Thailand Food and Drink Report Q3 2011

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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BMI Industry View 6
SWOT Analysis 7
Thailand Food Industry SWOT 7
Thailand Drink Industry SWOT 8
Thailand Mass Grocery Retail Industry SWOT 9
Business Environment 10
BMI’s Core Global Industry Views 10
Table: BMI Food & Drink Core Views 15
Asia Pacific Food & Drink Risk/Reward Ratings 16
Table: Asia Pacific Food & Drink Risk/Reward Ratings -Q3 2011 20
Thailand Food And Drink Risk/Reward Rating 21
Table: Thailand - Economic Activity 24
Industry Forecast 25
Consumer Outlook 25
Food 28
Food Consumption 28
Table: Food Consumption Indicators - Historical Data & Forecasts 28
Canned Food 29
Table: Value/Volume Sales of Selected Food Sub-Sectors - Historical Data & Forecasts 30
Confectionery 31
Table: Value/Volume Sales of Selected Food Sub-Sectors - Historical Data & Forecasts 31
Instant Noodles 32
Table: Value/Volume Sales of Selected Food Sub-Sectors - Historical Data & Forecasts 32
Trade 33
Table: Thailand Food & Drink Trade Indicators - Historical Data & Forecasts 33
Drink 34
Alcoholic Drinks 34
Table: Thailand Beverage Sub-Sectors - Value Sales Historical Data & Forecasts 36
Soft Drinks 36
Table: Thailand Beverage Sub-Sectors - Value Sales Historical Data & Forecasts 37
Hot Drinks 38
Table: Thailand Beverage Sub-Sectors - Value Sales Historical Data & Forecasts 38
Mass Grocery Retail 39
Table: Thailand MGR Sales Value by Format - Historical Data & Forecasts 41
Table: Thailand Average Sales per Outlet by Format - 2010 41
Food 42
Key Industry Trends And Developments 42
Domestic Food Producers Enjoying Strong Revenue Growth 42
Rice Sector Facing Increased Competition 42
Market Overview 43
Agriculture 43
Organics 44
Food Processing 44
Trade 44
Dairy 45
Drink 46
Key Industry Trends And Developments 46
Serm Suk Seeks To Terminate Bottling Agreement With PepsiCo 46
Strong Financials Underline Robust Drinks Demand 47
Thai Drinks Sector Attracting A Flurry Of Investments 48
Market Overview 48
Alcoholic Drinks 48
Soft Drinks 49
Mass Grocery Retail 50
Key Industry Trends And Developments 50
Growing Appetite For Overseas Exposure 50
Intensifying Dynamism In Hypermarket Retail 51
Positive Retail Dynamics Filtering Through To Strong Revenue Growth 52
Market Overview 52
Table: Structure of Thailand's Mass Grocery Retail Market by Estimated Number of Outlets 55
Table: Structure of Thailand's Mass Grocery Retail Market - Sales Value by Format (US$bn) 55
Table: Structure of Thailand's Mass Grocery Retail Market - Sales Value by Format (THBbn) 55
Table: Thailand Average Sales per Outlet by Format - 2010 55
Competitive Landscape 56
Consumer Share Price Analysis 56
Key Players 60
Table: Key Players in Thailand's Food Sector 60
Table: Key Players in Thailand's Drink Sector 61
Table: Key Players in Thailand’s Mass Grocery Retail Sector 62
Company Analysis 63
Food 63
Chokchai 63
Charoen Pokphand Foods (CPF) 65
Thai President Foods 68
Thai Union Frozen Products 71
Drink 73
Thai Asia Pacific Brewery (Thai APB) 73
Thai Beverages Plc (ThaiBev) 76
Singha Corporation (formerly Boon Rawd Brewery) 79
Mass Grocery Retail 81
CP All Ltd 81
Siam FamilyMart 85
Tesco Lotus 87
Central Food Retail Company Ltd (CFR) 89
Big C Supercentre 91
BMI Food & Drink Methodology 93
Table: Rewards 94
Table: Risks 95
Weighting 95
Table: Weighting 96
BMI Food & Drink Industry Glossary 97
Food & Drink 97
Mass Grocery Retail 97
BMI Food & Drink Forecasting & Sourcing 99
How We Generate Our Industry Forecasts 99
Sourcing 100
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