President Bakery delays factory opening
Company cites slow sales but is upbeat
SET-listed President Bakery Plc, which produces and distributes bakery products under the Farmhouse brand, has delayed opening a new factory in Bangkok due to the sluggish state of the market but still expects to see sales grow around 5% this year, it said this week.
The new bread and bakery factory in Bang Chan Industrial Estate will now start operating next year, said Apisate Thammanomai, the company’s director and IT manager.
“Sales of our bakery products in the first five months of this year are weaker than expected. Growth in the bakery business has slowed significantly since our company was established over three decades ago,” he said.
President Bakery began building its new factory on a four to five rai plot of land two years ago. The costly addition was initially set to begin operating in the third or fourth quarter of this year.
The company owns two factories that produce sliced bread, cakes, pies, burger buns and hot dog rolls in the Bangkok districts of Lat Krabang and Min Buri. The new factory, adjacent to the current Min Buri location, will boost production capacity by 20%, it said.
To fight weak purchasing power, the company has begun focusing on selling bread wholesale.
The strategy is expected to help battle stiff market competition from both Thai and international brands.
“We have put in more effort to tailormake bread and bakery items that match the spending power of our consumers,” Mr Apisate.
The company said it will also restructure and possibly scale down its marketing activities.
New products to be launched in the second half of this year will focus on widening the company’s customer base, it said.
It previously expanded its product line to include healthier options such as Farmhouse’s “Royal Bread” and “Royal Wholewheat Bread”.
Mr Apisate said the company is optimistic about its future business in Thailand due to the increasingly urbanised nature of society.
Thailand’s bread and bakery market is estimated to generate 20 billion baht in revenue each year but analysts say there is still room for growth due to the low consumption of bakery products.
One study conducted by President Bakery showed that Thai consumers buy two to three kilogrammes of baked products per year on average. In contrast, the average consumer in Japan buys 10-15kg of bread each year, or 80-90kg in Japan, its studies showed.
Farmhouse products are currently sold via wholesale channels, where they control about 40% of this channel’s market. The company said it will target other trade channels this year.
President Bakery said total sales last year stood at 7.64 billion baht with a net profit of 1.46 billion baht. In the first quarter of 2017 sales hit 1.75 billion baht with a net profit of 318 million baht.
The company is putting more effort to make bread and bakery items that match the spending power of its consumers, says Mr Apisate.