Sales slacken as consumers tighten belts

Thailand’s fast-moving consumer goods (FMCG) market grew by 1.2% in the first nine months of 2015, the lowest rate in seven years.

Gareth Ellis, commercial director of market research company Kantar Worldpanel, said the economic slowdown led consumers to tighten their belts and focus their spending on necessities.

The FMCG market grew in a range of 3.3% to 9.6% during 2009-14.

Falling demand has been seen in several product categories, including premium toothbrushes, bird’s nest drinks, body scrub, instant soup and powdered milk.

Somchai Porn rattana jaroen, president of the Thai Wholesaling and Retailing Association, said the price and promotional war in consumer goods would grow fiercer in 2016, particularly among hypermarket and supermarket chains.

He cited lower consumer spending as well as changes in lifestyle. Some consumers have shifted to online and other types of home shopping at the expense of modern trade stores.

The frequency of shopping at local retail complexes has fallen. In 2013, people visited shopping complexes 212 times on average. The rate declined to 207 times in 2015, while spending per visit fell to 50 baht from 80 in 2013.

Suthipa Panyamahasup, vice-president for home care and ice cream at Unilever Thai Trading, said the ice cream market was representative of poor consumer sentiment in 2015.

Ice cream sales are estimated at 7.8 billion baht for the full year, down 200 million baht from last year.

The ice cream market grew at a doubledigit rate in 2012, fell to single-digit growth in 2013 and was flat in 2014.

“The weak economy is the only factor for the declining ice cream market this year,” Ms Suthipa said. “Ice cream demand from middle-income people is shrinking because they switched to cheaper products. The buying frequency is also down.”

Per capita consumption of ice cream in Thailand is 0.85 litres a year, lower than the Asian average of 0.92 litres.

By comparison, per capita consumption in New Zealand is 15 litres a year, followed by Australia (13.4 litres), Singapore (nine litres) and Japan (seven litres).

To seize on market opportunities for ice cream in Thailand, Unilever has launched two new flavours of its Magnum ice cream bars to attract urban consumers in search of something unique.

About 2.7 million bars of the two new flavours, Pink Pomegranate and Black Espresso, will be available from now through March 2016 at a price of 50 baht.

The Magnum Mini six-bar pack is available from now until January and is meant as an alternative after-meal treat.