There are many reasons for Australian businesses to export to Thailand: various free trade agreements including the Thailand-Australia FTA and the ASEAN-Australia-New Zealand FTA, one of Southeast Asia’s largest consumer bases, and the emergence of the middle-class consumer. But, where exactly does the opportunity lie in the food and beverage space? Let’s take a look at what’s trending in Thailand’s F&B market in 2023.
Demand for Clean Foods Booms
Thailand’s top food exhibition, THAIFEX-ANUGA ASIA, identified clean foods as a major area of opportunity within the industry. This focus comes as no surprise, given the impact of the pandemic on consumer purchasing behaviours around the world, which has prompted an enhanced focus on wellbeing and healthy living–in which diet plays a major role. Increasingly, consumers are seeking out various ‘free from’ products, whether that be vegan, kosher of gluten-free foods. Part of this trend also includes the growing shift towards natural foods rather than those made with artificial flavours and preservatives, as well as organic and whole foods over heavily processed options. While this is very much a global phenomenon, the Thai Health Promotion Foundation found that 82% of Thai consumers prefer clean-label, all-natural foods made without chemicals and additives.
Rising Incomes Support Health and Premium Food Categories
While COVID-19 has certainly accelerated the growth of health trends and clean foods, the growing purchasing power of the Thai consumer has especially played a role in the rising demand for more premium, healthy foods such as keto and gluten-free products, nut and seed-based products, fresh fruits and vegetables, organic foods and dietary supplements. In the past, these foods have largely been restricted to higher-income individuals due to their higher price points, however Thailand’s growing middle-class consumer base is expanding demand.
As such, brand claims like low/no/reduced sugar, as well as functional claims like digestive and immunity support have risen sharply over the past decade. The functional beverage space especially is one to watch, with consumers willing to pay for premium, sophisticated and functional products. Young, affluent consumers are also driving demand for premium, imported foods across all food categories, not just those in the health space. 2023 is set to be an especially promising year for premium and health foods, with consumer spending set to continue growing from a high base in 2022 as strong economic growth, low unemployment and controlled inflation support a rise in consumer confidence and spending.
The Growing Role of Sustainability in Purchasing Decisions
Another major trend to emerge out of THAIFEX-ANUGA ASIA 2022 was the shift towards sustainable and eco-friendly foods and packaging. Whilst in comparison to other global and Asian markets, Thailand’s sustainable food space is very much still in its infancy, its impact on consumer purchasing decisions is growing as their awareness of the impact of the F&B sector on the environment grows. According to a recent Rakuten Insight survey in 2022, over 60% of the population claims to have adopted sustainable purchasing habits in the last year, while Euromonitor statistics suggest 45% of Thai consumers are trying to use sustainable packaging and 69% are seeking to reduce their plastic consumption. Plus, sustainability concerns are set to intensify further as Thailand begins to feel the effects of climate change and other environmental concerns like pollution, with Thailand ranking 10th globally in terms of countries sending the most plastic into our oceans.
Spotlight on Plant-Based & Vegan Products
As vegan, vegetarian and flexitarian diets surge in popularity amongst a growing number of ethically and sustainability-conscious consumers in Thailand, F&B companies are launching new plant-based product lines. For instance, local brands such as Absolute Plant, V Foods, Meat Zero, OmniMeat and More Meat are innovating to improve their plant-based protein range with new products as well as adapting their existing range through reducing additives or improving the texture to better imitate authentic meat using proteins like chickpeas and fava beans.
Vegan milk brands are also proliferating, offering the traditional oat and almond milks as well as more experimental options like barley and potato milk. Meanwhile, restaurants have also been quick to adapt, with many quick-service players like Burger King and McDonald’s offering their first meat-free meat options in 2021. This trend is only set to continue! In fact, Thailand’s non-meat-eating population has doubled from 4% in 2013 to almost 10% in 2019, while 53% of Thai consumers are looking to reduce their meat consumption. As a result, the plant-based food space is now highly competitive, with the sector experiencing an average annual growth rate of 10%.
Incorporating Global Flavours in Local Diets
Over the last few years, consumers around the world have been plagued by travel restrictions and border closures, limiting their opportunities to immerse themselves in diverse cultures and cuisines. As such, Thai consumers turned to their own backyards to seek out more novel flavours and exotic foods. With foodservice establishments now having reopened to full capacity, they’re looking for authentic global cuisines, as well as fusions which combine regional ingredients with global flavours to produce modern twists on classic dishes. In the retail space, supermarkets and hypermarkets are responding by offering a broader range of imported and exotic foods to satisfy consumers’ adventure and novelty-seeking tendencies.
Demand For Imported and Australian Foods on the Rise
Alongside the shift towards global flavours and rising disposable incomes, Thai consumers are also seeking out imported foods. This is especially prevalent within the packaged food and beverage segment, where the emerging middle-class consumer base is keen to spend on small indulgences for premium categories like ice cream, chocolate, 100% fruit juices, coffee and crackers.
In particular, Australian products are in demand thanks to their perceptions as clean, healthy and high-quality. Meanwhile, Thailand also houses a flourishing tourism market, seeing over 40 million tourists arrivals in 2019, and over 20 million expected in 2023 as the sector recovers. This means demand for imported foods isn’t just driven by mid-to-high-income Thai residents in major metropolitan areas like Bangkok, but also a growing tourist base looking for familiar, Western products on holiday. According to Austrade, major export categories of opportunity include Australian meat, dairy, fruit and vegetables, and packaged products, including fruit juices, functional beverages, grain and cereal products, sweet spreads, pasta, chocolate, confectionery and ready-to-eat foods.
New Channel Concepts Emerge From Necessity
COVID-19 saw both retailers and foodservice outlets alike dramatically alter their distribution strategies. While retailers harnessed technology to improve their contactless collection methods like click-and-collect and home delivery, foodservice operators did the same, with many transforming from dine-in-only models to incorporating pick-up and takeaway options. These new models forced restaurants, especially in the full-service sector, to refine and reduce their menu options. Meanwhile, some foodservice players dipped their toes into the retail space, creating signature product lines such as ready-to-eat foods and sauces. While these changes were largely considered as a temporary measure born from necessity, many restaurants have realised the revenue and efficiency benefits of these innovative strategies, so they’re largely set to stay.
Smaller Pack Sizes Cater to Demographic Trends
As the proportion of single-person households in Thailand grows, the pack sizes offered by food and beverage manufacturers is shrinking. Recent studies have found that single-person households have now become the dominant household type in Thailand. Meanwhile, family sizes are also shrinking, with young couples choosing to have fewer children, or none at all. This has seen the average household size shrink from 3.8 people in 2000 to 3.0 people in 2022. Plus, the country is becoming more and more urbanised, with over 50% of the population now living in urban areas compared to just 20% five decades ago. This typically also supports demand for smaller, portion-controlled pack sizes. While convenience stores have been quick to respond to this trend, there’s more room for product innovation in this area.
Convenient, Ready Foods Dominate the Market
As urbanisation continues at a solid pace in the Asia Pacific region, consumers are looking to save time and simplify their lives. In the food and beverage space, this is manifesting in the form of demand for ready-to-eat, or ready-to-prepare meals. The demand for convenience is also one born not just from urbanisation, but from necessity during the pandemic, as consumers spent more time cooking at home and thus sought to simplify this process as much as possible. Even as consumers revert from working from home to the office, the convenience trend is here to stay, as they inevitably become busier and free time becomes sparser. This will also prompt a boost in demand for food and beverages which can easily be consumed on-the-go. Another key aspect of the convenience trend is the demand for easy-to-open, easy-to-read packaging to cater to Thailand’s fast-ageing population, with the over-60s population making up 20% of the total consumer market in 2023.
That wraps up our exploration of the Thai food and beverage market! As we’ve seen, there are a plethora of exciting and unique opportunities for Australian producers looking to export their offerings to Thailand–many of which align with Australia’s solid advantage in areas including premium, sustainably-produced, plant-based, healthy and clean fresh produce, meat and dairy, and packaged foods. There’s also plenty of room for innovation, with smaller pack sizes and convenience, ready-to-prepare or eat foods becoming a growing area of opportunity among an increasingly urbanised and single-person-household consumer base.
We hope you’ve found these insights on the Thailand 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.