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Phuket Business: Coca-Cola pouring B200mn into Thai cola battle; New player enters market

Legacy Phuket Gazette

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Phuket Business: Coca-Cola pouring B200mn into Thai cola battle; New player enters market | The Thaiger

PHUKET: Coca-Cola (Coke) is spending 200 million baht on marketing in the final quarter of this year in hopes of surpassing Pepsi to become the undisputed leader of Thailand’s 38.5 billion baht carbonated-drink market.

Colas represent about 75% of Thailand’s carbonated drink market. This is followed by flavored drinks (20%) and lemon-lime beverages (5%). The cola segment is also the most competitive, with international brands such as Pepsi-Cola, Coca-Cola and Big Cola, in addition to local newcomer, Est (see below) fighting for a share.

As part of Coke’s 200mn baht marketing effort, the firm is conducting the largest sampling campaign ever in Thailand, along with a nationwide tour to interact with consumers; one highlight was distributing a million bottles of Coke in a single day.

In a recent interview with The Nation, Thiti Tuangsithtanon, marketing manager of Coke’s Thailand subsidiary, said that the soda drink market was projected to increase by 11% year-on-year in the first nine months of this year, while Coke would be able to grow its domestic sales by 20% over the same period…

“We expect that the overall carbonated drink market will be on par with 2010, with 12 to 15% growth [for the entire year]. The market was flat last year due to the massive flooding… We expect the market to grow again this year driven by positive factors, including the coming of new brands, and more investment allocated in the industry by both existing and new players,” he said.

“Having a strong alliance with local partners – Thai Nam Thip and Haad Thip – is considered as one of the factors driving our success in accessing individual consumers.

They have provided us with local insight and know-how regarding consumers and the market situation,” he said.

New cola player ‘est’ ambitious
Serm Suk has set an ambitious target for its recently launched ‘est’ brand to become Thailand’s cola segment leader within three years.

The company aims for est to achieve 8 billion baht in sales in its first year: “We aim to have 25% market share and to take the number two spot in the local cola drink market in the first year, and be the market leader by the end of three years,” said Dhitivute Bulsook, president of Serm Suk.

“We will invest 300mn baht in the last two months of this year to boost awareness of est, and another 900mn baht in proactive marketing activities next year,” Dhitivute said.

He added that while 40% of Thai consumers are loyal to either Pepsi or Coke, about 60% of them are brand switchers, willing to try new cola beverages when they appear on the market.

He described Thailand as a unique beverage market where returnable glass bottles still play a major packaging role, representing between 60 and 70% of the market, with PET bottles and cans making up the remainder.

“Our capacity for handling returnable glass bottles, which are owned assets, is our unbeatable advantage. [The volume of] returnable glass bottles is still growing at an average of 5 to 6% per annum,” he said.

Parinya Permpanich, Serm Suk’s marketing and sales operation director, said the company has five bottling plants and 48 branch offices across the Kingdom.

The company has 1,200 sales trucks, 150,000 coolers and more than 200,000 retail outlets and eateries that are ready to support the est product line, he said.

— Kwanchai Rungfapaisarn

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Business

500 people own 36% of equity in Thai companies

Greeley Pulitzer

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500 people own 36% of equity in Thai companies | The Thaiger

Roughly 36% of Thailand’s corporate equity is held by just 500 people, highlighting wealth inequality in the Kingdom, according to a study released by the Bank of Thailand’s research institute.

Each of these 500 amass some 3.1 billion baht (102 million USD) per year in company profits, according to the report from the Puey Ungphakorn Institute for Economic Research. In contrast, average yearly household income in Thailand is around 10,000 USD.

A report out this week from the Economic and Business Research Centre for Reform at Thailand’s Rangsit University also pointed to divisive and polarised politics being another root cause of the economic divide.

Thailand’s private sector is dominated by tycoons running sprawling conglomerates. According to the World Bank, the gap between the mega-wealthy and the rest of the Thai population of 69 million is among the many economic challenges for Thailand. According to Bloomberg, the perception of a divide, exacerbated by an economic slowdown, is a major political fault line.

“Magnates arise in Thailand from institutional factors that privilege certain businesses,” said the executive director of PIER, author of the study.

The institute said Thailand needs to promote competitiveness to reduce profits from monopoly power and bolster entrepreneurship to create a more equitable distribution of corporate wealth.

The research is based on analysis of 2017 Commerce Ministry data on the 2.1 million shareholders in Thai firms, and was funded by the University of California San Diego.

SOURCE: Bangkok Post

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Fish sauce excluded from Thailand’s proposed tax on salty foods

May Taylor

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Fish sauce excluded from Thailand’s proposed tax on salty foods | The Thaiger

PHOTO: Cook’s Illustrated

Thailand’s Excise Department and Public Health Ministry is considering a levy on salty foods in an attempt to tackle the sodium-rich diets of Thai citizens, and the health consequences.

The director general of the Excise Department, Patchara Anuntasilpa says the tax would be calculated based on the amount of salt in a product, with the proposal being sent to Finance Minister Uttama Savanayana by year end.

Fish sauce is a liquid condiment made from fish or krill that have been coated in salt and fermented for up to two years.[1][2]:234 It is used as a staple seasoning in East Asian cuisine and Southeast Asian cuisine, particularly south east Asia and Taiwan. Following widespread recognition of its ability to impart a savoury umami flavor to dishes, it has been embraced globally by chefs and home cooks.

“If the tax is approved, we will allow entrepreneurs one or two years to reduce the salt content and launch a less-salty version of their product.”

The World Health Organisation and the UN both recommend taxing foods with a high salt content, saying increased sodium intake leads to high blood pressure, cancer and kidney and heart disease.

The Nation reports however, that while the proposal is to levy the tax on frozen and canned foods, along with processed items such as instant noodles, seasoning such as fish sauce and snacks like potato chips would be excluded.

The Federation of Thai Industries has pledged to cooperate with the government’s effort to improve the health of Thailand’s citizens, but its head Wisit Limluecha says he is not in favour of taxing popular seasonings, snacks, frozen or instant foods.

“Research has found that these foods represent only 20% of what we eat each day, and everyone has different eating habits, so the better solution would be to advise consumers on how to eat healthily.”

Wisit warns that the tax may damage the country’s competitiveness in the food sector both overseas and in Thailand, where imported products are easily available. He also voices concern that small businesses will suffer if unable to afford ingredient and packaging changes.

SOURCE: The Nation

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Thai Airways must modify rehabilitation plan to survive: Airline President

The Thaiger & The Nation

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Thai Airways must modify rehabilitation plan to survive: Airline President | The Thaiger

PHOTO: gta5-mods.com

“Thai Airways will have to modify its rehabilitation plans to survive in the face of tight competition.” This frank admission by the airline’s president Sumet Damrongchaith.

The national carrier is now carrying a total debt of over 2.45 billion baht and losses of more than 20 billion, despite being able to reduce its debts by 48 billion baht over the past five years.

Sumet says the first step will be to restructure the airline’s management and finances as well as reconsider its plan to spend 1.5 billion baht on 38 new aircraft. He admits the biggest problem is that Thai Airways has low capital but a high debt-to-equity ratio of eight times.

In order to maintain its competitiveness, the carrier will have to reduce its debts versus assets and boost its working capital with support from the ministries of Transport and Finance. Hence, it plans to borrow approximately 3.2 billion baht in fiscal 2020 in line with the budget limit set by the Office of Public Debt Management.

This loan will be taken to support the airline’s investments as well as for its working capital, to update equipment and maintain existing aircraft, but will not be used to repay old debts.

The Nation also reports that the airline is also concerned about maintaining its liquidity because at the end of June this year, its revolving credit line stood at 13.4% of the total revenue forecast for 2019.

Sumet admits that, though the original rehabilitation plan has a set framework, the situation has now changed due to the appreciation of the baht, so in order to achieve goals, the work method has to be redesigned, such as finding a way to procure more passengers.

“We are now in the process of analysing new markets.”

Meanwhile, Thai Aiways’ board chairman Aek-Niti Nitithan-Praphas says the board is reconsidering plans to procure a new fleet taking into consideration the state of the global and domestic economies as well as the US-China trade war.

“The growth of the tourism industry and the airlines’ financial status needs to be reviewed in line with strong competition and routes that are no longer popular. It’s better to carefully revise the plan instead of exposing the airline to greater risk. The target should be reduce expenses by 20%.”

Meanwhile, Thai Airways aims to boost the sale of tickets, find ways of increasing online shopping of duty-free goods and reducing unnecessary expenses by 10%without affecting the quality of service in the last three months of 2019.

The airline is also negotiating the option of cutting down overtime expenses and is looking into curbing losses incurred by it’s semi-budget offshoot Thai Smile by increasing its flying hours to 10.5 hours daily. These steps are expected to help the airline reach breakeven point in the short term.

The airline is also considering long-term goals such roping in more passengers by offering greater benefits to Royal Orchid Plus members, focusing on digital marketing, retiring non-performing assets as well as increasing revenue from related businesses such as kitchens and aircraft repair centres.

SOURCE: The Nation

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