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Thailand Food and Drink Report Q4 2010
Business Monitor International, Sep 2010, Pages: 75
Business Monitor International's 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.
BMI View: Consumer confidence in Thailand appears to be strengthening as the political situation continues to improve and this bodes well for sustained short and medium term growth in the country’s food, beverage and mass grocery retail sectors. Thailand’s favourable population demographics, high tourist arrival levels and healthy forecast economic growth mark the country out as an attractive investment opportunity although we would caution that a number of sectors are beginning to mature at a faster rate, forcing producers to consider expanding elsewhere in South East Asia.
Headline Industry Data
- Alcoholic Drink Sales (THB) to increase by 4.2% in 2010 and by 34.7% to 2014. Growth in 2010 will be held back by political unrest which negatively impacted tourist arrivals
- Soft Drink Sales (THB) to increase by 36.8% to 2014. Energy drinks will be the outperformer, sales rising by 52.4% to 2014 from an already high base as consumers continue to trade up
- Mass Grocery Retail Sales (THB) to increase by 41.4% to 2014, with the independent grocery sector forecast to continue to lose market share over this period
- Per Capita Food Consumption (THB) to increase by 31.6% to 2014 thanks to sustained economic growth and the ongoing process of consumers trading up to higher value items
Key Industry Trends & Developments
Beverage Sector Remains Dynamic – Despite the maturity of Thailand’s hot drinks sector, Oishi Group announced in Q310 that it would invest THB1.06bn in building a new tea plant in the country. The move is in keeping with the sustained shift of purchasing towards healthier beverages. Also committed to Thailand is PepsiCo, who despite failing in its attempt to gain control of local bottler Serm Suk continues to look to Thailand for opportunities as it seeks to reduce its developed state reliance. Increased Maturity Sees Companies Begin To Look Abroad – Given that Thailand ranks fifth in our Food and Drink Risk/Rewards ratings it is unsurprising that investment continues to flow into the country. However, the quarter has also seen a number of the country’s food and drink producers announce overseas investments. Thailand’s Charoen Pokphand Foods (CPF) is one such company keen to pursue overseas expansion, announcing in Q310 that it intends to invest at least THB30bn over the course of the next five years. Most of this investment is to go towards expanding operations in Russia, India, Turkey, the Philippines, Malaysia and some African countries as it seeks to raise foreign revenue contributions to 40% by 2015. Thai Union Frozen Products (TUF) is also keen to broaden its international scope, and in keeping with this strategy announced it would acquire MWBrands. Should the deal go ahead it would mean that TUF would obtain a third of its revenues from Europe, up from a current 11%.
Risks to Outlook
The risk of a post-stimulus cooling of the Chinese economy poses a risk to sustained economic, and thus consumer demand growth in the export-dependent Thai market. Our short-term forecasts already reflect this anticipated Chinese slowdown. However, a worse than forecast economic dip could lead to downward forecast revisions. Furthermore, renewed political instability could result in downward revisions to our food and beverage forecasts, both due to reduced domestic spending and – certainly more pertinently in the case of the alcoholic drinks sector – reduced tourist arrivals.
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