Thailand
Thailand: Consumer goods outlays weak
Consumer goods makers have expressed concern about tepid domestic consumption this year and are adjusting their strategy to cope.
Leading consumer brands such as Lactasoy soymilk, Mama instant noodles, Morakot palm oil and Koh-Kae snacks agree consumer spending power was weak in the first quarter of 2017.
Jariya Chirathivat, president of the Thai Retailers Association, said positive factors in the first quarter included a slight increase in the consumer confidence index, 5% growth in foreign tourist arrivals to Thailand, rising crop prices and a 15.4% surge in car sales.
These positive factors slightly improved the macroeconomic situation, but were insufficient to spur significant growth in consumer goods consumption.
Market research firm Nielsen Thailand said fast-moving consumer goods contracted modestly in the first quarter while durable and semi-durable goods grew a little bit, with no signs of a strong recovery.
Sales of durable goods such as home appliances grew only 1.25% in the first quarter, while semi-durable goods grew 2.3% and non-durable goods grew by 3.4%.
Several consumer manufacturers acknowledged there are no clear signs of a recovery in spending power likely in the second half this year. Negative factors for the second half include continued delays in the government’s infrastructure megaprojects, middling private investment, and many listed companies projected to post dips in revenue and profits.
Vathit Chokwatana, vice-president of Saha Pathanapibul Plc, the marketer of Mama instant noodles, said while overall spending power for consumer goods was tepid in the first quarter, sales of Mama instant noodles grew by 4%, besting industry growth of 3%. “We started our aggressive marketing campaign in February because we were not sure what the market will be like in the fourth quarter this year,” Mr Vathit said. “With our lucky draw campaign, sales of Mama could grow by 10% as expected.
Phakaporn Sudtikitpisan, marketing manager of Mae-Ruay Snack Food Factory Co, the maker of Koh-Kae snacks, confirmed local consumers’ spending power was weak in the first quarter.
Sales of Koh-Kae snacks rose by 5% in the period, down from typical growth of 15%, she said.
The company plans to focus on Nut Natur, a new sister brand of almond snack, targeting high-end customers who are more health-conscious.
“Health-conscious people have shifted to consume more nuts, resulting in a contraction for some snack categories, particularly extruded snacks,” said Ms Phakaporn.
Phanwana Mahasup, advertising manager and marketing coordinator of Lactasoy Company Ltd, said its sales in the first quarter were flat. Consumers prefer to buy value-for-money products in the current economic environment.
The company will increase the channels selling its 500ml Lactasoy, a larger size, across the country. It will expand production capacity of Lactasoy 500ml containers to 3 billion packages by the end of this year, up from 2.4 billion last year. Lactasoy expects its sales to grow by 10% from 11 billion baht last year.
Source: http://www.bangkokpost.com/business/news/1254530/consumer-goods-outlays-weak