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Thailand Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 100
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.
Consumer goods companies looking to play Thailand’s domestic demand story have much to look forward to over the coming years. A positive macroeconomic picture, increasing wages and a reasonably strong showing in retail combine to paint an optimistic near-term domestic demand picture. Over the longer term, the country’s vast rural population arguably provides exciting opportunities on the consumer side, as rising affluence bolsters demand for higher-value food and beverage products over the coming years.
Headline Industry Data
- 2011 Food Consumption Growth = +6.6%; Compound Annual Growth Rate to 2015 = +6.1%
- 2011 Soft Drinks Sales Growth = +7.8%; Compound Annual Growth Rate to 2015 = +7.1%
- 2011 Alcoholic Drinks Sales Growth = +; Compound Annual Growth Rate to 2015 = +6.7%
- 2011Mass Grocery Retail Sales Growth = +; Compound Annual Growth Rate to 2015 = +5.6%
Key Industry Trends
Serm Suk Seeks To Terminate Bottling Agreement With PepsiCo – Due to a disagreement over bottling terms for a new bottling agreement due on March 31 2011, Serm Suk decided to terminate an exclusive bottling agreement between itself and PepsiCo. A key dispute between PepsiCo and Serm Suk amid talks to amend existing bottling terms, for instance, is the price of concentrates. Serm Suk proposed a new formula to lower the price of concentrates it has to pay to PepsiCo by 9% per annum from the previous contract. This demand was rejected by PepsiCo as it proposed only a 5% reduction instead, according to Serm Suk. Despite the conflicts of interest between PepsiCo and Serm Suk, we think it is likely that both companies will seek to renegotiate their bottling terms over the next 12 months and establish a common ground, given their strategic interests in the partnership.
Growing Appetite For Overseas Exposure – CP All plans to set up 500 new outlets per annum, with a significant proportion situated in China and South East Asian countries. While dynamism in the Thai convenience retail sector is unlikely to cool down anytime in the medium-term future, the retailer arguably needs to look further afield to relatively underdeveloped convenience retail markets to secure its longer-term growth. With organised retail in Vietnam, Cambodia, Laos and Myanmar still having a long way to go before its proportional contribution can match up to the developed economies, there is clearly massive untapped potential upon which CP All can capitalise.
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