Last week, we explored the Vietnam trends and market opportunities for food and beverage producers following the strong interest in Australian brands demonstrated by ASEAN buyers at FHA Singapore. Next up, we’re looking at past and upcoming trends in one of Southeast Asia’s largest markets, Thailand!

Economy Trending Up and Down in Recent Decades

Thailand’s economy has been on somewhat of a roller coaster in the past few decades, experiencing both highs and lows. Following a boom during the decades leading up to the 21st century, and stable growth of 5% annually during the Asian Financial Crisis, millions of Thai citizens were lifted out of poverty. However, this extraordinary growth, fuelled by exports, has begun to slow in more recent decades as investment flows and Thailand’s participation in global supply chains has dried up. As a result, Thailand’s wage incomes have stagnated. 

More recently, following the start of the COVID-19 pandemic, the majority of households, at over 70%, have seen a decline in their incomes. However, while the economy hasn’t reached recovery yet, there are some positive growth signs as the return of tourism provides a much-needed boost and enabled the economy to grow by 2.5% in Q2 2022. Yet exporters should remain cautious as the rate of inflation surpasses economic growth rates, which is slowing consumer demand.

Free Trade Agreements Benefit Australian Exporters

Australia maintains deep-rooted connections with Thailand, strengthened by various free trade agreements, the oldest of which being the Thailand-Australia FTA (TAFTA). This agreement has eliminated most tariffs levied on Australian exports, including a variety of meat and dairy products, while also reducing tariffs in other areas. 

Beyond the TAFTA, Thailand, as a member of ASEAN, also maintains a relationship with Australia through the ASEAN-Australia-New Zealand FTA. This agreement also provides preferential treatment and other benefits including standardised rules of origin and tariff minimisation. Meanwhile, the Regional Comprehensive Economic Partnership Agreement further cements our relationship with Thailand, securing duty-free access to Australian exports and a more standardised regulatory process to minimise non-tariff barriers.

One of South-East Asia’s Largest Markets

For Australian businesses that can successfully enter Thailand, the potential rewards are big! As the second largest economy in Southeast Asia, and with a population of over 70 million, Thailand represents significant growth potential. This is further compounded by the country’s bustling tourism sector, which pre-COVID-19, saw almost 40 million annual visitors passing through Thailand. With such a strong tourism sector, demand for imported food and beverages remains high, which will provide an avenue for export growth as tourism inflows resume in 2022 and beyond. 

Quality Considerations Now Influencing Purchasing Factors

Despite economic highs and lows, Thailand’s middle-class, and disposable incomes, have grown considerably over the longer term. Coupled with this increase is an enhanced consumer focus on food quality, presentation and country of origin and a reduced focus on price and availability concerns. With quality and health now key, consumers with disposable incomes actively seek out higher-value fresh produce and processed products and increasingly, imported goods. In particular, Australian products are in demand thanks to their perceptions as clean, healthy and high-quality. As mirrored in many other global markets, consumers are also becoming more environmentally conscious, and are hence gravitating towards more sustainably produced foods.

Consumers Increasingly Conscious Of What They Eat

Along with the general rising interest in health and wellness in Thailand, we can see a few clear trends. One such trend is the rise in low-carb, low-sugar, high-protein and gluten-free diets, which is seeing food and beverage companies release new editions of their most popular products to cater to consumers on such diets. With most of these products coming from the US, UK and Australia, exporters in this better-for-you and free-from space should keep an eye out for growth opportunities. 

While Thailand’s plant-based population falls behind other Asian nations, veganism and vegetarianism is growing and a majority of consumers have, or are open to trying plant-based alternatives to their favourite products. In fact, plant-based milks, meat alternatives and dietary supplements are already on the rise, and expected to see rapid growth over the next few years. As such, the variety of products in this area is growing, which was already visible at THAIFEX Anuga Asia 2022, where sustainable, plant-based, organic and clean-label products were on full display. 

Herbal drinks are also an area of focus, with many consumers seeking the gut health and immune-boosting benefits they provide. This falls in line with the general trend towards holistic nutrition, with consumers seeking food and beverage products that provide nourishment for the mind and body. Along this same line, raw and natural foods are highly popular, as well as fresh fruit and vegetables and ‘farm fresh’ foods that can be traced throughout the entire value chain.

Sweet, No-Fuss and Plant-Based Options See Growth

Thailand houses one of Asia’s largest food and beverage markets, with a recorded value of almost US$35 billion in 2021 and a forecast value of US$44 billion by 2026. As the Thai market reaches the US$44 billion mark in 2026, some key trends will stand out. Thai consumers clearly have a sweet tooth, with confectionary products, syrups and spreads expected to do well, while ice cream sales will see stronger growth than any other food category. The shift to convenient foods is also evident, with demand growing for canned, dried and frozen foods as well as prepared meals, pasta, noodles and soups. Growth for veganism and vegetarianism is also on the horizon as sales rates for meat substitutes grows over the next few years. Meanwhile in the beverage sector, wines and spirits are expected to do well.

Food Delivery Grows While Dining Out Remains Essential

Dining out has become an essential aspect of Thai social culture, with consumers viewing it as a sensory experience which cannot be replicated in the home. While COVID-19 certainly dampened this trend, foodservice is expected to make a strong comeback, especially as tourism inflows rise. Another mega-trend in foodservice is the rapid growth of food delivery services, fuelled by COVID-19, yet expected to remain a staple for many consumers who have become habituated to the convenience such platforms offer. As such, as we move beyond the pandemic, the overwhelming majority of Thai consumers have indicated their desire to increase their spending on both dining out and meal deliveries in the coming years.

Wrap Up

That finishes up our look at the Thai market! On a wider national level, we can see that despite a somewhat tumultuous economic climate over the past few decades, consumer demand is expected to recover well alongside the return of tourism. Meanwhile, a strong trading relationship with Australia is reflected in various free trade agreements to promote ease of access for exporters, while a large population provides considerable room to grow for Australian companies. 

On an industry level, food and beverage is well-positioned for growth as quality, wellness, convenience and sustainability become key buzzwords driving demand for diet-specific, functional, natural and plant-based foods. The demand for high-quality imported products especially is a positive sign for Australian exporters, while on the foodservice side, the growth in both online delivery and eating out post-COVID-19 will support food and beverage manufacturers catering to operators in this space.

We hope you’ve found these insights on the Indonesian market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.