Food company Berli Jucker has predicted growth slowing to 2% this year in Thailand’s 11bn bath (US$265m) snack market, compared with 8% last, the Bangkok Nation newspaper reported.
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Consumption of potato chips, which represents about a third of the Kingdom’s total snack market, is also facing a big downturn, with growth declining by about half, from 10% last year to only 5%. Berli Jucker managing director Pattaphong Iamsuro said the big downturn in snack consumption reflected Thai consumers’ lower purchasing power. People usually cut their budgets for snacks during an economic slowdown. The drought affecting many provinces has also affected how much people have to spend, particularly upcountry. Consumers are now more cautious spending money on any product, including snacks.
“During an economic downturn, consumers have less money in their pocket so they cannot afford snacks like they used to,” said Pattaphong. He said booming green tea consumption had also hurt sales of other snack products, as consumers had a limited budget for daily consumption of foods and snacks. They tend to cut one snack in favour of another.
“We [Berli Jucker Foods] expected a slowdown in our sales growth this year, declining from 24% last year to about 12% this year,” said Pattaphong.
He said the company expected total sales to top 2.3bn baht this year, of which 50% would be from its Tasto potato chips, 25% from Dozo rice crackers, and the rest from other market offerings. “We recorded slower growth in the first six months of this year compared to the same period last year,” said Pattaphong. “Sales grew by less than 10% in this year’s first half,” he said.
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By GlobalData“We have also been burdened by a 20% increase in costs since the beginning of this year, from rising raw material and packaging costs,” said Pattaphong.
And yet, faced with this surge in overhead costs, the company has had to fix its retail prices to stay competitive in the rough-and-tumble snack market.
A 95-gram pack of Tasto potato chips now costs 30 baht, while the 70-gram pack costs 20 baht and a 17-gram pack costs five baht.
“As we have to absorb all costs without any price increase, we have to become more efficient, particularly at the production stage,” said Pattaphong. He said the company would spend money only on marketing campaigns this year, to stir up a bit of interest in the market when major new products were released.
