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Is Indonesia’s consumer stronger than its currency?

Indonesia's currency has dropped sharply amid an emerging market sell-off, but there are signs it won't derail the country's strong consumer story, as companies come up with new ways to cope with a weaker rupiah.

"Conventional wisdom has it that consumer companies are likely to suffer margin compression as a result of rupiah depreciation, given that 70-80 percent of their costs are linked to the U.S. dollar and imported materials," noted Stevanus Juanda, an analyst at UOB KayHian, said in a note last week.

But historically, "currency depreciation has made little impact on yearly profit" in Indonesia, he said. "Consumer companies have strong pricing power and can pass on cost increases resulting from higher raw material costs or rupiah depreciation."

Read More Indonesian rupiah is at levels not seen since 1998

The rupiah has certainly seen substantial depreciation, falling around 18 percent since the beginning of this year, touching its lowest levels since the Asian Financial Crisis in 1997-1998. Market turmoil over expectations the U.S. Federal Reserve will soon raise its benchmark interest rates for the first time in nine years has spurred outflows from emerging markets.

But Stevanus has initiated coverage of Indonesia's consumer stocks at overweight, citing data from consultancy McKinsey that estimates the country's consumer class could grow to 85 million people by 2020 from 45 million in 2010, fuelled by an expanding working class and a demographic advantage from the fact the country's 15-64-year-old working age cohort is expected to make up around 70 percent of the population by 2020.

Dimas Ardian | Bloomberg | Getty Images

International brands selling in Indonesia are taking some steps to deal with the weaker currency. Tupperware, for example, counts Indonesia as its biggest market.

"What we technically do is grow the size of our sales force organization at times when we have economic imbalances," Asha Gupta, the company's group president for Asia Pacific, told CNBC on Tuesday. In emerging markets, the company still relies on its iconic Tupperware parties to sell its products.

Read More Rupiah plunge: It's not just commodities

"We also have to adopt much more aggressive pricing strategies," Gupta added. She noted that lower resin prices, due to a stronger dollar weighing on commodity prices, were providing some margin support for Tupperware.

Tupperware said in early September that it expected its local currency sales globally would rise 4-6 percent in the third quarter, but the period's foreign exchange moves would subtract around 26 cents a share from 2015 earnings; in 2014, Tupperware's diluted earnings per share (EPS) came in at $4.20. For this year, EPS is forecast at around $4.416, according to Reuters estimates.

But the company may continue to get a fillip from other consumer trends in Indonesia, such as the growing penetration of refrigerators, which can help drive demand for food-storage containers.

Sales of refrigeration appliances rose to around 35.73 trillion rupiah ($2.44 billion) in 2014, up from 9.66 trillion rupiah in 2009, according to data from Euromonitor International, which estimates there are around 83 refrigeration units for every 1,000 households.

To be sure, consumers themselves are feeling a lot less confident, with the ANZ-Roy Morgan Consumer Confidence Index declining sharply to 143.2 in September, down 18 points from its level a year ago during the "taper tantrums" as global markets convulsed under massive emerging-market fund outflows. About 64 percent of survey respondents this month expected their families to be better off financially this time next year, down 5 percentage-points from August to the lowest level since 2012. The percentage saying "now is a good time to buy" major household items fell 7 percentage points to 50 percent, a more-than-three-year low.

But with the immediate consumer outlook looking uncertain, companies are taking some unusual steps to maintain margins, such as like reducing products' size.

"Although some products have not seen price increases since July, such as shampoos and cheese, they now have lower content, suggesting that fast-moving-consumer-goods (FMCG) companies are reducing fillings to maintain margins amid weak purchasing power," analysts at PT Bahana Securities said in a note last week.

Bahana also noted retailers were bolstering margins via inventory management.

Pure electronics players raised average selling prices in September by 7.1 percent compared with July, although they remain below December 2014 levels, Bahana noted, attributing it to electronics dealers discounting older versions of products - which were likely purchased when the rupiah was stronger - during the July fasting month and keeping newer, more expensive products in inventory.

Some retailers are also cutting back on stocking new products that come at higher costs, as well as revamping their distribution systems, it noted.

Bahana doesn't expect these efforts to be entirely successful in countering the hit from the weaker rupiah, estimating that across the retail sector, every 1 percent fall in the local currency would reduce earnings per share by 2.1 percent.

But it sees one segment likely to get a boost as prices in rupiah begin to rise: "We expect the middle-end retailers to benefit from high-end consumers trading down market."