Euromonitor reports that Thailand’s real gross domestic product (GDP) will drop steeply in 2020. The domestic economy is being affected by lockdown measures with falls in tourism, retail and manufacturing particularly. Meanwhile export performance
is being stifled by the global slowdown caused by the pandemic. Consumer confidence is plummeting and investment has taken a nosedive. Growth of real GDP will bounce back to 5.3% in 2021, and fall to around 2.8% per year in 2024-2027.
Thailand is the second-largest economy in the Association of Southeast Asian Nations (ASEAN) however, its economy will experience a sharp recession this year. In 2020, real GDP will decrease by 7% after gains of 2.4% in 2019.
In 2019, private final consumption rose by 4.5% in real terms and a fall of 3.8% is expected in 2020. Private final consumption is being limited by the effect of lockdown measures and social distancing.
Unemployment was just 1% in 2019 and it will be the same rate in 2020. Businesses face great difficulties recruiting both skilled and unskilled workers.
Weak external demand will continue as the U.S.–China trade conflict drags on and perhaps even escalates, damaging global trade.
Thailand’s economy has been held back in recent years by political uncertainties created by the frequent changes in government. Bangkok had four different prime ministers during 2008. The uncertainty led foreign companies to put many new projects
on hold. A lackluster performance by exporters added to the economy’s problems.
An aging population is likely to be an economic drag in the longer term. Thailand is one of the world’s poorest countries to face the phenomenon of aging. Growth of the workforce is already slowing, creating pressure to improve productivity.
Thailand’s population was 69.6 million in 2019, an increase of 6.7 million since 2000. Growth of population was relatively rapid in recent decades but is now decelerating. The slowdown means the country’s pool of young workers will shrink
in the medium term.
Median age in 2019 was 39.7 years, up from 30.2 years in 2000. That steady rise is indicative of an aging process. Median age will reach 43.7 years in 2030. The number of elderly (those over 65 years) was 12.4% of the total in 2019 but the total will
rise sharply by 2030 when this group represents 19.6% of total population.
USDA’s Office of Agricultural Affairs (OAA) in Bangkok hereinafter referred to as “Post” reports that Thailand had a GDP of US$543.6 billion in 2019. Thailand remains a strong agricultural competitor as it is the world’s leading
exporter of natural rubber, frozen shrimp, canned tuna, canned pineapples, cooked poultry, and cassava. It is also a major exporter of sugar and rice. Thailand is currently the 13th largest export market for U.S. agricultural products while the U.S.
is the largest supplier of agricultural products to Thailand, with 16% of total import market share.
U.S. exports of consumer-ready food products to Thailand totaled over US$405.4 million in 2019 an increase of 13% from the same period in 2018. Thailand is an active importer of U.S. processed foods as well. In 2019 they totaled over US$427.3 million,
a decrease of 1%. Top 2019 U.S. processed food exports included:
Processed/Prepared Dairy Products
Chocolate & Confectionery
Processed Vegetables & Pulses
Syrups & Sweeteners
Dog & Cat Food
Thailand currently has preferential trade arrangements with the ASEAN, Australia-New Zealand, China, India, Japan, Peru, South Korea, and Chile. Thailand has been in negotiation for bilateral free trade arrangements with the European Union, Pakistan,
Sri Lanka, Turkey, and the Regional Comprehensive Economic Partnership (RCEP), which is the multilateral free trade agreement comprising of China, India, Japan, South Korea, Australia, New Zealand, and the 10 ASEAN countries. These agreements have
created additional challenges for U.S. agricultural exports, particularly due to large tariff differentials as the United States does not have any trade agreement with neither ASEAN nor Thailand.
Duties on imported U.S. consumer-ready food products range between 30%-60%. Tariffs on meats, fresh fruits and vegetables, and processed foods are equally high, even for items with little or no domestic production. For example, frozen potatoes are
not produced in Thailand but face a tariff of 30%. The tariff on apples stands at 10%, while pears and cherries tariffs are 30% and 40%, respectively.
Advantages and Challenges for U.S. Food Exporters in Thailand
Market “Advantages” (U.S. supplier strengths and Thailand market opportunities) and “Challenges” (U.S. supplier weaknesses and competitive threats).
U.S. exporters are able to provide a variety of high-quality agricultural products ranging from fresh to processed foods.
U.S. food safety is highly regarded. U.S. Food and Drug Administration (FDA) norms are being used as a reference by Thai government health authorities to enforce more efficient regulations to safeguard consumers.
The growing tourism industry is fueling demand for U.S. products such as seafood, beef, potato, wine, whiskey, and beer.
Health conscious consumers create new opportunities for U.S. exporters particularly those who have products marketed as sustainable, containing all-natural ingredients, or have other marketable health features.
The increasing number of elderly in Thailand means that by 2021, 14% of the Thai population will be over the age of 65. Many in the Thai elderly population have disposable income to spend on high-quality premium products.
U.S. products are generally less price competitive than similar products from countries that have Free Trade Agreements (FTA) with Thailand, such as Australia, New Zealand, China, Peru, Chile, India, Korea, and Japan.
Lack of local interagency communication/coordination causes interruptions in trade, as new regulations are imposed on imports without prior notification.
Substitutes for American imports can be produced locally, frequently at lower cost. High import tariffs on some consumer food and beverage products make it easy to replace U.S. imports with locally produced items.
High marketing costs (advertising, discounts, promotions, sampling, etc.) are necessary to promote new market products.
Due to limited information, Thai consumers are often reluctant to purchase foreign products from unknown brands.
“All of Food Export’s programs were a tremendous help getting us export ready, understanding the challenges that come with international business, and learning how to navigate them.”
According to Euromonitor, retail sales in the packaged food market in Thailand had been estimated to reach nearly US$14.2 billion in 2019. That represents a growth rate of 21.8% or over US$2.5 billion since 2015. The forecast for
growth in this market is also quite promising. By the year 2024, the retail sales in the packaged food market in Thailand is expected to reach US$17.4 billion, a growth rate of 20.5% or US$2.9 billion. High growth products in the forecast include:
Processed Meat and Seafood
Sweet Biscuits, Snack Bars and Fruit Snacks
Sauces, Dressings and Condiments
Post reports that Thailand represents one of the most attractive food and drink markets in the Asia Pacific region. Prior to COVID-19 pandemic, the Thai Retailers Association reported that Thailand’s retail sector in 2019 expanded
by 2.8% with a total value of approximately US$116 billion. The growth of the Thai retail industry has been largely driven by economic growth, coupled with a growing young, middle-income population with higher disposable incomes and a greater propensity
to spend, and a trend towards urbanization. The number of food retail outlets continues to grow with over 18,000 convenience store and supermarket locations. Changes in the structure of Thai households and the pandemic have led to changes in how Thais
eat with a rising demand for convenient ready-to-eat meals, healthy food products, and food delivery.
In 2019, grocery retail accounted for approximately 54% of total retail sales. Independent small grocers such as ‘mom & pop’ stores remain popular despite the growing number of convenience stores. Products sold in traditional
‘mom and pop’ stores in Thailand include traditional foods and snacks, confectionaries, beverages, and other food items produced either domestically or in neighboring Asian countries.
Changes in the structure of Thai households have led to changes in how Thais eat with a rising demand for convenient ready-to-eat meals, healthy food products, and food delivery. In addition, health and wellness food categories have
continued to grow in Thailand. Due to increasingly hectic lifestyles, the demand for products that can offer better health, boost wellbeing, manage weight, and increase nourishment is increasing even those that are generally more expensive than normal
Even though the impact of the COVID-19 outbreak on the overall retail industry is high, an estimated contraction of 5%-10% for the first quarter of 2020, the Thai food retail sector growth is expected to be mild to moderate, with the online food retailing experiencing a fast growth rate. Although
the coronavirus situation in Thailand has been well managed and contained, the risk of a second wave of outbreaks still cannot be ignored. The possibility of a second wave of outbreaks is impacting the expansion plans of retailers and is causing uncertainty
in the recovery of the tourism industry. Thus, the outlook for Thailand's food retail industry will rely much on the domestic demands over sales generated from tourists and expatriates through the end of the year.
Food importers in Thailand are constantly looking for new varieties of imported products to offer to retailers. To penetrate the retail food sector, it is often best for U.S. exporters to partner with importers/distributors willing
to introduce products to major retailers. Offline and online promotional activities, point of sales (POS), and product samplings are important tools to promote food and beverage products in the Thai retail food market. In addition, advertising through
social media, newspapers, radio, television, celebrity endorsements, and bloggers is recommended.
Supermarkets such as Central Food Retail and Villa Market have their own import divisions, whereas hypermarkets like Tesco Lotus only import company branded products. Siam Makro (cash & carry) also sources and
imports food and beverage products worldwide. U.S. exporters should refer to Thailand’s regulations on food and beverage products to prepare population will be over the age of 65. Many in the Thai elderly population have disposable income to
spend on high-quality premium products.
Convenience stores have experienced a continuous growth in comparison to traditional retailers. Competition in this sector is high as Thailand has a total of 18,240 stores nationwide, with 1,035 stores opening in 2019 alone. Demand
for convenient, inexpensive, and time-efficient foods has increased significantly due to changes in Thai society. Convenience stores serve ready-to-eat meals and fruits, baked goods, a variety of snacks, desserts, coffee, beverages, and other confectionaries.
Food and beverage products account for approximately 71% of all products sold in convenience stores. Convenience store operators have also increased healthy food assortments such as ready-to-eat fresh fruits and vegetables, fruit and vegetable juices,
functional drinks, low-calorie foods, and healthy snacks to accommodate the need and growth of health-conscious and aging customers. On average, in 2019, over 13 million customers per day shopped at a convenience store.
In 2019, 7-Eleven was still the market leader in this sector with approximately 64% of all convenience stores being 7-Elevens, followed by Tesco Lotus Express and Family Mart, which had 9% and 6% of the total number of convenience stores, respectively. The
CP food group sources most food and beverage products sold in 7-Eleven stores locally.
Supermarkets are highly competitive and are concentrated in Bangkok and in other major provinces such as Chiang Mai, Phuket, Chonburi, and Nakorn Rachasima. Thailand’s supermarket segment has many players including Central Food
Retail (Central Food Hall and Tops Supermarket), MaxValu, The Mall Group (Gourmet Market and Home Freshmart), Villa Market, UFM Fuji, and Foodland.
The middle to high-income consumers remain the key target segment for supermarkets, driven by a desire for premium products and services. Imported food and beverages such as fruits, vegetables, seafood, meat, frozen food, beverages,
packaged foods, and organic products are well-positioned and recognized by consumers. Most supermarkets now have dine-in counters (in-store restaurants) for customers to shop raw materials at the retail store for cooking and dine in as well. This
allows them to promote meat and seafood products in their frozen/chilled form, prepared in restaurant menus, or prepared in take-home meals.
Hypermarkets and ‘cash & carry’ establishments present good opportunities for U.S. exporters of fresh and frozen food, and beverage products as well as products that cater to mainstream consumers. Due to limited space
and high land cost in the Bangkok metropolitan area, new outlets have expanded to other provinces focusing on large growing provincial cities. Hypermarket operators are also diversifying their store formats to smaller-scale retail stores including
mini-supermarkets, express stores, and convenience stores.
The largest two hypermarkets are Tesco Lotus and Big C. Both hypermarkets offer a wide range of premium products including a wide selection of imported foods targeting middle and high-income customers. Siam Makro also has its own
import division, which delivers frozen imported and local food products such as American fries, cheese, and frozen seafood.
Best Prospect Products
Post reports that U.S. products with the best prospects for retail sales in Thailand include:
Dried Fruits and Nuts
Healthy and Functional Foods and Beverages, Etc.
Food Service Sector
Post reports that Thailand has a well-developed hotel and restaurant industry with Pre Covid 19 solid growth expected over the next three years. According to industry estimates, the restaurant sector expanded by 4%-5% in 2018. The long-term outlook for the restaurant industry remains positive owing to increasing urbanization, higher consumer disposable income, and the increased frequency of Thais to eat out. Currently, Thais on average eat out around 56 times per month
Food outlets are located everywhere in Thailand ranging from small street carts to five-star restaurants in some of the world’s finest hotels. The ubiquity of food outlets leads establishments to compete by offering different
menu items, trendy concepts, and innovative cuisine. On average, the entire Hotel, Restaurant, and Institutional (HRI) sector sources about 30%-35% of their food products through imports. The United States has approximately a 20% market share of this
Thailand’s highly competitive HRI sector is comprised of approximately 150,000 outlets including some 100,000 restaurants and more than 5,000 hotels and resorts. The industry has steadily increased in recent years driven by
continuous growth in the country’s tourism industry as well as changes in consumer behavior as modern urban families tend to eat out more regularly. Thailand imported US$405 million in consumer-oriented foods from the United States in 2019.
HRI establishments are heavy users of imported products for food preparation, ready-to-eat meals, and catering services for airlines and cruise lines. In 2018, per capita consumer expenditures on hotels and catering totaled US$781 per person, a 13%
increase from the previous year.
Thailand’s tourism industry remains one of the strongest in Asia and is an important component of the service sector, a driver of Thailand’s GDP growth, accounting for 12.3% of GDP in 2018. The Ministry
of Tourism and Sports reported that 38.3 million international tourists arrived in 2018, a 7.5% increase from the 35.6 million tourists that visited Thailand in 2017. Thailand’s goal is to continue to grow the number of tourists by 10% annually.
As Thailand’s HRI foodservice sector is reliant on tourism, the growing numbers of tourists continue to fuel the growth of the country’s HRI foodservice sector. Spending by international tourists on food and beverage products totaled US$12.3
billion in 2018, accounting for 21% of total tourist expenditures.
The restaurant sector is highly competitive with international chains competing with well-established local restaurants and other small-to-medium sized food establishments. Low barriers for entry leads to new establishments regularly
entering the market and bringing with them new ideas and concepts. Food outlets are located everywhere in Thailand ranging from small street carts to five-star restaurants in some of the world’s finest hotels. Thus, restaurants compete on a
variety of factors including price, food quality, value perception of menu, service, trendiness, new product development, and food variety. Japanese and Korean style foods such as ramen, shabu, yakiniku, Korean barbeque, Bibimbap (Korean style hotpot
mixed rice), Chinese cuisine, American style burgers, Italian pizzas and pasta, and French cuisine are popular in Thailand, especially among Thai teenagers.
Quick Service Restaurants (QSR) hold a 10% market share for the restaurant sector and have become increasingly popular in Thailand, with an annual growth rate of 8%-10%. Patrons of QSRs in Thailand today are a diverse group including
traditional families, office workers, teenagers, and tourists. The QSR market is dominated by franchises, which sell chicken, burgers, bakery products, pizza, ice cream, and breakfast meals.
Traditionally, about 80% of Thailand’s food franchises are formed through partnerships with U.S. brands such as McDonald’s, KFC, Pizza Hut, Au Bon Pain, Subway, and Domino Pizza and non-U.S. brands like Bonchon Chicken, Chabuton ramen, Mos Burger, and Japanese rice bowls from Yoshinoya. It
is estimated that the QSR market will grow to reach nearly US$7.6 billion by 2020. However, the QSR sector faces a growing challenge from consumers that perceive fast food as unhealthy. Thai consumers also increasingly focus on healthiness and food
Best Product Prospects
Post reports that the best market prospects for U.S. suppliers include:
Meat: frozen and chilled beef;
Potatoes: frozen American Fries with variety cuts;
Fresh and frozen seafood such as fish fillets, scallops, lobster, mussels, oysters, salmon, halibut, codfish, Alaska king crab, etc;
American spices and seasonings; Bakery and baking products: flour, biscuits, pancake mixes, waffles, cookies, muffins, cakes, frosting and icings, and puff pastries;
Beverages: fruit and vegetable juices, wine, liquor, whisky, craft beer, cocktail mixes, mineral water, healthy beverages, and mineral water;
Dried fruits and nuts;
Canned foods: soup, fruit, and vegetables;
Condiments: bacon bits & toppings, barbecue and cocktail sauce, dips, hot sauce/pepper sauce, mayonnaise, mustard, olives, salsa and taco sauce, pickles, steak sauce, syrups, salad dressing, and vinegar.
Fresh fruit and vegetables (organic and specialty vegetables, apples, grapes, cherries, kiwi fruit, blueberries, grapefruit, oranges).
Jams, jellies, and spreads.
Post reports that Thailand’s food processing industry has developed rapidly and is one of the most developed in South East Asia with more than 10,000 food and beverage processing factories. In 2019, Thailand’s food ingredient
imports exceeded US$2.7 billion. With rising demand for processed foods, Thai food processors must import large quantities of food ingredients that are not locally available.
Thailand is one of the world’s leading agricultural suppliers, primarily due to its well-developed food processing sector. The country has one of the most advanced food processing industries in Southeast Asia, which enables
Thailand to export value-added products to international markets like Europe, Japan, China, and the United States. Major food exports include rice, canned tuna, sugar, chicken meat, cassava products, shrimp, and canned pineapple. Prior to the COVID
crisis, the National Food Institute estimated that the value of Thai food exports would be US$34.9 billion in 2020, an increase of 5.4% from the previous year.
The Thai seafood sector is the third-largest in the world, after China and Norway, with 90% of output exported. The packaged food industry is highly fragmented, with the top ten companies controlling only about one-third of the sales
Thailand is one of the world's leading food exporters, with seafood products making up the largest share at about 18.2%, followed by chicken, rice, sugar, processed fruits, and beverages. While rice and seafood products suffered a decline
in export value, which fell 22% and 3.6% respectively, the value of chicken exports increased 5%, beverages 8.5%, and ready-to-eat meals 4.6%.
The country is also a major importer of agricultural products, including food ingredients and a wide range of food and beverage products. In addition, Thailand produces innovative and high-value products including frozen meals, canned
foods, halal foods, food seasonings, food supplements, functional foods, and medical foods. Thailand exports halal products worth US$6 billion to more than 57 countries, making the country the world’s ninth-largest halal food exporter. Opportunities
in Thailand’s food processing sector continue to grow as domestic sales of processed foods rise due to strong demand from the retail and foodservice sectors.
In 2019, Thailand’s food ingredient imports reached US$2.7 billion. The United States is the third-largest supplier of these products. U.S. products with the highest growth were dairy ingredients, dried fruits, and nuts. The
food ingredient market continues to grow due to increases in population, purchasing power, dual-income families, and new product development. Although domestic ingredients hold the greatest share of the market, these items tend to be low-value items.
High-value raw and semi-processed products such as grains, vegetable oils, starches, dairy ingredients; specialty bakery ingredients are generally not available locally and must be imported.
Due to Thailand’s agricultural resources, most food processors can source some inputs domestically. However, local production facilities lack many higher-value and technology-based ingredients. Importers report that U.S. food
ingredient exporters are generally less competitive in terms of price, service, and delivery time, but offer high-quality products and consistent service. In order to avoid price competition with other exporting countries,
Post advises that U.S. exporters need to focus on product innovation, services, technical support, quality, and position their products in the middle-high price range. Trade shows such as Food Ingredients Asia and market promotions
are highly effective ways to promote U.S. food ingredients and compete with similar products from China, Europe, Australia, and Canada. U.S. suppliers must be prepared to lend considerable technical support to food processors and distributors to develop
products that will boost demand for their ingredients.
Best Product Prospects
Post reports that U.S. products in the market with good sales potential include:
A growing aging population has increased demand for healthy and functional food ingredients including dried fruits, nuts, pulses, plant-based proteins, proteins, and amino acids, vitamins, minerals, prebiotics and dietary fiber, probiotics, carotenoids,
essential oils, and omega-3 and 6 fatty acids
Also, there is a growing demand for organic ingredients, gluten-free, plant-based ingredients, and protein boost food ingredients
Emulsifying, foaming, stabilizing and thickening agents. These products are used in frozen foods, bakery products, ice cream, evaporated milk, and confectionery products; Colors and flavors. These products are used in non-alcohol beverages, ice cream
and other dairy products, confectionery products, snack foods, bakery, instant noodles, and a wide range of processed meats
Sweeteners used in non-alcohol beverages and the confectionery industry. Beverage manufacturers are reducing sugar content to minimize the impact from new excise tax
Concentrated fruit juice due to growing demand for new flavors
Fish fillets for processed seafood, frozen food, and ready-to-eat products
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