As the Thai economy shifts away from being agricultural- to more skilled-based, as well as industry-and-commerce-focused, many consumers are gaining knowledge of the nutritional value and the health benefits of certain products and ingredients. Meanwhile, Thailand’s population is ageing, which also looks set to drive demand for improved health through food. Jens Kastner surveys the development of the country’s healthier food segments and looks at what could lie ahead.
Demographic trends in Thailand, notably the growth in its urban middle class, is driving demand for healthier food.
The market for packaged food with health claims is still small in Thailand, with, for example, the organic food sector being particularly tiny. However, elsewhere in the food sector, the increasing demand to improve health through food can be seen.
The rate of the growth in sales of functional foods has been picking up markedly on the back of an ageing population translating into increasing awareness of health problems, such as cancer, cardiovascular diseases, obesity and diabetes.
The demand for diet products and foods perceived to slow ageing has also been strengthening. According to forecasts by UK-based market researcher Euromonitor International, the retail value of “naturally healthy packaged food”, “better-for-you packaged food” and “organic packaged food” will in 2016 respectively grow by 5.2%, 6.5% and 8.4% year-on-year to THB27.9bn (US$794.1m), THB6.3bn and THB322m to reach overall market shares of 7.3%, 1.7% and 0.1%.
Euromonitor International defines “naturally healthy packaged food” as products that naturally contain a substance that improves health and wellbeing, such as naturally healthy high fibre food. By contrast, “better-for-you packaged food” are products where the amount of a substance considered to be less healthy, such as fat and sugar, has been actively reduced during production. And “organic packaged food” refers to food certified organic by an approved certification body. Euromonitor International sees Dutch Mill Co. and Capital Rice Co., both Thai companies, as the respective market leaders in “better for you packaged food” and “organic packaged food” in 2015.
Fonterra, the New Zealand-based dairy giant, says the growth in incomes is boosting interest in how its products can contribute to a healthy diet. “Rising incomes and better education are also leading to increasing awareness about the nutritional benefits of dairy,” Paul Richards, managing director of Fonterra’s branded business in Thailand, tells just-food.
Richards points to the growth of what Fonterra calls its “advanced nutrition category”. That part of Fonterra’s business includes Anlene, an adult milk devised and marketed to support healthy bones. It also includes Anmum, a milk and formula brand targeted at women looking to start a family, during pregnancy and while breastfeeding, as well as products for infants and young children.
“Both brands are leading the way through continued product innovation and development,” Richards says. “Anmum holds the number one position in the market today and we’ve been able to maintain this market leadership position through new formulation and product developments. An example of our drive for innovation was Anmum’s latest formulation called Anmum Materna Probiotics DR10. We developed this after speaking to expecting mums who said that one of their key concerns during pregnancy was constipation. To therefore support mums’ digestive systems we developed a new formulation that included probiotics DR10.”
Richards says Fonterra will continue to invest in product development to ride what the company sees as rising interest in improving health through food. “We’re seeing more consumers seeking foods that offer specific health benefits, such as improving digestion, fortifying bones and boosting immunity. We are well positioned here with our Anlene and Anmum brands – Anlene, in particular, is looking at adding specific formulations that promote mobility including collagen and Vitamin B2 early next year here in Thailand. In order to be at the forefront to deliver on these trends, we are focused on innovation and new product development to ensure we are delivering the best dairy nutrition to our consumers across the country.”
Thailand’s ageing population is seen as a key driver in the growth of healthier categories. “When we are talking about health food in Thailand, we mean food for ageing people of whom there are ever more in Thailand amid the demographic trends,” says Prasong Siriwongwilaichat, head of the department of food technology at Silpakorn University in Thailand’s central Nakhon Pathom province. “Health food for the young is a different field as it caters to those who are concerned with beauty and fitness,” Siriwongwilaichat continued, listing Sappe’s Beauti Drink as a prominent example in the beauty and fitness category. Beauti Drink is advertised with the “no worries, low calories” slogan, and its dozens of formulas contain ingredients with health claims such as collagen, vitamins, zinc and Biotin. In 2015 alone, six Beauti Drink formulas were added.
Emil Fazira, a Singapore-based senior research analyst at Euromonitor International, attributes Thai consumers’ increasing awareness of prominent health concerns partly to aggressive government campaigns. Amid growing obesity, in 2015, Thailand’s Ministry of Public Health advised Thais should not consume more than six teaspoons of sugar daily. And in April this year, the country’s government published new labelling regulations for packaged food, such as snacks and ready meals, to declare the total amount of energy and important nutrients to prevent over-consumption.
“This increasing exposure does play a part in gradually shifting consumer perspectives,” Fazira explains. “The trend is aided by the fact that prices of better-for-you packaged food are typically only slightly higher than regular products, which is still affordable.”
Health food companies’ marketing departments will also be challenged to constantly push the envelope. According to Fazira, Thais are still not likely to commit in overwhelming numbers to eating health-targeted packaged foods but, at the same time, they are also not willing to spend too much more for a product with reduced nutrition. “The bottom line is that keeping prices affordable is the key in convincing consumers that it is worth to spend a little extra on a healthier product while fulfilling their other needs like convenience and taste,” she says.
Ravina Sachdev, a manager at Radiance Wholefoods, a neighbourhood health store in downtown Bangkok’s Klongtoey Nua district, says the health food industry in Thailand has been a laggard compared to global trends. However, she notes “over the last 12-18 months the pace of growth and adoption has been accelerating at a faster pace.”
Sachdev’s observations mirror that of Euromonitor International, seeing recent campaigns by the Thai government as succeeding in promoting and educating consumers through workshops, events and television shows.
Euromonitor’s Fazira says awareness for organic food remains limited to the middle- and high-income consumers, who are less price-sensitive. According to Fazira, consumers interested in organic are buying the category, in part for health, reasons, although organic packaged food has low availability in mass retailers and a significantly higher unit price than regular food. “Demand stems from consumers who regard food safety as a top priority and value products that improve their general wellbeing, rather than a commitment to go organic,” Fazira says.
However, at the Radiance Wholefoods store, Sachdev says the building interest in organic food for health reasons is leading to increasing supply.
“New interests in healthy living has also triggered land owners to convert and develop their unused lands into organic and health farms, which has also helped supplies and new products being introduced into the marketplace,” Sachdev says, although she adds “demand is still very much with the upper middle class and expats and will take time to get into mainstream consumers because of the affordability factor”.
However, a few pioneers in the Thai organic food sector have been working on affordability, such as the Raitong Organics Farm, in Sisaket, a Thai province 500 kilometres north-east of Bangkok. There, South African-born Bryan Hugill, together with his Thailand-born wife Lalana, have for a decade been converting the family farm to organic, now operating according to EU and Canadian organic standards. Their main products are rice and ginger beer, the former mainly for export to Singapore, the latter for the domestic market. Among Raitong’s newest project is an organic baby food range.
“We are doing well but the Thai organic market is definitely still very niche, us being about the first,” Hugill said. “Growing a pool of organic raw material suppliers in Thailand requires constant fighting against the status quo, there being a constant need to produce facts and figures showing that this and that organic concept is doable.”
Additional reporting from Dean Best.