beans grown at altitude S2 (1500–1750 masl) show better physical quality and a superior flavor profile compared to beans from lower altitudes. This emphasizes the critical role of altitude-associatedterroir in achieving the highest specialty quality.
4.2. Mandailing Coffee (North Sumatra)
Mandailing Coffee has built a global reputation with a flavor profile capable of competing in the international market. This cluster stands out for the diversity of flavor profiles achieved through innovation in post-harvest processing:
- Natural Processed: Produces a dominantbody character, accompanied by a sweet tobacco, chocolate, and cedar wood impression flavor profile.
- Wet Processed: Provides a comprehensive flavor character, displaying dark chocolate, roasted nuts, and brown sugar profiles.
- Honey Processed: Known for its flavor balance, with profiles of lemon, black tea, and pure honey.
The Mandailing cluster’s ability to diversify this process is a key strategy in targeting different specialty market segments. This diversification, which yields different flavor potentials from the same garden region, allows the cluster to maximize sales value and the potential to achieve premium prices, as demonstrated by other superior Arabica clusters.
4.3. Java Preanger Coffee (West Java)
Java Coffee, especially Java Preanger, has historical significance as one of Indonesia’s prime commodities supporting the economy. Java Preanger Coffee is highly favored by coffee connoisseurs in European countries for its distinctive and unique flavor.
Sensorially, Java Estate Coffee (often associated with Preanger) is characterized bymedium body (fairly dense), an aroma like chocolate, nuts, and herbal plants, and a relatively low acidity level. The quality reputation of this cluster was internationally confirmed when Gunung Puntang Coffee (from West Java) successfully won first place at the Specialty Coffee Association of America (SCAA) Expo 2016, with an auction price reaching USD 55 per kilogram. This price achievement serves as a benchmark for the potential sales value that Indonesian specialty Arabica coffee can achieve in the global market.
4.4. Kintamani Coffee (Bali)
Kintamani Coffee is known for its unique flavor profile resulting from cultivation systems linked to the subak (traditional irrigation) and planting under shade trees. Sensorially, Kintamani Coffee is characterized bylight body (light and watery) and aromas like nuts and orange peel. This coffee tends to have a medium to fairly high acidity level.
4.5. Flores Bajawa Coffee (East Nusa Tenggara)
Flores Bajawa Arabica Coffee is a perfect example of how legal protection secures the comparative advantage ofterroir. Originating from Ngada Regency, this coffee grows in valleys at altitudes above 1,700 masl, flanked by mountains and hills, including the foot of the Inerie Volcano (2,245 masl).
These geographical factors, combined with organic cultivation methods (without chemical pesticides) and careful processing (manual harvesting of ripe cherries, washed, and sun-dried), result in coffee with a strong flavor. Flores Bajawa Coffee has been Geographical Indication certified since 2012.
4.6. Toraja Coffee (South Sulawesi)
Toraja Coffee holds legendary status in Indonesia, recognized as one of the Best Archipelago Coffees. This reputation rests on a long history of cultivation and distinctive flavor characteristics shaped by the geographical conditions in South Sulawesi.
Table 2: Comparison of Sensory Profiles and Processing Methods of Superior Arabica Clusters
| Coffee Cluster | Key Altitude (masl) | Prominent Processing Method | Key Flavor Characteristics | Acidity & Body | Specialty Value (Score) |
| Gayo Coffee | 1500–1750 (optimal) | Semi-washed | Specialty, Excellent | Depends on altitude | 82.75–85.25 |
| Mandailing Coffee | Not specified | Natural, Wet, Honey | Sweet tobacco, Chocolate, Honey | Varies (Body dominant if Natural) | – |
| Java Preanger Coffee | Not specified | Washed/Wet Process (Implisit) | Chocolate, Nuts, Herbal | Low Acidity, Medium Body | High Auction Price ($55/kg) |
| Kintamani Coffee | Not specified | Traditional (Subak) | Nuts, Orange Peel | Medium Acidity, Light Body | – |
| Flores Bajawa Coffee | >1700 | Organic, Full-Washed/Sun Dried | Nutty, Orange, Caramel, Chocolaty | Good Acidity, Full Body (Dense) | Certified GI (2012) |
| Toraja Coffee | Not specified | – | Legendary Reputation | – | – |
V. Challenges and Opportunities for Specialty Arabica Clusters
5.1. Challenges of Quality Standardization and Sustainability
Although Indonesia’s premium Arabica clusters have extraordinary potential (indicated by the Gayo score and Java Preanger price), the biggest challenge is ensuring consistent Grade 1 quality on a massive scale, beyondmicro-lot production. The Grade 1 standard (maximum 11 defects) demands sophisticated post-harvest infrastructure and strict farmer compliance.
The nationally reported issues of low quality and low productivity can contaminate the reputation of superior clusters. When low-quality commodity coffee is exported under the broad label “Indonesian Coffee,” the overall perceived value in the global market can be suppressed. Therefore, specialty Arabica clusters must aggressively separate themselves from the commodity coffee image through the strengthening of GI identity and verified Specialty scores.
5.2. Opportunities for Utilizing Geographical Indication (GI)
Geographical Indication is an invaluable marketing tool and quality assurance. GI registration legally binds the product’s quality to its origin, creating abarrier to entry for competing products and guaranteeing authenticity.
Clusters with a worldwide reputation but not yet formally registered (such as Mandailing, Toraja, and Kintamani) have a huge opportunity to increase sales value through GI registration. They can emulate the success model of Flores Bajawa Coffee and Merapi Merbabu Arabica Coffee, which use GI to secure their comparative advantage—such as volcanicterroir and altitudes above 1,700 masl—which inherently produce beans with high physical quality and unique flavor. This process not only protects the name but also mandates continuous quality monitoring through the MPIG.
5.3. Socio-Economic Impact of Cluster Development
The development of specialty Arabica clusters has a significant economic and social impact at the grassroots level. The increase in income generated from selling premium coffee (Grade 1) has enabled improvements in education levels within farming communities, such as the ability to send children to university.
Institutionally, this development encourages the formation of strong farmer groups. These farmer groups become the backbone of IG standard implementation, serving as learning classes, production units, and cooperation platforms among members. Therefore, investment in specialty clusters, such as providing post-harvest facilities and grading training, acts as a catalyst for rural transformation. The improvement of Arabica quality (Grade 1) increases the selling price, which in turn improves the quality of life and theself-governance capabilities of farming communities, aligning with coffee’s status as a national strategic commodity.
VI. Conclusion and Strategic Recommendations
6.1. Synthesis of Key Findings
This comprehensive analysis confirms that Indonesia’s Specialty Arabica Coffee clusters have a strong foundation to dominate the global premium market. The main strength of these clusters lies in their uniqueterroir (fertile volcanic soil and optimal altitude above 1,500 masl), as well as the proven ability to achieveexcellent Specialty scores (82.75–85.25 points). Geographical Indication (GI) protection is the essential legal instrument to secure this comparative advantage and maintain quality integrity from upstream to downstream.
6.2. Strategic Recommendations for Regulators and Investors
Based on the synthesized findings, focused strategic interventions are needed to strengthen the competitiveness of premium Arabica clusters:
- Acceleration of Geographical Indication (GI) Registration:
The government must facilitate the accelerated registration of GI for Arabica clusters with a global reputation but not yet formally protected, namely Mandailing Coffee, Toraja Coffee, and Kintamani Coffee. Utilizing the success models of Flores Bajawa (GI 2012) and Merapi Merbabu (GI 2022) should be a priority to legally bind quality (prime quality) to the GI requirements book.
- Standardization and Verification of Optimal Land Altitude:
A policy is needed to promote and verify the sourcing of Arabica beans only from optimal altitudes, ideally above 1,500 masl, as validated by the Gayo research. This standardization is crucial to ensure the bean density and flavor complexity required to consistently achieve Grade 1.
- Investment in Post-Harvest Process Diversification:
Funding support and technical training should be directed towards investment in post-harvest facilities to enable process diversification (such as Honey, Natural, and Wet/Full-Washed methods), emulating the Mandailing strategy. This strategy directly targets the highest value-added specialty segment, maximizing the opportunity to achieve premium auction prices, as demonstrated by Java Preanger Coffee ($55/kg).
- Strengthening Farmer Institutions for Quality Control:
Farmer groups should be encouraged to transform into independent production and quality control units. This strengthening must include intensive training in grading systems (recognizing and minimizing defects to achieve Grade 1 standards) and implementing sustainable/organic cultivation standards set out in the GI requirements book. This step is crucial for addressing the national low-quality issue and protecting the reputation of superior clusters.
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