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Thailand Food and Drink Report Q4 2009
Business Monitor International, Sep 2009, Pages: 75
The Thailand Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Thailand's food and drink industry.
The global financial crisis continues to have a negative impact on the Thai economy and as such the autho has again revised down its 2009 GDP growth forecast for Thailand from –2.5% to –4.5%. Despite this dismal outlook many of the country’s food and drink producers remain positive and this quarter has seen several such producers confirm investment plans both domestically and internationally, as discussed in more detail in BMI’s newly published Thailand Food and Drink Report for Q409.
One company feeling particularly confident is Thai Union Frozen Products (TUF). Having posted strong Q109 results, with revenue increasing 15% y-o-y to THB17.7bn, while net profit rose 13% y-o-y to THB653mn the company announced in May that it expected revenue for FY09 to increase 15% from the THB69bn recorded for FY08. In addition, it has increased its investment budget for 2009 from THB1.2bn to THB2bn after having previously stated that it expected to have to significantly reduce it, signifying its optimism in the opportunities still available within the country.
Moving to the drink sector, Thai Namthip and Serm Suk, local bottlers of Coca-Cola and Pepsi-Cola respectively, in Q309 announced that despite the tough economic conditions they would increase their budgets for expansion. With growth in Thailand’s soft drink sector forecast to increase 10.2% to reach THB90.3bn in 2013, both companies are hoping to improve efficiencies in order to take advantage of this. One company not feeling positive is brewer Thai Bev who reported in Q3 that sales for Q109 had fallen 1.4% to THB27.6bn, while domestic beer sales plummeted 33% y-o-y to THB7.9bn. The company has sought to gain a foothold in the lucrative alcoholic drink sector in China by purchasing Chinese spirits firm Yunnan Yulinquan Liqour. China’s alcohol sector is forecast to show very strong value sales growth of 31.4% to an enormous US$12.48bn in 2013 and it is unsurprising that Thai Bev would seek to benefit from this, particularly in light of challenging domestic conditions.
Meanwhile, the country’s retailers are not faring well and this quarter has seen both Siam Makro and Casino-owned Big C announce a drop in profits of 23.9% and 5.2% respectively for Q109. Retailers have been under pressure to pursue discounting campaigns as a way of maintaining market share during this period of economic turmoil and this has served to undermine profits.
The outlook for Thailand remains positive in the long term, however, despite some positive activity this quarter, the operating environment is likely to remain tough in the short term as the latest financial data from the country’s retailers shows.
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