Business Opportunities Study in Thai Bakery Sector

Business Opportunities Study
in Thai Bakery Sector
June 2013
This report is written by Larive (Thailand) Co Ltd in cooperation with, and commissioned by, the
Embassy of the Kingdom of the Netherlands in Bangkok.
Sector Report: Bakery Sector in Thailand
Contact addresses:
Embassy of the Kingdom of the Netherlands in Bangkok
15 Soi Tonson, Ploenchit Road
Lumpini, Pathumwan
Bangkok 10330, Thailand
E-mail: [email protected]
http://thailand.nlembassy.org/
Larive( Thailand) Co Ltd
Rm 3249, Level 32, Interchange 21 Bldg
399 Sukhumvit Rd, North Klong Toey
Wattana, Bangkok 10110, Thailand
Tel: +662 660 3630
Fax: +662 660 3881
Contact person: Tepin Getuadisorn
E-mail [email protected]
www.larive.com
Larive International BV
Sparrenheuvel 2
3708 JE Zeist, The Netherlands
Tel: +31 30 693 32 21
Fax: +31 30 693 29 08
Contact person: Wouter van Vliet
E-mail: [email protected]
Date: June 2013
Disclaimer
This information in this report is provided by the Embassy of the Kingdom of the Netherlands in
Bangkok. Every effort is made to provide accurate and com plete information. However, we cannot
guarantee that there will be no e rrors. The embassy assumes no legal liability for the accuracy,
complete ness, or usefulness of any information disclose d here in and does not represent that use of
such information would not infringe on privately owned rights.
TABLE OF CONTENTS
Executive Summary ............................................................................................................ 3
Overview ....................................................................................................................... 6
Market size and growth trends .......................................................................................... 7
Competitive lands cape ..................................................................................................... 9
Trade opportunities ....................................................................................................... 10
Investment opportunities ............................................................................................... 11
Key elements of success for Dutch traders ......................................................................... 12
Chapter 1: Overview of Thai Bakery Industry ......................................................................... 14
Major Com ponents of T hai Bakery Indus try ........................................................................ 14
Current Status .............................................................................................................. 15
Chapter 2: Demand Ana lysis ............................................................................................... 21
Market identification ..................................................................................................... 21
Market size estimation ................................................................................................... 21
Baked goods .......................................................................................................... 21
2012 baked goods ma rket by product category .......................................................... 23
Market size breakdown by type of suppliers/outle ts: 2012........................................... 24
Bakery ingredie nts .................................................................................................. 28
Bakery machinery and equipment .............................................................................. 30
Business cycle ...................................................................................................... 34
Product niche ...................................................................................................... 35
Chapter 3: Com petitive environment ................................................................................... 38
Retail bakery chains ....................................................................................................... 38
Specialist Bakery Chains ........................................................................................... 39
Bakery & Restaurant Chains ...................................................................................... 41
Café Bakery Chains .................................................................................................. 44
Donut Chains .......................................................................................................... 45
Cake Specialists ...................................................................................................... 47
Industrial bakeries ......................................................................................................... 48
Bread.................................................................................................................... 48
Other Industrial Baked Goods .................................................................................... 50
Frozen Dough ......................................................................................................... 51
Bakery ingredie nts ......................................................................................................... 53
General Supplie rs .................................................................................................... 53
Specialist Supplie rs .................................................................................................. 56
Local producers ...................................................................................................... 59
Importers .............................................................................................................. 60
Bakery equipment ......................................................................................................... 67
Strengths of OEM Brands .......................................................................................... 69
List of OEM Brands and Type of Bakery Machines by Thai Supplie r ................................... 71
Chapter 4: Regula tory Environment..................................................................................... 75
Licensing Requirements for Bakery Ingredie nts and Baked Goods ........................................... 75
Import Quotas............................................................................................................... 76
Import Tariff Scheme ...................................................................................................... 76
Regional Ope rating Headquarters (ROH) ............................................................................ 77
Minimum Wage Policy .................................................................................................... 78
Other Government Procedures ........................................................................................ 79
Chapter 5: Overview of Dutch Bakery Industry....................................................................... 80
Introduction ................................................................................................................. 80
Trends in the Dutch market ............................................................................................. 80
Opportunities and threa ts ............................................................................................... 81
Dutch presence in Thailand.............................................................................................. 82
Chapter 6: Bus iness Opportunity Analysis ............................................................................. 84
Trade opportunities ....................................................................................................... 84
Import of raw ma terials/ingredie nts ........................................................................... 84
Import of baking equipment...................................................................................... 85
Import of packaging solutions .................................................................................... 86
Other opportunities ................................................................................................. 87
Investment opportunities ............................................................................................... 87
Acquisition/Joint venture/Greenfield investment .......................................................... 87
Retail Bakery Franchis ing .......................................................................................... 88
Regional Ope rating Headquarters .............................................................................. 89
Technical coope ration .................................................................................................... 89
PAGE 4
ANNEXES
PAGE 5
Annex 1
FDA List of Food Products for Licensing
Annex 2
BOI Incentive Package
Annex 3
Overview of Dutch Bakery Industry
Annex 4
“Why Thailand”
Annex 5
Dutch Subsidy Programmes
Annex 6
List of Relevant Events and Exhibitions
Annex 7
Short Profiles of Key Players
Annex 8
List of Interview Partners
Annex 9
List of References
Executive Summary
1
Overview
The fa ce of the Thai ba kery indus try toda y is a far cry from the lands cape two decades
ago when i t was considered much s maller and less developed compa red with other
ma rkets in the region. Rice and noodles remain s taple food for the a vera ge Thai
household; but bread, pas try or cookies can usually be found in the sna ck corner i n
ma ny homes . Business executi ves and many offi ce workers in Bangkok and other
urban a reas ha ve a bi te of a sandwich or bun or croissant or even donut wi th thei r
coffee for brea kfas t – ei ther in a coffee shop or purchased ‘on-the-go.’ On weekends ,
shopping malls are pa cked wi th people of all ages to enjoy the cool atmosphere, the
pleasure of shopping, and dining out wi th famil y and friends – a t a wide selection of
res taurants , bakery shops and donut outlets . Not onl y do they eat on the premises,
they us ually a lso buy a bag of baked goods to take home.
From the small-s cale bakery operati on of the past, the indus try now has more than
700 medium-si zed and la rge businesses wi th nea rl y 14,000 loca tions /outlets
na ti onwide i ncluding:
•
•
•
•
•
•
•
Industrial bakeries
Reta il bakery chains, i ncluding l ocal, regional and international
Ca fé chains
Other reta il concepts, e.g. donut outlets a nd pizza outlets
In-s tore bakeries in supermarkets and hypermarkets
Ba ke-off shops i n convenience stores
In-house bake shops in hotels
In a ddi tion, several thousands of small bakeries , home-based entrepreneurs and
a rtisanal bakeries do s till exist and there is a posi ti ve trend towa rds these upgrading
and, i n some cases , evol vi ng into hi gher grade single si te ca fé bakery or s tandalone
ba kery outlets.
In Europe and Northern Ameri ca , many business mergers and a cquisitions in the
ba kery sector ha ve tra nspi red over the past decade, in order to a chieve economies of
s cale. In Thailand, onl y one or two M&A deals ha ve been formed in recent yea rs , e.g.,
the a cquisi tion of Au Bon Pain and Dunkin’ Donuts franchises in Thailand in 2012 from
Na vis Ca pi tal by Sub Sri Thai PLC (SST)– a public company listed on the Stock Exchange
of Thailand wi th interes ts in wa rehousing, l ogis tics and edible oil . Thus the ma rket is
s ti ll highly-fragmented with no new consolidations s een on the horizon.
2
Market size and growth trends
Unit: billion baht
Ba ked goods
In 2012 the Thai ba ked goods ma rket was es ti mated to
be worth nearly 27 bi llion baht1 .
According to leading pla yers the ma rket grew a t leas t 10
percent per yea r during the past few yea rs and will
continue to enjoy annual double digi t growth of 10-15
percent in the short to medium term as a resul t of
increasing number of in-store bakery s hops and retail
outl ets.
2012 Market = 27 Billion Baht
Source: Industry &trade interviews; Commerce Ministry
By product category, the ma rket can be broken down into bread, 40 percent; pastry,
24 percent; cake, 19 percent; donuts, 11 percent; and cookies & bi scuits, 5 percent.
By type of outlet, retail bakery chains accounted for the hi ghes t sha re at 35 percent,
followed by convenience stores, 33 percent; in-s tore ba keries a t hypermarkets , 16
percent; in-house bake shops a t hotels , 9 percent; and a rtisanal & home-based bakers ,
7 percent.
Type of outlet
Players
S&P, Yamazaki, Au Bon
Retail bakery chains Pain, BreadTalk,
(including donut & Gateaux House, Mr.
coffee chains)
Donuts, Dunkin' Donuts,
etc.
9.397
35%
7-11, Family Mart, 108
Shop
8.920
33%
Hypermarkets
Big C, Tesco Lotus,
Makro
4.300
16%
Hotels
500 luxury hotels
2.373
9%
Artisanal & homebased bakers
Several thousands
2.000
7%
26.989
100%
Mid-rate in 2012: 1 EUR = THB39.96
http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=123&language=eng
PAGE 7
Market
Share
Convenience stores
Total
1
2012
(Million
Baht)
Source: Group estimate of a leading hypermarket, edible oil producer, bakery ingredient supplier and
Larive – based on company sales submitted to the Ministry of Commerce
By manufa cturer, pa cka ged bread producer President Ba kery Publi c Co., Ltd.
commanded the la rges t sha re in the 27 billion baht ba ked goods ma rket in 2012 with
an es tima ted 21.6 percent contribution, followed by CPRAM wi th 18.9 percent sha re,
and S&P Syndi ca te Publi c Co., Ltd. wi th 10.6 percent sha re of the market. The other
ranked pla yers were the gl obal hyperma rket/cash & ca rry giants Tes co Lotus and Siam
Makro, ea ch ha vi ng 5.6 percent sha re, and Bi g C with 4.8 percent. Together, these si x
pla yers contributed more than two-thi rds of baked goods sales in 2012 (about 18
billion baht), while the other retail bakery chains , coffee chains, a rtisanal bakeries and
home-based bakers accounted for the res t, wi th a value of approxima tel y 9 billion
ba ht.
Baked Goods Sales of Selected Companies
2012 Sales (Billion Baht)
President Bakery
5,82
CPRAM
5,00
S&P
2,85
Tesco Lotus
1,50
Siam Makro
1,50
Big C
1,30
0,00
2,00
4,00
6,00
8,00
Source: Annual reports, interviews, news reports and Larive estimates
Ba kery i ngredients
Ba kery i ngredients cons ti tute roughl y 40 percent of the total baked goods value, or
approxima tel y 10.8 billion baht in 2012. Ma jor ingredients include wheat flour, fa t
(ma rga rine, shortening and butter), and flour mi xes whi ch together a ccounted for 60
percent of the total value of ingredients used during the yea r. The indus try sources
milled flour, ma rgari ne, shortening and blended butter mainl y from l ocal producers ;
whi le flour mixes a nd pure creamery butter a re imported.
Ba kery equipment
Demand for bakery ma chinery and equipment rea ched a value of about 2 billion baht
in 2012. This can be broken down into ovens , 30 percent; dough making and pastry
ma king equipment, 25 percent; pa cka ging equipment, 20 percent; dough di viders and
brea d slicers , 15 percent; and other bakery equipment, 10 percent. His tori call y mos t
of these types of equipment ori ginate from European countries incl uding Swi tzerland,
Germany, Ital y, Fra nce and Spain, as well as Japan. In recent yea rs, China has
emerged as among the leading suppliers . Also a number of these Chinese companies
ma nufacture under li cense from European OEM suppliers . The main adva ntage of
Chi nese suppliers is thei r cheaper products because (1) wages a re lower than in
Europe, and (2) equipment i mported from China a re exempted from ta riff because of
PAGE 8
tha t country’s bila teral trade a greement wi th Thailand. Some supporting equipment
(not used in the baking process) such as commercial refri gerators , cake displa y
ca bi nets, tables a nd sinks which a re made of s tainless s teel, are manufactured l ocally.
3
Competitive landscape
Ba ked goods
President Bakery Publi c Co., Ltd. was the ma rket leader in baked goods segment in
2012 contributing nea rl y 22 percent sha re. The company possesses key s trengths ,
wi th i ts long-s tanding presence in Thailand, s trong dis tribution network na tionwide
and a la rge va riety of products a cross di fferent ca tegories . Its larger s cale of
producti on helps the company to obtain economy of s cale, whils t i ts products a re
s tanda rdi zed in terms of quality compa red to independent unpa cka ged / a rtisanal
ba keries.
President Bakery’s product portfolio ranges from sliced bread,
burger/hotdog buns , sna ck bread, snack cakes , cookies and pies . In 2012, the
company i nves ted more in new ma chinery to increase the production capa ci ty of i ts
pa ckaged/industrial bread line.
Second-ranked CPRAM manufa ctures and distributes frozen food, prepa red food,
chilled food and ba kery products both for the l ocal and interna tional ma rkets . Sales
spli t is about 85 percent domes tic and 15 percent export. Current production ca paci ty
is 1.8 million pieces of dim sum, 280,000 pa cks of ready meals and 1.4 million bakery
i tems per da y. Bakery i tems a re distributed through modern tra de outlets i ncluding
i ts sibling company’s 7-Eleven convenience s tore chain, retail s tores in gas s ta tions ,
hyperma rkets and superma rkets . CPRAM’s sales of baked goods rea ched an
es timated 5 billion baht last year or 18.5 percent s hare of the market.
From a very s mall fa mil y-run opera tion in 1973, S&P has trans formed after four
decades into a mul ti-billion baht ba kery and food servi ce business tha t serves the
whole of Thailand and a number of overseas ma rkets incl uding Singa pore, Taiwan,
Chi na , Swi tzerland and the U.K. S&P and i ts subsidia ries opera te business related to
res taurants , coffee and bevera ges, ba kery, and ready to ea t food, and produce va ri ous
food products under the name S&P. The bakery business accounts for about 50
percent of the company’s domes ti c revenues. The company’s local operati on has
enjoyed double-digi t growth over the pas t 5-6 yea rs , wi th CAGR of 11.4%. Domes ti c
sales in 2012 s tood a t 5,663 million baht, with sales of baked goods worth 2,850
million baht – ma king S&P the thi rd larges t player in the retail ba kery ma rket with
nea rly 11 percent share.
Ba kery i ngredients
The bi gges t supplier of bakery ingredients is Ki m Chua Group Co., Ltd. (KCG), with
domes ti c sales worth 4 billion baht in 2012 or a bout 37 percent of the ingredients
ma rket. Percei ved by competi tors as a mass (low-end) supplier, KCG ca rries a broad
product ra nge, with the bulk of sales derived from blended butter a nd margarine.
Uni ted Flour Mill Pl c, the la rgest producer of milled flour in the country and the
bi gges t supplier to the ba kery indus try a chieved sales esti mated a t 3.6 billion baht in
PAGE 9
2012, of whi ch a t least 50 percent came from bakery, for a ma rket sha re of between
15 to 20 percent in the i ngredients segment.
Suppliers of higher-end bakery ingredients include Ja gota Brothers , Ameri can
European Products and Schmidt wi th combined sha re of 7.5 percent of total
ingredients ma rket in 2012. They ca rry top of the line couverture chocola tes from
Bel gium & Switzerland; bread mi xes and pastry fla vori ngs from Germany; frui t fillings
a nd frozen fruits and puree from Europe a nd other countries.
There a re 20 to 30 more s uppliers of va rious ingredients including product enhancers ,
yeas t, suga r, dai ry products , fla vors and a roma , baking enzymes , emulsifiers and other
ba king essentials . They contributed between 35 to 40 percent of the total bakery
i ngredients market in 2012.
Ba kery equipment
Three commercial ki tchen equipment suppliers tha t also ca rry bakery ma chines and
equipment comprise Somerville (Siam) Ltd., Metro H and Res Co., Ltd. and Seven Fi ve
Dis tributor Co., Ltd. They a re also the ma jor equipment contra ctors to the HoReCa
s ector.
Together they accounted for more than 40 percent sha re in the 2 billion baht
equipment ma rket in 2012: Somerville, 21 percent; Metro H & Res , 17.5 percent;
Seven Fi ve Dis tributor, 2.4 percent. Most of the equipment (ovens , bread slicers ,
dough sheeters , mi xers, etc.) a re i mported from Europe, U.S.A. and Japan; some from
Chi na . Somerville is also a local ma nufa cturer of commercial refri gera tors and ca ke
di s play ca binets made of stainless steel.
Two other identified suppliers tha t ca rry a relati vel y wide range of bakery equipment
a re: (a) M.K. Uni group Co., Ltd. wi th 5 percent sha re (representing OEMs from Ital y,
Swi tzerland, Japan, Taiwan); and (b) Good Distri butor Co., Ltd. with 3 percent sha re
(representing OEMs from Sweden, Denma rk, U.S.A. a nd Netherlands - notabl y Daub
a nd Leventi brands).
These fi ve suppliers contributed less than 50 percent of total ma rket; with the more
than 50 percent coming from sales of other smaller suppliers tha t ca rry small
equipment and baking tools a nd wares. These products mostly originate from China.
4
Trade opportunities
The s tudy i dentified the following tra de opportunities:
‒ Import of raw materials/ingredients such as hi gh-gra de whea t flour, yeast, food
addi ti ves , enhancers , i mprovers , fla vors a nd a roma , cocoa powder/couverture
chocola te. Thailand is self-suffi cient for granulated s uga r and fa t (butter /
ma rga rine / shortening); but there are s till some imports of these products . For
the other bakery ingredients , the country is highl y dependent on imports , whi ch
crea tes vast opportunities for foreign-based manufacturers to supply the ma rket.
PAGE 10
There is great potential to sell high-grade ingredients to more than 500 hotels
whi ch ha ve an increasing trend to produce bakery products to ca ter for thei r
gues ts a nd for distribution to the food s ervice and ca tering s ectors.
‒ Import of baking equipment. Except for some s tainless s teel cabinets and
refrigera ting equipment, pra cti call y all types of la rge and small bakery equipment
used in the country a re i mported. Ma jor importers ca rry a broad range of
commercial kitchen & bakery equi pment i ncluding va rious types of oven
(convection ovens, deck ovens , conveyor pizza ovens , wood-fi red ovens),
proofers , dough sheeters /cutting/ & make up line, mi xers , donut fryers , hot bake
s hop machinery, a nd bread slicers/dividers/and rounders.
Despi te the emerging presence in Thailand of equipment made in China , the
ma jority of indus trial and retail baker chains still prefer large equipment made in
Europe – percei ved as reliable, dura ble and hi ghl y-effi cient. Expansion of in-s tore
ba keries in dis count s tores and superma rkets presents a promising upwa rd trend
in demand for ba king equipment. Moreover, the rising trend of bake-off concept
in convenience store outlets , e.g., 7-Eleven’s Kudsan Bakery & Coffee, will dri ve
the need for more ovens and baking utensils.
‒ Import of hi-tech pa ckaging solutions. There is a ni che demand for imported
specialty flexible pa ckaging solutions used for desserts such as moon ca kes that
need a special oxygen ba rrier film to keep the product fresh for weeks without
a dding preservatives to the product.
‒ Others . In addi tion to imports of products cited above, the bakery sector offers a
range of other opportuni ties, for instance in servi ces (e.g., traini ng, educa tion)
and IT solutions . At present there is shorta ge of skilled manpower in the sector
because new gradua tes prefer managing thei r own business ra ther tha n working
in hotels and res taurants . A solution could be training people tha t ha ve the
interes t, but la ck proper educa tional ba ckground, in bakery s chools and training
centers outside the a cademic s ystem.
Sea mless intera ction of production processes in the bakery industry is crucial –
and a n IT solution s uch as integra ted automa tion s ys tem for ba kery production
processes could be the ans wer. This woul d cover both software and ha rdwa re
tha t would automa te the production process – from receipt of raw ma terials /
i ngredients to production and packaging to finished product shipment.
5
Investment opportunities
Gi ven the growth potential of the Thai bakery s ector a nd Thailand’s increasing
pos ition a s ‘regional hub,’ Dutch s trategic i nvestors s hould consider entering into
equity pa rtnerships with l ocal counterparts through a cquisition, joint venture or other
s tructures. The following describes two business ventures that have i mmediate
potential:
PAGE 11
‒ Premi xes blending fa ctory. The Thai bakery indus try mainl y imports premi xes,
cake mi xes and other flour mi xes from overseas suppliers . This market is worth
about one billion baht per year. There is a percei ved business opportunity for
setting up a blending operati on in Thailand to serve not onl y the domes tic ma rket
but the whole of ASEAN. Trading between ASEAN countries is highl y conduci ve
because of zero ta riffs on commodi ties traded between member na tions . The
blending fa ctory coul d also potentially recei ve ta x and other loca tion-based
incenti ves from the government’s Boa rd of Inves tment (BOI) as this falls under
the Li s t of Acti vities Eligible for BOI Promotion.
‒ Retail Bakery Fra nchising. The success of retail chains in Thailand’s bakery
lands cape has been excepti onal, from home grown entrepreneurs such as S&P
and Coffee Beans by Dao, to regional pla yers such as Thai Yama zaki, Brea dTalk
and Secret Reci pe, and global businesses such as the donut chains. Underl yi ng
growth of these pla yers combined was in double digi ts over the past fi ve years
and is expected to continue in the medium term. Thus there a re vast
opportuni ties for retail ba kery franchising. Important pointers for potential
inves tors include: fi rs t and foremos t – loca tion; second, sma rt choi ce of bakery
delights that appeal to local consumers and expat communi ty; a nd thi rd, abili ty to
fi nd competent a nd l oyal employees.
We expect the Thai ma rket to be recepti ve for typi cal Dutch franchise concepts
l i ke ‘het Stoepje,’ ‘Bakker Ba rt’ and others.
‒ Regional Opera ting Headqua rters . Wi th i ts highl y s tra tegi c loca tion in Asia,
Thailand is in the bes t position for global companies to set up thei r Regional
Opera ting Headqua rters (ROH). Compa red with Singapore and Hong Kong, the
cos t of doing business in Thailand is still much cheaper. The country offers
modern infrastructure and reasona bl y skilled labor force. In addi tion, ROH is a
government promoted a cti vi ty whi ch gets attra cti ve ta x and non-ta x incenti ve
pa ckage from the BOI.
6
Key elements of success for Dutch traders
‒ Educa tion. The Thai bakery sector is relati vel y young and buyers tend to be
hesi tant to change thei r buying beha vi or. Suppliers a re advised to gi ve high
emphasis to educa tion in thei r marketing mi x. For example, ingredient suppliers
mi ght consider using test or demo kitchens tha t would showcase the use of thei r
products i n creating a va riety of bakery creations.
Fonterra (Brands ) Thailand has been successful in promoting i ts flagship butter
products by setting up an ‘Anchor Ki tchen,’ and uploading on YouTube a ctual
demons tra tion of va ri ous recipes using the ingredient (e.g., ‘Croissant Factory
Demo’ a t http://www.youtube.com/watch?v=Lob5NTOYP3Y).
PAGE 12
DKSH (Thailand) Ltd., through its Bakery and Confectionery Innova tion Centre in
Ba ngkok, develops innova ti ve ba ked goods crea tions jointl y wi th va rious suppliers
they represent.
‒ Bra nd awa reness . Corollary to educa ting potential cus tomers , making the brand
known in the ma rket is equall y essential. This can be achieved by a ttending
industry a nd trade events held in Thailand or the region and even at the
international sta ge. For ins tance, the study has observed tha t onl y a few Thai
pla yers a re familiar wi th or ha ve hea rd of Dutch equipment suppliers. Annex 6
provi des a l ist of upcoming events i n Thailand a nd the region.
‒ Route-to-ma rket. The Thai ma rket is fra gmented and mi ght requi re different
dis tribution routes , meaning mul tiple distribution pa rtners , in many cases. This
needs to be ca refully a ddressed before selecting agents or i mporters.
‒ After-sales servi ce. Adequa te after-sales servi ce capabilities (notabl y for
equipment suppliers ), na tionwide or a t least in high growth urban centers , a re
important to build and maintain ma rket position. The distri bution pa rtners should
possess such capabilities or, if not, suppliers should develop these capabilities
wi th other partners.
PAGE 13
Overview of Thai Bakery Industry
1
Major Components of Thai Bakery Industry
Ba keries bake bread and create ca kes , pastries and other desserts. La rge bakeries use
automa ted ma chines for production while s maller bakeries work wi th smaller
equipment. Confectioneries focus on crea ti vi ty. The components or basi c elements
and ingredients of the Thai ba kery indus try cover the enti re pa rameters of small and
l a rge bakeries.
La bor
Labor comprises one of the key components of the bakery industry. La rger plants run
mos tl y through automa ted production equipment, but workers need to oversee the
ma nagement, quality a nd output of the ma chines . President Bakery PCL, the larges t
industrial bakery in the country, opera tes three fa ctories , employs 3,000 offi ce s taff
and production workers and has 38 dis tribution centers na tionwide, deli vering the
products to cus tomers by a fleet of more than 1,000 deli very trucks. The company
owns such brand names as Fa rmhouse, Deli ya by Fa rmhouse, Madame Ma rco and
Good Morning Farmhouse. The i ndustry employs more than 50,000 people.
Ma chi nery
The ma chi nes of the baking indus try comprise another ma jor component. The hea rt
of any ba kery opera tion is the oven from where baked products such as cakes ,
bis cui ts , cookies , wafers , buns, puffs , pizza, pas tries, etc. a re produced. Other
necessa ry ma chines and equipment for smaller bakeries include sifters , slicers , molds ,
frees tanding and electri c mi xers , a va riety of refrigera tors and cooling equipment, and
all types of baking utensils and kitchen tools. La rger bakeries use dough proofing
ma chines, large-scale mi xers , ma chines to roll out or shape dough and huge ovens .
President Bakery empl oys cutting-edge production machinery in all i ts plants , where
the whole production process is computer-controlled. In contras t small bakeries use
s ta ndalone equipment.
Government regulations
Thailand’s bakery i ndus try mus t compl y wi th the Food and Drug Administra tion (FDA),
Minis try of Public Heal th (MoPH) regula tions rega rding certain food i tems tha t a re
classified into three ca tegories: 1) speci fi c controlled food (e.g., food addi ti ves , foods
in sealed containers , milk products ); 2) pres cribed food to ha ve quali ty or s tanda rd
(e.g., cream, chocola te, palm oil , fa t & oil, butter, cheese, ma rga rine, ja m & jell y and
semi -processed food); and 3) prescri bed food to ha ve label (e.g. bread, flavoring
a gents, ready-to-eat foods).
Foods in the fi rs t ca tegory requi re FDA registra tion (for both locall y-produced and
imported products).
Legal provisions a re related to food s tanda rd quality,
specifi ca tions , pa ckagi ng, and labeling requi rements , as well as other aspects of good
ma nufacturing practices.
PAGE 14
[GEEF TEKST OP]
Sta nda rdi zed foods in the second category do not require regis tra tion but their quality
and labeling ha ve to meet the s tanda rd requi rements as speci fied i n the Noti fica tion
of the Mi nistry of Public Health.
Other foods in the thi rd ca tegory (foods , ra w or cooked, preserved or non-preserved,
processed or non-processed), if not listed under ca tegory 1 or 2 a re considered as
general foods and do not requi re FDA regis tra tions . However, general products a re
controlled and moni tored wi th rega rd to hygiene, safety, labeling and advertisement.
Foods in this ca tegory ma y be subdi vided further i nto (a ) foods tha t mus t bea r
s ta ndard l abels, a nd (b) other general foods. Bread falls under category (a ).
In addition to the FDA/MoPH regulations , bakery fa ctories a re controlled by the
Depa rtment of Indus trial Works , Minis try of Indus try (MoI) under the Fa ctory Act of
B.E. 2535 (1992). Purs uant to the Act, the MoI issued Ministerial Regulation 1992
defining the classifica tion of va ri ous types of fa ctories . Classified under ca tegory
01001 a re fa ctories engaged in making bread or cake. Fa ctories a re further classified
by si ze (based on ei ther ma chinery horsepower or number of employees) which
determines the type of registra tion procedure and documents wi th whi ch appli cants
need to comply.
Products
While bread ma y be the mains ta y of the local bakery indus try – grabbi ng a bout 40
percent of the total retail ma rket value – ca kes and pas tries ha ve also created
considerable consumer awa reness. Creati vi ty in the ma rket has flourished as
demons tra ted by the success of leading cake maker S&P as well as cake specialty
houses such as Boa t Bakery, Coffee Beans by Dao, Secret Recipe and others .
Confectioneries enjoy the process of coming up wi th new deli ca cies for consumers to
enjoy. Whether it is a new fla vor of an already exis ting product or a completel y new
des sert creation, producing quality i tems is a major element in the baking industry.
2
Current Status
Before the turn of the 21st century, the Thai bakery industry was la rgel y considered
one of the s maller and less developed in South Eas t Asia. But this s tatus has improved
signi fi cantl y in the last 5 to 10 yea rs wi th demand for dail y baked products ha ving
grown faster than the overall economy. Ri ce and noodles remain to be pa rt of the
Thai conventi onal diet, yet bread and other baked goods consumption has slowl y but
surel y become entrenched i n the daily li fe of mos tl y urban Thais on the go – offi ce
empl oyees, executives a nd s tudents alike.
‘In Bangkok and large cities upcountry, the ‘rice for breakfast tradition’ is
gradually being replaced by bread/croissant/sandwiches/etc. especially
amongst female office workers. Compared with other countries in Asia (e.g.,
Japan, Philippines), Thailand is perceived to be lagging behind in bread per
capita consumption and there is certainly a room for growth.’
–Dech Sangsrijan
Thai Bakery Association President
PAGE 15
[GEEF TEKST OP]
These developments ha ve also bolstered the rapid growth in demand for i mported
ba kery i ngredients from relatively s mall volumes a decade a go.
Thailand’s baked goods ma rket was es tima ted to ha ve a retail value of nea rl y 27
billion baht in 2012. According to leading pla yers the market has grown a t least 10
percent per yea r duri ng the pas t few yea rs and will continue to enjoy annual double
di git growth in the short to medium term as a resul t of increasing number of in-s tore
ba kery s hops a nd retail outlets.
Va ri ous bakery formats
The indus try landscape toda y l ooks very different from the small-s cale bakery
opera tion of the pas t, a nd, in the ci ties and key urban a reas, medium-size and la rge
bus inesses dominate the s cene. These businesses i nclude:
‒
Indus trial bakeries , e.g. President Bakery, C.P. Retail and Ma rketing (CPRAM) and
S.T. Indus try, wi th na tionwide dis tributi on channels. President Bakery and C.P.
RAM ha ve been aggressivel y expanding thei r range of products for a number of
yea rs now. There a re less than 10 indus trial bakeries with annual turnover of
more tha n 500 mi llion baht.
‒
Retail bakery chains , e.g. S&P Ba kery, Yamaza ki, Au Bon Pain and Brea dTalk,
whi ch serve a wide ra nge of dail y baked products . The offering also includes a
basi c range of sandwi ches . Some indus try experts also call them ‘specialist
ba keries.’ There a re 15-20 retail bakery chains in Thailand toda y wi th a combined
number of a round 1,400 outlets.
‒
Ca fé chains , e.g. Sta rbucks, Coffee World and True Café which a re mos tl y loca ted
inside shopping malls and offi ce buildings . A signifi cant number of Sta rbucks
outlets a re also found on hi gh streets in Bangkok and other ci ties. Other coffee
chains a re found in gas s ta tions na tionwi de, e.g., Ca fé Ama zon, Inthanin, Ca ffe
D’Oro. Some 10 ca fé chains ha ve a combined number of a round 1,200 outlets all
over the country.
‒
Other retail concepts , e.g. donut outlets ( Dunkin’ Donuts , Mr. Donuts , Krispy
Kreme) and pi zza outlets (Pi zza Hut, The Pi zza). There a re a round 550 donuts
outl ets i n Thailand today, which are part of chain operators.
‒
Superma rket and hyperma rket in-store ba keries, e.g. as in Tesco Lotus , Bi g C and
Sia m Ma kro. Combined number of la rge-format outlets is more than 500. In
addi tion, another 1,400 smaller s tore formats of Tesco Lotus such as Lotus
Expres s and Talad a re scattered a round the kingdom.
‒
Ba ke-off shops in convenience s tores , e.g. Kudsan Bakery opera ted by 7-Eleven.
There a re 196 Kudsan outlets na tionwide. In additi on there a re more than 7,500
convenience s tore outlets that also sell pa ckaged bread and pas try products
(which i ncludes >6,500 7-Eleven and more than 1,000 outlets of other
convenience s tore chains such as Family Ma rt a nd Lawson 108).
PAGE 16
[GEEF TEKST OP]
‒
Hotel bake shops , e.g., J.W. Ma rri ott, The Oriental , Dusi t Thani , Landma rk and
pra cti call y all luxury hotels na tionwi de numbering a round 500; a nother 200 hotels
s erve freshly baked goods a t breakfast.
Several thousands of s mall bakeries and home-based (a rtisanal) entrepreneurs do
s till exis t and there is a positi ve trend towa rds these upgradi ng and, in some
cases, evol ving into higher gra de single site ca fé ba kery or s tandalone bakery
outl ets.
Ba kery i ngredients
Thailand can suppl y mos t ingredients used in the sector. But there a re i tems tha t a re
ma i nly i mported and those that are mainly s ourced l ocally.
‒
Ba kery ingredients tha t tend to be i mported: pre-mi x flour, chocola te, fillings &
toppings, frozen frui t, puree, yeast, baking enzymes and product
i mprovers/enhancers.
‒
Ingredients likel y to be sourced locall y: suga r, regular milled flour, ma rga rine and
fa t.
The industry purchases i ts ingredients from bakery ingredient suppliers, some of
whom ca rry other imported food products . Imported bakery i ngredients compete
wi th locally milled flour, edible oil products, some types of cheeses and recombined
butter.
There a re many bakery ingredients importers i n Thailand and a few whea t flour
ma nufacturers. Some of the major suppliers a re:
‒ Ki m Chua Group, i mporter a nd manufacturer of food a nd bakery i ngredients
‒ Schmi dt, importer of bakery i ngredients
‒ Ameri can-European Products, i mporter of bakery i ngredients
‒ Ja gota, i mporter of food (75%) a nd bakery i ngredients (25%)
‒ Gourmet One, importer of food and bakery i ngredients
‒ Uni ted Flour Mill, milled wheat flour
Main countries of ori gin of imported products include France, Swi tzerland
(chocolates ), Germany, Ital y, U.S., China , Indonesia and Philippines (fillings &
toppings). Verify this s ta tement from the i mport s ta ts . Thailand i mports cheeses
from Aus tralia, the Netherlands and New Zealand; while there are some imports of
brea d and cake mi xes, fillings and toppings from Zeelandia , a Dutch ingredients
ma nufacturer wi th a fa ctory in Indonesia. Some baking enzymes a re also supplied by
Dutch manufa cturer DSM and other global suppliers such as Novozymes (Denma rk)
a nd AB Enzymes (Germany).
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[GEEF TEKST OP]
Ba kery equipment
Thailand la rgel y imports ba kery equipment such as ovens , dough making ma chines ,
pas try ma king ma chi nes, proofers , conveyors, mixers , bread slicers , etc. Countries of
ori gin a re Tai wan, China , Fra nce, U.S., Ital y, Germany and other European countries .
Dutch bakery equipment has very s mall, almos t invisible, presence in the ma rket.
Onl y commercial refrigerators, display ca binets, tables and sinks are produced locally.
There a re about 20 commercial ki tchen equipment suppliers (mos tl y importers ) tha t
also ca rry bakery ma chinery and equipment product lines . Others a re small suppliers
tha t distribute a limi ted range of products and mostl y small equi pment and bakery
utensils (e.g., ca ke pans, cookie sheets, beaters, hand mixers, s mall ovens, etc.)
Somerville (Siam), Metro H and Res, Seven Fi ve Distri butor and M.K. Unigroup a re
leading commercial ki tchen equipment contra ctors and suppliers mainl y to the
HoReCa sector. Procurement of ki tchen and baking equipment in hotels and bi g
res taurants normall y is conducted through bidding with rigid supplier cri teria i ncluding
pri ce, techni cal expertise, superior cus tomer servi ce (including after-sales and
maintenance), ins tallation servi ces and reputable product offering. Suppliers that do
not ha ve in-house expertise hi re professionals such as pastry chefs a nd engineers to
demons tra te the usage of machine and equipment to walk-in customers in
showrooms or during i ndus try events such as the Coffee, Bakery a nd Franchising
exhi bition.
Support servi ces
Baking schools. There a re a few baking and culina ry s chools in Bangkok that offer
professional courses.
‒
UFM Baking & Cooking s chool was es tablished to produce s killed pers onnel in the
field of cooking & baking. UFM School conducts va rious ba king courses from
fundamental to professional supported by the most up-to-date equi pment and
fa cili ties. Instructors a re gradua tes of food s cience and home economi cs wi th
a dditional training from recognized local a nd overseas i nstitutions.
‒
Opened in 2007, Le Cordon Bleu Dusi t Culina ry School is a joint venture between
Le Cordon Bleu Internati onal a nd Dusit Interna tional - one of Thailand's leading
Hotel brands . The s chool is a modern sta te-of-the-a rt facili ty offering all the
s tanda rd Le Cordon Bleu programs as well as a Professional Thai Cuisine program
unique to Le Cordon Bleu Dusit. All classes a re ta ught i n English and the s chool
a ccepts both Thai and international students from all over the world. The s chool
s ta rted off mainl y wi th professional courses , but now, more short courses a re
taught such as a basic chocola te workshop (one da y), ma ca roons (one da y) and
chocol ate cakes (four day).
‒
School of The Oriental Hotel Apprenticeship Progra m (OHAP) was set up to
develop the s kills of hotel personnel in the rank and file a nd lower middle
ma nagement ca tegories . The OHAP provides pra ctical training wi thin the
s tanda rd of the Ma nda rin Oriental , Bangkok whi ch has been voted as the ‘best
PAGE 18
[GEEF TEKST OP]
hotel in the world’ for many yea rs . Ma jori ty of ins tructors a re hi ghl y qualified
Manda rin Oriental Hotel ’s s taff; the rest a re specialists invi ted from va rious
ins ti tutions . Courses a vailable include Front Offi ce, Housekeeping and Food &
Beverage. Under F&B includes Interna tional Cuisine, Tradi tional Thai Cooking,
Ba kery & Pa s try, Bartending and Restaurant Operations.
Many others loca ted mos tl y in Bangkok, offer short courses – some 3 hours , some 3-5
da y progra ms, and others week-long progra ms – to the general publi c and indi viduals
who a re interes ted in lea rning the fundamentals of ma king bread, ca kes and pastries .
Exa mples of these s chools a re as follows:
‒
Imperial Bakery and Food Culina ry School (IBAF) was set up by the Ki m Chua
Group/Imperial Group, the makers of Imperial cookies and Allowrie butter – after
being in the bakery business for 50 yea rs . A basic dessert course is from one da y
to fi ve da ys and incl udes muffin recipes (for the da y-course) or ni ce recipes for
ca kes (for the three-day course).
‒
The Interna tional Cooking and Baking School has been es tablished since 1978.
Classes a re s mall wi th no more than 10 s tudents to ensure equal a ttention.
Courses focus on both the theory a nd the pra cti ce so tha t s tudents ca n further
adapt these skills after the class is over. Ea ch course ta kes about 3 hours , wi th
the student learni ng one baked good ‘masterpiece’ e.g., whi te chocola te cake,
bla ck fores t cake, al mond meringue ca ke, sun ma rble bread, ma ngo mousse cake,
etc.
‒
Ma ca roon Pastry Training Center was opened in Bangkok in 2004 by a French
pas try chef who has a ccumula ted 30 yea rs experience in the business a round
As i a. Courses a re based on short two to three days program.
Bakery/product innovation centers. In mature ma rkets such as Europe, U.S.A, and
Japan bakery product i nnova tions a re cons tantl y experi mented and developed not
onl y by in-house resea rch and development (R&D) teams but also by independent
innova tion centers whi ch collabora te wi th clients in jointl y developing new bakery
crea tions all the time. In Thailand, la rge ba kery companies normall y ha ve in-house
R&D capability to develop new products tha t cater to local tas tes of consumers . But
smaller bakeries do not ha ve the financial capa ci ty to do this . Two global companies ,
Nestle and DKSH, are known to ha ve the techni cal expertise to provi de consul ting
s ervi ces to partners and other customers i n the bakery a nd confectionery business.
‒
Nestlé’s R&D center in Thailand provi des assistance to customers in developing
new formulations or menus . The company has worked wi th some leading bakeries
i n crea ting new products that use i ts chocolate powder as a bakery i ngredient.
‒
Realizi ng the vas t opportuni ties for serving unmet demand, DKSH commissioned a
s tate-of-the-a rt innova tion center i n mid-2011 to introduce new concepts and
ingredients to the confectionery and ba kery indus try in Thailand. The main focus
of the center revol ves a round s trengthening the company’s appli ca tion expertise,
PAGE 19
[GEEF TEKST OP]
developing cutting-edge business ideas , and formula ting concepts tha t create
better opportuni ties for i ts suppliers and cus tomers . The innova tion center is
fi tted with an electri c oven for ba king wi th precise hea t, a proofing cabinet for
automa ti c tempera ture and humidi ty control for bread a ppli cations, a n i ce cream
ma ker for blending, and a mi xer and kneader for blendi ng di verse bakery
appli ca tions . (Two yea rs down the road, however, the center seems not to ha ve
ma de an impa ct as ini tiall y expected. Very few seem to be a re a wa re of the
pres ence of DKSH confectionery a nd bakery i nnovation center.)
Packaging. Pa ckaging ma chinery is normall y included in the producti on line of
industrial bakeries . Some even import thei r plasti c wra pping bags (e.g., President
Ba kery – clip lock plas tic bags for sliced bread, and S&P – va cuum pa ckaging for moon
cakes ) because they claim tha t they could not find local suppliers tha t can meet thei r
ri gid pa cka ging requi rements. For the rest, shri nk wrap is the popular method of
pa ckaging as more pri va te label customers prefer this kind of packaging. Displa y
boxes are the most used for shrink wra p appli cati on in the bakery i ndus try because
consumers get a clea r view of the product in this kind of wrapping. Manual shrink
wrap machines a re commonl y used in l ow to modera te volume producti on lines by
smaller bakeries. In general, the indus try does not use thi rd pa rty suppliers of plasti c
pa ckaging, as i t is more cost-effi cient to opera te its own pa cka ging equipment than
outs ourcing.
PAGE 20
Demand Analysis
This demand anal ysis section aims to provide an unders tanding of how much
consumer demand for ba ked goods and bakery ingredients , as well as commercial
demand for bakery equipment exis t in the Thai ma rket. The anal ysis contains a
revi ew of the basic components of the Thai bakery i ndustry which are:
‒
‒
‒
‒
‒
‒
Ma rket i dentification
Ma rket s ize estimation, market shares, growth trends
Bus iness cycl e
Product ni che
Growth potential (discussed under each section below)
Competition (discussed in a separate chapter)
The anal ysis is aimed a t helping companies determine if they can successfull y
enter the Thai bakery ma rket and genera te enough profi ts to adva nce thei r
business opera tions . The ma rket size es tima tes a re not precise but indica ti ve of
the current market situation.
A.
Market identification
Ba ked goods a re consumed by pra cti cally all Thai consumers of all a ges, but a re
predominantl y popular among the working popula tion in urban a reas such as
Ba ngkok a nd vicinities and major ci ties.
Ba kery ingredients a re used by all types of bakeries ; but hi gher gra de ingredients
(e.g., imported butter, cocoa powder, chocolates) a re used by hotels and specialist
ba keries; while thousands of smaller bakeries tha t dot the country mainl y use
edible oil and fa ts , and locall y milled flour. Top-end cus tomers such as President
Ba kery, manufa cturer of Fa rmhouse bread products and Thai Ai rwa ys Ca teri ng use
fi rs t-class quality i mported whea t flour (e.g., from Dossche Mills), although the
brea d maker also buys from domestic wheat flour suppliers.
Indus trial bakeries use automa ted bakery ma chinery; while a rtisanal bakeries use
s ma ller bakery equipment.
B.
Market size estimation
1
Baked goods
The es tima ted retail value of baked goods consumed in 2012 was worth a round
THB 26,989 mi l lion.2
2
Mid-rate in 2012: 1 EUR = THB39.96
http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=123&language=eng
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[GEEF TEKST OP]
This es tima te was based on a consensus of anal yses from a number of pla yers in
the indus try including a leading modern trade pla yer, and edible oil producer and
an importer of bakery ingredients and relevant indus try a nd ma rket informa tion
from both primary a nd s econdary s ources.
Estimation methodology: Top-down approa ch was used in the
es tima tion of the ma rket whi ch cal culated the es tima ted sales
of va rious pla yers in the indus try genera ted during the yea r
2012 based on official sales da ta submi tted to the
government’s Minis try of Commerce as well as resul ts of
interviews wi th key pla yers . For companies tha t a re engaged
in other business acti vi ties in addi tion to baked goods
retailing, we made adjus tments on the proportion of baked
goods sales compared to total turnover of the company.
Scope: Modern trade outlets (hyperma rkets, superma rkets,
convenience s tores ), retail bakery chains , hotels, a rtisanal
producers and cottage indus try pla yers who ba ke from home.
Donut chains, while s tri ctl y not ‘ba keries’ because thei r endproducts a re fried ra ther than baked, were included i n the
es tima tion in view of thei r huge presence in the ma rket and
us a ge of similar bakery i ngredients in the production process.
Exclusions: Bakery sales of ca fé chains (except for Au Bon Pain
whi ch ma kes thei r own baked goods) were excluded because
vi rtually all of these outlets do not enga ge in the production of
ba kery items sold in thei r stores , but mainl y buy from thi rd
pa rty suppliers including a rtisanal bakers and hotel ba keries.
Indus trial producers such as President Bakery, S.T. Indus try
and CPRAM suppl y mos tl y to modern trade a t wholesale
pri ces (thus their sales were al ready included in the
es timates).
Overa l l growth trends
Thailand’s ba kery sector is poised to grow on a verage about 15 percent per yea r
for the next 3 to 5 yea rs , much faster than Euromoni tor’s 6 percent and nea rer
Nielsen’s 10-12 percent. This predi ction is based on the field survey of about 40
industry experts , major pla yers and other informed sources in the indus try. We
also inves tiga ted the underl yi ng growth trend in ea ch company based on thei r 3-5
yea rs ’ financial reports s ubmitted to the Mi nistry of Commerce.
A former executi ve a t a special ty ingredients supplier has also predi cted tha t “the
market will expand 15-18% per year during the next 3-5 years. Growth will be
driven by increasing consumer demand for bread (buns, sandwiches, etc.) and
other bakery products (pastries, etc.), because of the fast lifestyle of urbanites not
only in Bangkok but this phenomenon is also observed in cities outside Bangkok.”
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The table below presents CAGR of total annual sales of selected companies during
the reference years ci ted.
Company
Krispy Kreme
Secret Recipe
BreadTalk
Bonjour
7-Eleven (CP ALL PLC)
Mr. Donut
Dunkin' Donuts
Siam Makro PLC
Daddy Dough
Mr. Bun
Tesco Lotus
Au Bon Pain
Little Home Bakery
Thai Yamazaki
Sales CAGR
256.0%
34.0%
32.0%
21.0%
18.9%
15.4%
15.0%
13.6%
12.0%
10.0%
9.9%
9.0%
7.0%
6.0%
Financial Years
2010-2011
2009-2011
2009-2011
2009-2011
2009-2012
2009-2011
2009-2011
2009-2012
2009-2011
2009-2011
2008-2012
2009-2011
2009-2011
2009-2011
Note: CAGR = Compound Annual Growth Rate
Source: Department of Business Development, Ministry of Commerce; Stock Exchange of Thailand
1.1
2012 baked goods market by product category
Ba ked goods consist of all types of bread, cakes , pastries and other ba ked
products i ncluding cookies and biscui ts . Donuts, while not ‘baked’ a re also
included in the es tima tion because they consti tute a signifi cant porti on of flourbased desserts consumed in the ma rket. The product focus is also more on
freshl y-baked goods, ra ther than the long shelf-life pa ckaged goodies such as
wa fers , biscuits and crisp bread. Mos t imported items fall into this ca tegory –
whi ch have been excluded.
PAGE 23
[GEEF TEKST OP]
2012 estimated market size = THB 26,989 million
• By value, bread accounted for the
biggest consumption in 2012. This
segment includes packaged sliced bread,
artisanal (unpackaged) bread, buns,
baguettes, etc. representing 40% of the
market or about THB10.9 billion.
• Pastries (e.g., croissants, Danish
pastries, pies, éclairs, moon cakes,
pretzels, strudels, etc.) made up 24% of
total demand or about THB6.5 billion.
• Cakes of all types accounted for 19%
(THB5.2 billion).
• Donuts consumption accounted for
about 12% (THB3 billion).
• Cookies and biscuits made up the
balance of 5% (THB1.4 billion).
Source: Industry and trade interviews; income statements of major players (as reported to Commerce Ministry)
Bread remains the mains ta y in the bakery indus try; however, i ts market
dominance has been challenged by other bakery products including pastries and
especially donuts tha t ha ve enjoyed rapid growth in recent yea rs and expected to
conti nue expanding i n coming years.
“LFL (Like-for-Like) sales for us this year (2013) will be generally flat for
bread and cakes; donuts will increase at least 15% year-on-year due to
huge demand from our regular customers. We continue to expand our
donut product range each year to meet this demand.”
– Buying Manager
Fresh Food (Bakery), Ek-Chai Distribution Co., Ltd (Tesco Lotus)
1.2
Market size breakdown by type of suppliers/outlets: 2012
The s tudy covered modern trade and ins ti tutional ma rket segments, but did not
include tra di tional tra de (i .e., Mom & Pop s tores) whi ch typi cally ca rries
pa ckaged/long-shelf baked products tha t a re generally considered inferior quality
than freshl y-based goods . Also the once big influence of these corner s tores on
Thai consumers ’ buyi ng beha vior has been diluted over the yea rs as a resul t of
s tiff competi tion coming from convenience s tores whi ch provide jus t tha t –
grea ter convenient and more satisfying buyi ng experience.
PAGE 24
[GEEF TEKST OP]
Type of outlet
Players
Million
Baht
Hypermarkets
Big C, Tesco Lotus,
Makro
4.300
Convenience
stores
7-11, Family Mart, 108
Shop
8.920
Retail bakery
chains
S&P, Yamazaki, Au
Bon Pain, BreadTalk,
Gateaux House, Mr.
Donuts, Dunkin'
Donuts, etc.
9.397
Hotels
500 luxury hotels
2.373
Artisanal &
home-based
bakers
Several thousands
2.000
Total
26.989
Note: Artisanal & home-based bakers supply to café chains, kiosks, traditional trade/wet market, offices &
general consumers.
Source: Group estimate of a leading hypermarket, edible oil producer, bakery ingredient supplier and
Larive based on company sales submitted to the Ministry of Commerce
1.2.1
Reta il bakery chains
In 2012 retail sales of the more than 15 bakery chains were es tima ted to ha ve
rea ched around 9.4 bi llion baht or 35 percent of the total market.
This segment comprises local, regional and i nterna tional bakery chains tha t
compete i n their sub-segments:
‒ s pecialist bakeries such as Yamazaki, BreadTalk, Gateaux House
‒ ba kery & res taurants such as S&P, Li ttle Home, Coffee Bean by Dao
‒ donuts shops such as Mr. Donuts, Dunkin’ Donuts, Krispy Kreme and Daddy
Dough
‒ ca ke s pecialists s uch as Boat’s Bakery
In the café & bakery chains , onl y Au Bon Pain has been included in the esti ma tion
because the company has its own ba kery fa ctory, unlike Sta rbucks and other
coffee chains (Coffee Worl d, True Coffee, Ama zon, Ninety-Four, etc.) tha t source
thei r baked goods from outside s uppliers - mainly from a rtisanal bakers.
Growth trend
The reta il bakery cha in segment is expanding a t 15-20 percent per year.
“We expect this segment to grow at least 15% in 2013, driven by urban
market demand especially in Bangkok and surrounding areas.”
Mr. Vitoon Sila-on
Senior Vice President, S&P Syndicate PCL
PAGE 25
[GEEF TEKST OP]
“I think it will grow about 20-30% this year because of the fast-paced
urban life of consumers in cities such as Bangkok and Chiang Mai. They do
not have much time to sit down for breakfast and take a sandwich or bun
or croissant to go.”
Ms. Pornsawan Karanpattaraniti
Marketing and Cost Controller, Little Home Bakery Co., Ltd.
1.2.2
Convenience stores (CVS)
Wi th dail y bakery sales a vera ging between 2,500 – 3,500 baht, the more than
8,000 convenience store outlets na tionwide a ccounted for the second bi gges t
ma rket share of 33% or 8.9 bi llion baht in 2012.
CP All, fra nchise holder of the larges t na tionwide convenience s tore network in
Thailand wi th a total of 6,773 Seven-11 outlets as of Q32012, introduced Kudsan
Ba kery & Coffee in 2010. Kudsan serves freshl y ba ked bakery and brewed coffee
24/7 in 196 corpora te-owned outlets in Grea ter Bangkok and ma jor ci ties. The
remaining 6,500+ 7-11 outlets sell pa cka ged bread, ca kes and pastries . CP ALL
pl a ns to open new 7-11 outlets i n 2013 to rea ch 7,000 by the end of the year.
Other CVS chains such as Famil y Ma rt (of Japanese ori gin) and 108 Shops (owned
by Sa ha Group) offer packaged bakery i tems such as bread a nd pastries.
‒ In ea rl y 2013, Saha Group announced a joi nt venture wi th Japan’s Lawson
convenience s tore chain to opera te La wson 108 Shops. To da te there are
four Lawson 108 s tores offering sushi a nd bakery products . The objecti ve
is to graduall y convert some 260 of the 600 108 Shops to La wson 108
Shops.
‒ Fa mil y Ma rt, another Japanese CVS chain, has 800 outlets all over Thailand
a nd plans to increase the total to 1,000 by the end of 2013.
Growth trend
The convenience stores segment is expected to grow a t 15% per yea r for the
medium term. Growth will come from increasing consumer demand per outlet
and the fa ct that more and more neighborhood stores open ea ch month in every
vi l lage or town a cross the country.
1.2.3
Hyperma rkets
The thi rd la rges t bakery retail segment includes interna tional hyperma rket and
dis count chains Bi g C and Tes co Lotus , and cash & ca rry wholesaler Makro.
Together they had an esti mated sha re of 16% of total ba ked goods ma rket in 2012
wi th THB 4.3 billion sales during the year. In-s tore bakery forma ts offer a va riety
of products including freshl y baked breads , ca kes, pastries , donuts and cookies ,
a nd packaged sliced bread supplied by i ndustrial bakeries.
PAGE 26
[GEEF TEKST OP]
Growth trend
This segment has experienced between 12 to 15 percent growth duri ng the pas t
fi ve yea rs , despi te di ps in the GDP growth and the grea t flooding in 2011. Pla yers
a re opti misti c tha t in general , thei r business will expand a t about the same ra te as
in the previ ous yea rs . For in-s tore bakery, there is a mixed feeling rega rding
expa nsion. Siam Makro, the opera tor of Ma kro cash & ca rry s tores is very posi ti ve
about the prospect of i ncreased sales of i ts baked goods whi ch ha ve become
popula r among its loyal cus tomers . Tes co Lotus meanwhile could onl y predi ct the
expa nsion of i ts donut product line, whi ch has grown annuall y between 10-15
percent during the past few years. It expects the same trend for donuts this year.
Modern trade: CVS + Hypermarkets
Thus baked goods sales in modern tra de outlets (hyperma rkets , cash
& ca rry, CVS) rea ched 13.2 billion baht in 2012. This esti mate is qui te
close to that of Nielsen’s, an i nterna tional ma rket research company
whi ch valued this ma rket segment a t a round 12 billion baht in the
same year. (Source: Tesco Lotus interview, with Lotus claiming to have 12-15%
share)
1.2.4
Hotels
There a re a round 500 hotels in Thailand tha t opera te in-house ba ke shop selling a
range of bakery i tems ; while another 200 hotels serve freshl y ba ked goods a t
brea kfas t but do not ha ve a bake shop. Demand for bakery products in the hotel
segment is es tima ted to be worth nea rl y 2.4 billion baht in 2012, a ccounting for
nea rly nine percent of the total market.
Growth trend
Ba kery shops in luxury hotels ha ve also enjoyed brisk sales and growth is expected
to be at a round 12 percent per yea r. Some of the bake shops also deliver ba ked
goods to other cus tomers . For example, the ba kery unit a t Ananta ra Bangkok
Ri verside Resort and Spa is considered the larges t hotel opera tor tha t ca ters for
other cl ients i n the food s ervice industry.
1.2.5
Arti s anal bakers/Small bakeries/Home-based bakers
This group numbering thousands s cattered throughout the country, sold an
es tima ted 2 billion baht of baked goods or about seven percent of the total ba ked
goods market in 2012.
The es tima te was based on the oil and fa t sold to bakery ingredients retailers from
whom small bakers normally purchase thei r baki ng supplies. According to one
la rge edible oil producer, total oil and fa t sold to the bakery ingredients retailers in
2012 was worth THB200 million. Fa t normally a ccounts for 20 percent of cost of
the finished product; while sales ma rgin is typicall y 50 percent. (Calculation: 200
MB fat / 20% = 1000 MB; factoring in 50% sales margin = 2,000 MB retail sales
value for this segment).
PAGE 27
[GEEF TEKST OP]
Growth trend
This segment is forecas t to grow by about 10 percent this yea r as the a verage Thai
consumers s ta rt to apprecia te the taste of freshl y-ba ked goods tha t ha ve become
qui te a ccessible from home ma kers and artisanal bakers alike.
2
Bakery ingredients
There is a wide range of bakery i ngredients used in the indus try whi ch can be
grouped as follows:
Flour Products
Oil and Fat
Wheat
flour
Margarine
Flour
mixes, premixes,
cake mixes
Rye flour,
etc.
Sweeteners
Sugar
Milk & Cocoa
Products
Product
Enhancers
Toppings &
Filllings
Milk
powder
Yeast
Dried &
candied
fruits
Cocoa
powder/
Shortening
Chocolate
Glucose
Butter
Cream /
Whipping
Cream
Bread
improvers
Others
Aromas &
essences
Flavors
Jams &
jellies
Cake
Emulsifiers
Baking
enzymes
decorations
Cream
Eggs
As indus trial and a rtisanal bakers alike produce more i nnova ti ve products for
dis crimina ting consumers , new ingredients a re added to the long-list. Bakeries
collabora te wi th crea ti ve companies (usuall y forei gn) in devel oping and crea ting
new products based on infusion of innova tion, technology and creati vi ty. Pla yers
know too well tha t new, innova ti ve ingredients could enri ch thei r success wi thin
the competitive bakery i ndustry.
Ba kery compa nies source thei r ingredients both from local and overseas suppliers .
There a re products tha t a re mainl y sourced locall y such as milled whea t flour,
suga r, oil and fa t, and eggs ; while the rest a re i mported including pre-mi x flour,
product enhancers, toppings and fillings, etc.
Beca use of the wide range of products covered, none among industry insiders and
informed sources coul d provi de a decent es tima te of the retail value of this
s egment i n Thailand.
PAGE 28
[GEEF TEKST OP]
Thus our market size es tima tion of ba kery ingredients was based on anal yzi ng a
number of indus try pa ra meters from several sources : a ) a leading food servi ce (FS)
& retail bakery opera tor; b) value chain anal ysis of whi te bread; c) Cus tom
Department’s tra de s tatistics; a nd (d) bakery i ngredients i mporters/suppliers.
Step 1: Compa rative Value Chain Analysis of a Retail Bakery Operation a nd White
Brea d
Cost Item
Retail Bakery
(Bread & Pastry)
Ingredients
30-35%
Packaging
Labor
Selling & administration
Rental
Margin
Total
5%
10%
10%
15%
25-30%
100%
White Bread
Wheat Flour = 38%
Other raw material = 8%
3%
10%
17%
24%
100%
Sources: Leading FS operator and industrial bakery manufacturer
Step 2: From the above table – al though sketchy as coming from onl y two
opera tors , the es tima ted value in percent of ingredients ranges between 30-35
percent (for bread & pas try product of a retail bakery opera tion) to as high as 46
percent (for an industrial bread producti on). A ‘mi ddle’ ra tio is used – about 40
percent, to roughl y cal culate the value of ingredients out of the total retail value
of ba ked goods (which was earlier estimated at 27 bi llion baht in 2012).
Thus , the bakery i ngredients market i n 2012 wa s about THB 10.8 billion.
Step 3: Breaking the segment i nto product sub-segments was a challenging task.
From dis cussions with several i ngredients suppliers , an a verage es tima te of the
proporti on of ea ch ingredient to the total retail value of baked good ma rket was
a rri ved at. These ra tios were a djus ted in rela tion to ma rket informa tion obtained
from other i ndustry s ources.
A brea kdown by va lue a nd market share is shown in the following ta ble.
Ingredient
Wheat flour
Margarine/shortening
Flour mixes
Butter
Sugar
Cocoa powder/chocolate
Milk powder
PAGE 29
2012
Value
MB
3,239
1,295
1,080
864
756
864
648
in % Share
30%
12%
10%
8%
7%
8%
6%
[GEEF TEKST OP]
Product enhancers*
Yeast
Others**
540
432
1,080
5%
4%
10%
Total
10,796
100%
*Product enhancers include bread improvers, emulsifiers, stabilizers, baking enzymes, etc.
**Others include fruit toppings, nuts, flavors, aroma & essences, eggs, etc.
Illus tra ted below a re examples of ma rket si ze es tima tion for the two la rges t
i ngredients: wheat flour a nd s hortening & ma rgarine.
Shortening a nd margarine
Shortening and ma rga rine a re used mainl y in ma king pastries , which cons ti tutes
20 percent of the value of the finished product. The es tima ted value for
ma rga rine was also compa red wi th imports and local producti on to further check
the validi ty of the es tima te. As it turned out, the 2012 esti ma te of 1,295 million
baht came very cl ose to the combined import in CIF value (137 million baht) and
locall y-produced shortening and marga rine during the same yea r (approxi ma tel y
1,200 million baht). About 96% of total ma rga rine i mports ca me from Singapore,
Indonesia, Aus tralia and Japan – countries whi ch Thailand has bilateral free trade
agreements , and where Thai imports of ma rga rine from these countries a re
exempt from import ta riff.
Whea t flour a nd yeast
The value of whea t flour consumed in the bakery indus try in 2012 was es tima ted
a t THB 3,239 million, a ccounting for 30 percent of the value of total bakery
i ngredients.
Whea t flour used in this sector is principall y supplied by local flour mills; while
small amounts a re also imported. The es tima ted demand s plit between l ocal and
i mported i s about 80%:20% by va l ue and 85%:15% by vol ume.
In bread making, about 2 to 5 kg of yeas t is used for every 100 kg of wheat flour.
By value, the ra tio of whea t flour to yeas t is approxima tel y 87%:13% - whi ch
translates to about 420 million baht worth of yeas t used in 2012. The es tima ted
value of yeast shown in the table is 432 million baht (close to the 420 million baht
fi gure).
Growth trend
Growth in demand for bakery ingredients shoul d normall y follow the same trend
as the finished products . Thus the segment is expected to grow in double digi ts
duri ng the next few years.
3
Bakery machinery and equipment
This segment includes a wide a rra y of ba kery ma chinery and equipment such as
oven, proofer, dough maki ng ma chine, pas try making ma chine, pa cking
equipment, mi xer and a whole range of smaller equipment such as dough di vider,
PAGE 30
[GEEF TEKST OP]
dough sheeter, dough molder, brea d slicer, donut fryer, wa ffle machine and other
ba ker’s wares.
According to Somerville, one of the four leading commercial ki tchen and bakery
equipment suppliers , the country’s bakery equipment ma rket was valued two
bi l lion baht i n 2012.
Somerville also provi ded a rough breakdown of the ma chinery ma rket by product
ca tegory based on the company’s own observa tions of the ma rket during the pas t
few yea rs.
Ba kery machinery & equipment ma rket by ca tegory, 2012
Ovens
Dough making a nd pastry making equipment
Pa cka ging equipment
Dough dividers, bread slicers
Other ba kery equipment
Tota l
30%
25%
20%
15%
10%
100%
600 MB
500 MB
400 MB
300 MB
200 MB
2,000 MB
Source: Somerville Siam based on previous years’ market observations.
As expected, ovens and dough making machinery commanded the biggest sli ce of
commercial purchases in 2012. Together they a ccounted for about 55 percent or
1,100 mi l lion baht of the total bakery equipment market.
There appea rs to be an emerging trend of s hifting demand for dough making
ma chines from baked goods manufa cturers to frozen dough makers . According to
Tes co Lotus, Thailand’s la rges t hyperma rket chain wi th 102 la rge forma ts plus
1,400 smaller forma ts , they ha ve been buyi ng a porti on of thei r demand for pastry
dough from independent suppliers in the recent pas t and in 2013 will completel y
outsource frozen dough. This means Tes co Lotus will no longer be adding any
dough making equipment from this yea r onwa rds . The company has a budget of
three million baht per hyperma rket s tore for outfi tting bakery equi pment a nd
spa ce. Normally the ki tchen consists of ovens, a t least two mi xers (one for bread,
one for cake), proofers , sheeters , dough di viders and other smaller baking
utensils.
Cash & ca rry operator Siam Makro, wi th a total of 59 branches na tionwi de, buys
va rious types of equipment from local i mporters . The range of equipment
ins talled in the bakery secti on of ea ch Makro branch includes , a mong others :
ba rcode printing ma chine, plasti c bag seal ma chine, bread sli cers , convecti on
oven, deck oven, proofer, dough sheeters , va rious sizes of di gi tal weighing
ma chines, dough di vider, dough kneader, conventional mi xing ma chine (egg
bea ter), spi ral mi xing ma chines , chillers, freezers . Other la rge equipment includes
donut fryer and s teamer. Small equipments and baki ng utensils include va rious
types and sizes baking tra ys , tra y ca rts , non-s ti ck baking molds , etc. Most of the
PAGE 31
[GEEF TEKST OP]
la rge and s mall equipment used by Siam Ma kro are now made i n China – wi th
European product s pecifications.
Beca use of the dura bility of la rge ma chi nes and equipment lasti ng 10-15 yea rs or
more, repla cement demand is qui te low. For ins tance, tunnel ovens installed in
the Chiang Mai factory of leading retail bakery chain S&P ha ve been ins talled for
more than 15 yea rs now but they a re s till functi oning well wi th proper
maintenance. The company uses Japanese and European equipment suppliers .
Specifi call y they use Japa nese bra nd equipment for baking cakes , moon cakes and
cooki es.
“We are satisfied with our current equipment suppliers because of the
reliability of the equipment and they deliver good after-sales services.
But we are open to new suppliers. Quality and price are important.”
– Vitoon Sila-on
Senior Vice President, S&P Syndicate PCL
Central Restaura nts Group Co., Ltd. (CRG) uses Belshaw brand of bakery and frying
equipment from the U.S. because its franchise contra ct wi th Mr. Donut requi res
all ma jor equipment to be purchased from U.S. suppliers . These incl ude dough
mi xers and donut fryers , among others . CRG has also purchased ovens for other
retail bakery business from the U.S. The company is a leading food servi ce
opera tor and a franchise holder in Thailand of bakery/confecti onery brands Mr.
Donuts , Auntie Anne and Bea rd Papa ’s ; fast food and res taurant outlets KFC,
Pepper Lunch, Chabuton, Ryu Shabu-Shabu, Yoshinoya and Ootoya ; an i ce-cream
pa rlor Cream Stone Crea mery; and i ts i n-house restaura nt chain, The Terra ce. Like
S&P, CRG would consider other baking equipment suppliers (outside of the biding
contra ct wi th Mr. Donuts ) including those from the Netherlands ; however, the
company management is appa rentl y not fa miliar wi th the quali ty of Dutch bakery
ma chines.
“Last year I attended an international food trade event in Munich, but did
not see or meet with any Dutch company engaged in the bakery industry.
The Dutch suppliers should attend such events, even here in Thailand
where we have the annual Thailand Bakery and Ice Cream Fair.”
Kanop Sriavut
Purchasing Department Manager, Central Restaurant Group Co., Ltd.
Tha i imports of bakery equipment in 2012
Pra cti call y all essential equipment and ma chinery used by bakers of all types and
sizes a re imported. Onl y such rela ted equipment as commercial refri gera tors ,
cake displa y cabinets, and tables and sinks made of s tainless steel , are produced
l oca lly.
From the import s ta tisti cs compiled by the Customs Depa rtment, Thailand
i mported the following major types of bakery a nd related equipment i n 2012:
PAGE 32
[GEEF TEKST OP]
Type of equipment
Ba kery ovens
Other ba kery machinery
Ma chi nery for the manufacture of confectionery,
cocoa or chocolate
C.I.F Va l ue (Million Baht)
317
477
257
Other bakery ma chi nery includes dough making ma chine, pas try making ma chine,
mi xers, etc. Smaller baking utensils a re lumped together in other product
ca tegories and cannot be segrega ted. The same is true for pa cking equipment
(e.g., shrink wra pping ma chinery) used in the bakery indus try; thus import value
ca nnot be determined.
For ovens and other la rge ba kery equipment, the retail value in 2012 was
es tima ted a t a round 1,141 MB – after adjus ting for relevant ta xes a nd ta riffs of up
to 20%, and 20% ma rgins. This a mount is qui te compa rable to Somerville’s
es timate of 1,100 MB for the s ame equipment categories.
Countri es of origin of i mported equipment
Many yea rs a go, pra cticall y all ma chines and equipment used by i ndus trial bakers
and hotels i n Thailand ca me from Europe – Ital y, Germany, Denma rk, Swi tzerland,
Sweden, France and Spain; as well as the U.S.
European and U.S. bra nd
ma nufacturers a re reputable for durable and reliable equipment and cus tomers
were willing to pa y for the hi gher-pri ced products realizing thei r l ong-term
s ervi ceability.
Now hotels remain to be loyal cus tomers of European-made equipment; but more
and more end-users such as hyperma rkets and smaller bakeries ha ve s wi tched to
sourci ng from China. La rger cus tomers order ma chines from Chinese companies
to desi gn the equipment a ccording to European speci fica tions; while bakeries wi th
smaller budgets settle for cheaper equipment desi gned by Chinese and Taiwanese
ma nufacturers.
“In the past, all equipment that we use was from Europe. Today, we
source machinery & equipment with European specifications from China.”
Paritut Siwadit
Associate Director Bakery Development, Siam Makro PCL
Japan was the leading supplier of ba kery ovens and other bakery equipment in
2012; followed by China , Denma rk and Ital y for ovens , and Germany, China ,
Swi tzerland and Italy for other types of bakery ma chines.
Imports from the Netherlands
During 2010-2012, Thailand imported a total of 32 uni ts of ba kery equi pment from
the Netherlands wi th a total C.I.F. value of THB59.74 million or landed cos t of
THB71.69 million. Imported equipment from the Netherlands ca rries a 20% ad
va l orem tax.
PAGE 33
[GEEF TEKST OP]
HS Code
Description
8417.2000.000 Ovens
8438.1010.001 Bakery machinery
Machinery for
confectionery,
cocoa or chocolate
8438.2010.000
manufacturing
(electrically
operated)
Total
2010
2011
2012
CIF Value
CIF Value
CIF Value
Units
Units
Units
(Baht)
(Baht)
(Baht)
1
1.200
1
93.425
4
4.583.424
5
26.645.647
8
6.314.241
6
5.740.139
1
111.014
6
16.257.575
11
10.324.763
7
26.850.086
14
22.571.816
Source: Customs Department
CIF value of equipment a nd ma chinery per unit whi ch were i mported from the
Netherlands va ried from a low 1,200 baht (for oven) and 5.33 million baht for a
(la rge) ba kery ma chine. The ma chi nery for making cocoa/chocola te that was
i mported i n 2012 wa s priced, on average, 2.7 mi llion baht per unit (CIF).
Growth trend
The domes ti c ma rket is growing a t least 10 percent per yea r due to new bakery
s tores and outlets opening ea ch yea r. But growth in this segment is dri ven not
onl y by local demand, but also by regional demand. For example, the hospi tality
industry i n Myanma r is booming and Thailand is in a very s trategi c locati on to
servi ce the indus try needs at all angles . Two leading equipment suppliers Metro H
and Res and Somerville al ready export some of thei r products and servi ces to
nei ghboring countries; this trend is expected to continue in the coming years.
C.
Business cycle
The Thai bakery sector is s till growing, and despi te concerns of rea chi ng pla teau
s tage – the break-even level of the ma rket, where the suppl y of goods meets
current ma rket demand, i t has become evident tha t the ma rket is s till expanding
and yet even a t a rapid pa ce. Indus try insiders forecas t tha t for the next few
yea rs , the indus try will further expand between 10 to 20 percent yea r-on-yea r,
wi th s ales i n retail bakery cha ins and convenience stores drivi ng this growth.
This implies that there is s till ample room for new pla yers to enter the vi brant
ma rket. Indeed newcomers ha ve to evalua te a two- or three-dimensional ma tri x,
ra ther than one-di mensional, when deciding whi ch segment, product or servi ce
they would like to enter a nd compete.
PAGE 34
-
For ins tance, some hyperma rkets ha ve observed a fla t or declining growth in
thei r sales of bread and pas tries, but demand for donuts is outpa cing growth
of thei r entire food offerings.
-
Meanwhile, specialist bakeries a re experiencing brisk sales of cakes and
pa s tries more than donuts.
[GEEF TEKST OP]
-
At the same ti me, donut specialists a re all reporti ng explosi ve growth
qua rter by quarter, year by yea r.
“Thanks to the unwavering support of our customers, Mister Donut
manages to retain a lion’s share of 60% in this market worth 2.5 to 3
Billion Baht a year. Over the fourth quarter of 2012 alone, our sales
surged by 30%. And this was followed by another robust 25% sales
growth in the first quarter of this year.”
- Sucheep Tamacheepjareon
General Manager, Mister Donut Brand, Central Restaurants Group Co., Ltd.
Dunki n’ Donuts , main ri val of Mr. Donuts in Thailand, also pos ted 15 percent
CAGR over the pa st 5 years.
Ta rget customers for donuts in Thailand a re mainl y high s chool and uni versity
s tudents as well as entry-level empl oyees between 15 to 25 yea rs whose lifes tyles
a re modern, fun-filled, s ociable, a nd open to new trends.
-
D.
Depending on a pla yer’s line of business, the company ma y decide to join
the fra y of donuts franchising or get invol ved i n suppl yi ng ‘i nnova ti ve’
ingredients to current players . Taking Mr.Donuts ’ case again, the Japanese
franchise opera tor Duskin Company which covers Asia including Thailand,
has recentl y announced that i t would subs tantially change i ts donut recipes
– the fi rs t ma jor change since 1971 when the chain debuted in Japa n.
Duskin said i t will alter the recipe for dough and will use oil i t has ori ginally
developed to make i ts donuts tas tier. New products s ta rted selling in Japan
on April 26, 2013 wi thout changing thei r pri ces. Duskin is expected to
extend the recipe change shortl y to its fra nchisees in Thailand. This could
be a golden opportuni ty for an ingredient s upplier to work wi th Central
Res taurants Group.
Product niche
In rela tion to ma rket si ze assessment and business cycle tha t ha ve al ready been
dis cussed, companies should develop bakery products tha t meet a speci fi c ni che
in the ma rket. Products mus t be di fferentiated from others in the market so they
meet a speci fi c need of consumer dema nd, creating higher demand for thei r
product.
For ins tance, indus trial bread producer President Bakery offers new products ea ch
yea r and conducts tes ts in sample ma rkets to determine whi ch of thei r potential
product s tyles is most preferred by consumers. Also the company aims to develop
i ts ba kery products so that competi tors cannot easil y dupli cate thei r product –
al though this has become very challenging for President Bakery because being the
ma rket leader, i ts products a re being ‘copied’ left and right, wi th some changes in
mi nor i ngredients or proportions of s ugar or milk or s hortening.
PAGE 35
[GEEF TEKST OP]
Product positioning is very much related to crea ting a ma rket ni che. Mr. Donuts
and Dunkin’ Donuts sold a t affordable pri ces both a ppeal to the younger
genera tion tha t ha ve modest purchasing power. On the other hand, higher-end
products of Krispy Kreme a re more pri cey and ta rgeted for more a ffluent
cons umers.
Wholegrain bread, rye bread, mul ti-grain bread and similar bread products tha t
a re advertised to ha ve hi gher nutrient value than white bread, appeal to heal thcons cious consumers, especially women.
PAGE 36
Competitive Environment
This section presents an anal ysis of the existing competi tion in the va rious segments
of the Thai bakery i ndus try incl uding the number of pla yers and thei r ma rket sha res
(where obtainable).
The lands cape of Thailand’s bakery indus try seems to be a contradi ction of marketing
theory. Since there is a country-wide prolifera tion of ba kery outlets of all sizes , one
would expect tha t the ma rket is nea ring i ts satura tion level and maturi ty where fewer
profi ts a re achieved and companies will begin to lose money. But the exa ct opposi te
is true. Despite the seemingl y overcrowded spa ce, evident especiall y in Bangkok and
i ts vi ci nities , and in urban a reas , there is an observed burgeoning demand of Thai
consumers for bread or a sandwi ch a t brea kfas t or a piece of ca ke or sa vory during
coffee break. Henceforth the ma rket continues to embra ce new pla yers pa rticularl y
the ones who can offer innova ti ve a nd novel bakery products a t a ffordable pri ces and
s ol d a t convenient locations.
Overall packaged bread producer President Ba kery Public Co., Ltd. commanded the
la rges t sha re in the 27 billion baht ba ked goods ma rket in 2012 wi th 21.6 percent
contribution (THB5.82 billion sales from baked goods for domes ti c market). Coming a
close second is CP Retailing & Ma rketing (CPRAM) whi ch is the manufa cturi ng a rm of
CP All, franchise opera tor of 7-Eleven convenience s tores , wi th approxi matel y THB5
billion sales of ba ked goods or 18.9 percent sha re. The thi rd bi gges t manufa cturer,
S&P Syndica te Publi c Co., Ltd. whi ch specializes in cakes more than bread, had 10.6
percent sha re of the ma rket. The other ranked pla yers were the global
hyperma rket/cash & ca rry giants Siam Makro and Tesco Lotus, each ha vi ng 5.6
percent sha re, and Big C wi th 4.8 percent. Together, these si x pla yers contributed
more tha n two-thirds of baked goods sales in 2012, while the other retail bakery
chains , coffee chains, a rtisanal bakeries a nd home-based bakers a ccounted for the
res t, wi th a value of a pproximately 9 bi llion baht.
Company
President Bakery
CPRAM
S&P
Siam Makro
Tesco Lotus
Big C
Others
Total
2012 Sales
(Billion
Baht)3
5.82
5.00
2.85
1.50
1.50
1.30
9.02
26.99
% Share
21.6%
18.5%
10.6%
5.6%
5.6%
4.8%
33.4%
100.0%
Source: Annual reports, interviews, news reports and Larive estimates
3
Mid-rate in 2012: 1 EUR = THB39.96
http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=123&language=eng
PAGE 37
[GEEF TEKST OP]
1
RETAIL BAKERY CHAINS
Thais a re known to be willing to try and taste new and innova ti ve products . When
Mala ysian specialist ba kery Rotiboy fi rs t introduced i ts popula r s weet coffee buns in
2006 in Thailand on a tiny s treet shop on Silom Road – the heart of Bangkok’s business
dis tri ct – long queues of enthusiasti c Bangkokians lined up the crowded sidewalk and
pa tientl y waited up to one hour jus t to ha ve a taste of the ni ce smelling freshl y-baked
buns . The Rotiboy fever soon died down but the populari ty of the product continued
wi th a number of small ba kers trying to dupli ca te the buns . The Rotiboy Thai franchise
‘Mr. Bun’ was established and registered in 2007. Toda y i t has 64 outlets all over the
country – mos tl y loca ted in hyperma rkets and shopping malls – wi th a turnover of 150
mi l lion baht per year.
A similar si tua tion happened in 2010 when the U.S. doughnut chain operator Krispy
Kreme opened its fi rs t outlet a t Siam Pa ragon, the premier shopping complex l ocated
in the world fa mous Bangkok’s Ratchapasong shopping dis tri ct. For yea rs , s weet
tooth Thai consumers ha ve enjoyed the wide va riety of donut fla vors and concocti ons
ma de by two other U.S. franchisers Mr. Donuts and Dunkin’ Donuts . But here ca me a
novel brand offeri ng a completel y ‘enti cing’ arra y of goods. ‘They a re pleasing to the
eye, they mus t taste really good!’ – was a common thought a mong Bangkok
consumers . On the fi rst da y of launching, hundreds of people of all a ges were seen
lining up the length of Rama I Road hours before the mall even opened i ts doors . This
went on for weeks tha t s tretched for months . Krispy Kreme was a success! Wi th a
pri ce nea rl y double tha t of i ts cl oses ri vals, a Krispy Kreme donut is a premium
product; but those who ha ve deep pockets do not mind to shell out more so tha t they
can ‘eat and tell .’ Toda y the franchise holder opera tes seven Krispy Kreme outlets
s tra tegi call y loca ted in hi gh people traffi c a reas including the two i nterna tional
a i rports a t Suvarnabhumi and Don Mueang.
PAGE 38
[GEEF TEKST OP]
1.1
Specialist Bakery Chains
This group consists of Yama zaki , BreadTalk, Ga teaux House, Saint Etoile by Yama zaki ,
Bonjour, Mr. Bun and a few s maller operators.
Company
Name
Thai Yamazaki
Co., Ltd.
Brands
Number of
Outlets
Yamazaki
Saint Etoile by
Yamazaki
Sun Royal
Chez Recamier
Gateaux House
50
19
18
BreadTalk
outlets
Bonjour Co., Ltd.
BreadTalk
Food Republic
ToastBox
Din Tai Fung
Bonjour
Bun Co., Ltd.
Mr. Bun
64
Gateaux House
Co., Ltd.
BreadTalk (Thailand)
Co., Ltd.
3
4
43
>20
Product Range
Breads (baguette, soft,
etc.), cakes, pastries,
cookies, éclairs, donuts,
sandwiches,
Japanese
sweets
Breads & buns (sweet and
savory,
pizza
bread,
sandwich bread, French
bread)
Cakes, pastries and pies
Breads (savory, sweet)
and cakes
Breads (French, others)
Cakes and pastries
Bun selection, croissants,
pretzels, bread sticks
2012 Estimated
Sales
916 MB
329 MB
144 MB
150 MB
150 MB
Source: Company websites, Ministry of Commerce, Interviews
1.1.1
Tha i Yamazaki Co., Ltd.
Commanding the la rges t ma rket sha re in this group, Yama zaki is owned and managed
by Thai Ya mazaki Co., Ltd. whi ch is a joint venture between Thai inves tors and
Japanese company Yama zaki Baki ng Co., Ltd. Thai Ya mazaki was es tablished i n 1984 –
ma king i t the pioneer of specialist bakery formats i n Thailand. It operates two plants
and runs 50 Yama zaki outlets in Grea ter Bangkok and urba n centers i n the provinces .
In addi tion the company also opera tes nea rl y 20 Saint Etoile by Ya mazaki bakery
outlets in Bangkok and one in Pa tta ya Ci ty, 3 Sun Royal (soon to be converted to Saint
Etoi l e by Yamazaki) a nd 4 Chez Recamier outlets i n Bangkok.
Yama zaki is positioned more for Thai consumers wi th thei r taste for suga r galore,
whereas Saint Etoile ta rgets a broader orientation including the expat communi ty.
The Saint Etoile shops tend to ha ve a better selection of non-sweet regular breads ,
sliced and whole loafs (along wi th all the pastry selections ), whereas the Yama zaki
shops seem to be hea vier on the sweets a nd pas tries and lighter on thei r selections of
regula r breads . For ins tance, the Saint Etoile shop in the basement of Siam Pa ra gon
seems to alwa ys ha ve a good selection of thei r regula r breads . Because of the brand
pos itioning, Saint Etoile’ bread and pastry s election also costs more than Ya mazaki.
Aside from openi ng new Yama zaki shops in s tra tegi c loca tions , Thai Ya mazaki is seen
to be upgrading exis ting Yama zaki shops to the more ups cale Saint Etoile forma t –
perceived to build the ‘premium’ image for the company a mong discerning customers.
PAGE 39
[GEEF TEKST OP]
The company pos ted modes t growth during the fi ve-yea r period 2007-2011 wi th a
CAGR of 6 percent. Sales in 2011 rea ched 874 million baht and i n 2012 were
es tima ted a t a little more than 900 million ba ht. For 2013, Thai Yama zaki is
forecas ting a slightl y higher sales growth of 7-8 percent, dri ven mainl y by i ncreased
number of new outlets.
1.1.2
Brea dTalk (Thailand) Co., Ltd.
BreadTalk entered Thailand in 2004 with i ts fi rst shop after i t was founded in
Si ngapore in 2000 and was listed on the Singapore Exchange in 2003. Bread Talk
(Thailand) Co., Ltd. is regis tered under ‘restaura nt, canteen and drink’ ca tegory
ins tead of bakery because some retail shops also ha ve sea ting capa ci ty for cus tomers
who enjoy eating their breads and cakes with fruit beverages.
Toda y there a re 18 BreadTalk outlets in Grea ter Bangkok and the number keeps on
growing. The BreadTalk Group also opera tes Food Republi c food court, Toas tBox
coffee and toast chain, a nd Din Tai Fung meat dumpling chain in Bangkok.
While annual turnover is still small compa red with Yama zaki , BreadTalk has managed
to demonstra te exponential growth from onl y 36 million baht in 2007 to 111 million
baht in 2011 or more than 30 percent CAGR. Wi th this expansion, the company could
be considered one of the success s tories i n the Thai retail bakery.
Its foothold in the Thai terri tory is further s trengthened by ha ving Thailand’s Minor
Interna tional (MINT) – a leading res taurant opera tor – as a sha reholder in the
Si ngaporean pa rent company. In April this yea r, MINT upped i ts s take in BreadTalk
Pte to 8.9 percent. Anal ys ts in the Singaporean bourse do not anticipa te a takeover
of BreadTalk by MINT and view the s take acquisition as a stra tegi c move by MINT to
enl arge its portfolio.
1.1.3
Ga teaux House Co., Ltd.
Es tablished in 1987, Ga teaux House Co., Ltd. has been opera ting a retail ba kery chain
for almos t 27 yea rs . Ga teaux House has many bra nches throughout Thailand. It is a
ba kery tha t serves a selection of over 100 i tems such as breads , ca kes, cookies ,
cupcakes , pies , other desserts and baked goods as well as hot and i ced bevera ges .
The shop use quality ra w materials for i ts goodies and wi thout any preserva ti ves . One
of i ts flagship creations a re i ts chocola te buns - chocolate cream filled buns coated
wi th pure chocolate.
Ga teaux House opera tes 43 retail shops in Bangkok and vi cini ties, and in Chiang Mai .
The company a lso provi des catering servi ces.
In recent past, the company s howed sluggish expa nsion wi th nea rl y flat growth over
the past fi ve to si x yea rs . It reported sales of 310 million baht in 2011, up by onl y two
percent over the 2007 level of 304 million baht, a nd a vera ge yea rl y growth of less
tha n 0.5 percent.
PAGE 40
[GEEF TEKST OP]
1.1.4
Bonjour Co., Ltd.
Founded by a Thai a nd a foreign entrepreneur, Bonjour Co., Ltd. sta rted its retail
ba kery business in Thailand in 2004. Branches a re loca ted mostl y in Bangkok and
vi cini ties, wi th one outlet i n Pa tta ya Ci ty in the eastern region. It offers a broad
selecti on of cakes , pastries , donuts, cookies and sandwi ches. The company has
enjoyed solid growth over the yea rs wi th sales jumping by nea rl y 80 percent from 70
million baht in 2008 to 125 million baht in 2011 or a 20 percent a vera ge growth per
yea r.
1.2
Bakery & Restaurant Chains
This group comprises S&P, Li ttle Home Bakery, Secret Recipe and Coffee Beans by Dao
– a mong the more prominent pla yers . There could be others tha t opera te two or
three restaura nts whi ch also sell baked goods , but sales a re considered insigni fi cant in
compa rison with the bigger chains.
Company
Name
S&P Syndicate
PCL*
Brands
Bakery: S&P, Delio
Restaurants:
S&P,
Patio, Patara, Vanilla,
Golden
Dragon,
Bluecup
Little
Bakery
Ltd.
Home
Co.,
Dao
Coffee
Beans Co., Ltd
Little Home
Coffee Beans by Dao
Number of
Outlets
Bakery/
restaurant: 299
Restaurant only:
117
Bakery/
restaurant: 5
Bakery (large): 13
Bakery booth: 22
6 (all in Bangkok)
Product Range
2011 Sales
Bakery
line:
cakes,
pastries, cookies, bread,
sandwiches, moon cakes
Food line: Thai dishes;
noodles, pasta; Japanese
cuisine
2011
Total 5879 MB
Bakery 2540 MB
Bakery
line:
Breads,
pastries, cakes, cookies
Food line: Thai cuisine
2012
Total
Bakery
Total
Bakery
5663 MB
2850 MB
146 MB
58 MB
Bakery line: Cakes and pies Total 210 MB
Food line: Thai specialty Bakery 100 MB+
dishes; Western dishes;
East-West fusion dishes
Secret Recipe Secret Recipe
30 in Bangkok Cakes
(cream
cake, 79 MB
(Thailand)
and
vicinities, cheesecake, health cake)
Co., Ltd.
Chieng Mai, Hua Brownies & pies
Hin and Pattaya
Soups & beverages
*Note: The Company operates 211 BlueCup coffee shops in S&P restaurants and bakery shops
N/A = Not Available
Source: Company websites, Ministry of Commerce, Interviews
Except for Secret Recipe whi ch is a Mala ysian franchise, the other three pla yers a re
homegrown businesses. Li ttle Home Bakery is the oldes t pla yer in this segment,
ha vi ng s ta rted i ts ba kery business 47 yea rs ago i n 1966. S&P s ta rted as a small i ce
crea m pa rlor in 1973, and es tablished i ts bakery fa ctory in 1984. Coffee Bea ns and
Dao opened i ts fi rs t outlet on Ekamai Road, Ba ngkok in the hea rt of Sukhumvi t
commercial distri ct. The three Thai companies s ta rted out as a bakery business
opera tion which later diversified into the restaurant business.
PAGE 41
[GEEF TEKST OP]
While ea ch company has i ts own unique business model whi ch ta rgets di fferent
cus tomer s egments, they also compete head-on in some respect.
1.2.1
S&P Syndi cate Public Co., Ltd.
From a very small fa mil y-run opera tion in 1973, S&P has trans formed i nto a mul ti billion baht ba kery and food servi ce business tha t serves the whole of Thailand and a
number of overseas ma rkets i ncluding Singapore, Taiwan, China , Swi tzerland a nd the
U.K. The company positions ea ch s tore-type differentl y to better serve di fferent
groups of customers . S&P res taurants and bakeries s tore focuses on mass ma rket,
while other specialty res taurant brands target ni che and ‘more unique’ cus tomers .
S&P and its subsidiaries opera te business related to res taurants , coffee and
beverages , bakery, and ready to ea t food, and produce va rious food products under
the name S&P. The ba kery business accounts for about 50 percent of the compa ny’s
domes ti c revenues. The company’s local opera tion has enjoyed double-digi t growth
over the past 5-6 yea rs , wi th CAGR of 11.4%. Domes tic sales in 2012 s tood a t 5,663
million baht, with sales of baked goods worth 2,850 million baht – making S&P the
l a rgest player i n this retail category.
1.2.2
Li ttl e Home Bakery Co., Ltd.
Li ttle Home Ba kery is managed and controlled by a Thai famil y. Its bakery products
known for thei r classic tas te (e.g., butter cakes baked wi th real butter) gained
popula ri ty a mong the older genera tion elites and were a household word several
decades a go. Over the yea rs the company di versified into res taurant business serving
mos tl y Thai special ty dishes . But the expanded opera tion did not propel the company
to high growth levels , al though the business had been profi table. The decadent,
almos t shabby, look of the company’s flagship bakery a nd res taurant outlet in i ts
headqua rters nea r Chi natown is proof tha t Little Home has not kept pa ce wi th the
modern ti mes. Its retail outlets inside shopping malls and superma rkets a re not
impeccable ei ther. While food and baked goods ma y be tasty and delicious, the lack
of dining ambience has perhaps contri buted la rgel y to i ts current s ta te of affai rs . Sales
of Li ttle Home Bakery pos ted annual growth of 6 percent during the 2007-2011 period
– much s lower than i ts bigger ri val.
S&P’s nea rl y 3 billion baht income from bakery sales in 2012 dwa rfs that of Li ttle
Home Ba kery whi ch had es tima ted sales of less than 100 million baht in the same
yea r, making S&Ps bakery business 30 ti mes as la rge as tha t of Little Home. This
ma mmoth gap between ‘Da vid and Goliath’ is na rrowed somewha t by looking a t the
a vera ge sales per outlet per year: S&P, 9.5 million baht; Li ttle Home, 1.6 million baht.
Thus on sales per s tore basis, S&P is onl y si x times la rger than i ts smaller ri val . Yet this
remains a si gnifi cant di fference whi ch underlies the fa ct that S&P has managed to
a ttra ct more cus tomers . Aside from offering a wide arra y of baked goods , S&P bakery
outl ets l ook modern a nd welcoming to customers.
1.2.3
Da o Coffee Beans Co, Ltd.
Coffee Beans by Dao, owned by Dao Coffee Beans Co., Ltd., is a misnomer as i ts menu
pa ys no special mention to coffee i tems . Indeed i t is positioned in a different league
al together, ta rgeting the well-heeled clients more than the ordina ry. A famil y-run
PAGE 42
[GEEF TEKST OP]
business, Coffee Beans by Dao is a full -fledged res taurant serving authenti c Thai and
Western dishes , while the bakery section is mainl y ca kes. Bes t known for i ts deli cious
cake crea tions including i ts flagshi p ca rrot cake and cheeseca kes, the res taurant - with
i ts tas ty décor - is the ‘in trend’ place to ha ve lunch or dine out wi th friends . Wi th onl y
si x outlets in Bangkok, Coffee Beans by Dao is not in a hurry to expand as i t s tri ves to
serve a wider selecti on of appeti zing desserts and innova ti ve dishes to i ts loyal
cus tomers . Judging from the alwa ys ‘pa cked’ place a nd long queues of cus tomers
wai ting to be sea ted and served in every outlet in town, one would come up wi th onl y
one conclusion tha t the business is humming. The company reported a turnover of
210 million baht in 2011, clea rl y a bigger business than Li ttle Home Bakery. Income
deri ved from i ts bakery unit i s estimated to be a t least 50% of total earnings.
1.2.4
Secret Recipe (Thailand) Co., Ltd.
Secret Recipe entered Thailand in 2004, and after nine yea rs now boas ts of 30
bra nches in the country – mos tl y loca ted in Bangkok and peripheries . In the true spi ri t
of i ts pa rent company in Malaysia , Secret Recipe Thailand offers a friendl y and
personalized full-servi ce dining experience to customers . Despite the cra mped
a tmosphere in most shopping mall loca tions , Secret Recipe has managed to crea te a
contempora ry interi or concept. With modera te, qui te a ffordable pri cing, the bakery &
res taurant chain a ttra cts a wide spectrum of cus tomers from families, offi ce workers ,
businessmen and women as well as s tudents . The cake specialties a re a vailable in bi g
servings which make them look more value for money compa red wi th i ts competitors .
Genera ting sales of 78 million baht in 2011, Secret Recipe had eclipsed Li ttle Home
Ba kery – both in terms of total income and average i ncome per outlet.
PAGE 43
[GEEF TEKST OP]
1.3
Café Bakery Chains
In this group, onl y Au Bon Pain is known to run a production fa cility for its bagels ,
brea ds and pastries tha t a re freshl y baked every da y a nd dis tributed to its bra nches
na tionwide. Most other café bakery chains including Sta rbucks outsource thei r suppl y
of fres h bakery products i ncluding ca kes, pastries, cookies a nd sandwiches.
Name
ABP Café (Thailand)
Co., Ltd.
Brands
Au Bon Pain
Number of
Outlets
48
Bakery
Product Range
Bakery: bagels, croissants,
brownies, muffins, cookies,
other pastry specialties
Sandwiches
Soups & salads
Beverage
Croissant,
sandwiches,
muffins, cookies, cakes
2011 Sales
(Million Baht)
Total 487
Bakery 240
Starbucks
Coffee
(Thailand) Co., Ltd.
Starbucks
136
GFA
Corporation
(Thailand) Co., Ltd.
True Corp
Coffee World
80
True Café
56
PTT PCL
Black Canyon (Thailand)
Co., Ltd.
Golden Cream Co., Ltd.
Ultimate
Beverage
Products Co., Ltd.
Central Food Retail Co.,
Ltd.
McThai Co., Ltd.
Café Amazon
Black
Canyon
Coffee
Caffe’ D’ Oro
94 Coffee
>500
210
>70
38
2012 estimate
Total 536
Bakery 268
2011 Total: 2,089
2012 Total: 2,618
Bakery N/A
Waffles
Total 204
Sandwich wraps
Bakery N/A
Bread & sandwiches, cakes, N/A
pastries
Cakes and pastries
N/A
Cakes and pastries
Total 876
Bakery N/A
Cakes and pastries
198
Cakes and pastries
94
Segafredo Zanetti
Espresso
McCafé
11
Cakes
N/A
57
Cakes and pastries
Total 4,104
Bakery N/A
Note: N/A = Not Available Source: Company websites, Internet search
Over the past 15 yea rs , Au Bon Pain has become a familiar brand tha t can be seen on
the main streets of Bangkok, pri me offi ce buildings , la rge depa rtment stores and even
i n hospitals.
ABP Café (Thailand) Co., Ltd. is the larges t fra nchise opera tor outside the U.S. The
U.S. bakery ca fé chain was fi rs t introduced i n the country in 1997 by Royal ABP
Thailand. Since then, ownership of the franchise has changed hands twi ce. In April
2006, Royal ABP Thailand became ABP Ca fe Thailand, jointl y owned by the Na rula
fa mil y and Na vis Capi tal. Fi ve yea rs later in November 2011, the company was
bought out by Sub Sri Thai (SST), a wa rehouse servi ce provider and the producer of Tip
bra nd edible oil. To ensure uninterrupted opera tion, SST had retained the then
exi s ting management team of Au Bon Pain.
ABP fi rst took i ts roots in offi ce loca tions wi thin the central business distri ct ta rgeting
Thai and foreign consumers , a cri ti cal fa ctor in the chain’s success . Then i t expanded
PAGE 44
[GEEF TEKST OP]
to other high growth a reas such as shopping malls and ma jor hospi tals. Toda y the
cha i n has 48 outlets, of which 43 a re l ocated i n Bangkok a nd 5 i n Pattaya a nd Phuket.
Products offered differ slightl y from those in the U.S. in order to adapt to local tas te
and preferences . These include a wide selection of bagels , croissants, bread and
pas tries. With a clea r motto – “Alwa ys fresh, alwa ys something new, wi th nutri tion in
mi nd” – Au Bon
Pain Thailand has made i t a point to launch new menu i tems every si x weeks. Total
ea rnings have grown on average 9 percent per year since 2007.
Competition a mong other international coffee chains such as Sta rbucks and Coffee
World, and local coffee chains such as True Coffee and Ca fé Amazon is fierce, yet
everyone has survi ved the ba ttle so fa r – showing tha t there is still unmet demand
tha t needs to be filled. Au Bon Pain is seen not be competing di rectl y wi th these other
café chains because i t is fi rs t and foremos t a bakery restaura nt ra ther than a coffee
shop; whereas the majori ty of i ts ri vals a re pushing thei r coffee and bevera ge
products upfront, with bakery ta king a backseat.
Nonetheless, some pla yers ha ve also adopted a res taurant forma t. Black Ca nyon
while known for i ts coffee has also a bustling res taurant business ; but i t has a small
selecti on of bakery i tems . Starbucks has begun to expand i ts bakery and sa vory
offeri ngs which are being outsourced from contract s uppliers.
1.4
Donut Chains
Thais were ini tiated to Western-s tyle donuts in 1978 when the fi rst Mr. Donut shop
opened in Bangkok. Next ca me another U.S. donut fra nchise opera tor Dunkin’ Donuts
in 1981. More than three decades later since tha t fi rst Mr. Donut s tore, more than
500 donut outlets crowd the urban space of Bangkok a nd ci ties across the country.
For decades , the two Ameri can giants competed fiercel y for ma rket sha re, wi th both
cl a iming pole position.
Tapping the huge demand in the donut cra zy nati on, Krispy Kreme became the thi rd
U.S donut fra nchise operator to join i ts big brothers in 2010.
Before Krispy Kreme came into the pi cture, two local pla yers Do Dee Dough and
Daddy Dough s ta rted thei r own donut chains . In addi tion, there a re numerous
i ndependent Thai shops that proliferate i n supermarkets and shopping malls.
Bei ng the pioneer in Thailand, Mis ter Donut has been a leader in the Thai donut
ma rket since 1978. It is known for i ts concept "Donut for Fun." Operated by franchise
holder Central Restaura nts Group, Mis ter Donut has 280 branches a cross Thailand
wi th more opening yearl y. They include stand-alone s tores as well as outlets a t
shopping malls and superma rkets . To gain and maintain ma rket sha re, Mis ter Donut
has launched pri ce-cutting s tra tegy wi th a bit s maller portion of its donuts and sold a t
cheaper pri ces than Dunkin’ Donuts . The s tra tegy is working as Mis ter Donut has
continued to command the bigges t sha re of the ever growing ma rket. But the
PAGE 45
[GEEF TEKST OP]
presence of Krispy Kreme and Daddy Dough has ea ten awa y some sha res from both
Mr. Donut and Dunkin’ Donuts . In the past couple of yea rs two more donut chains
ha ve entered the fra y: Do Dee Dough and Bapple, but sales information cannot be
obtained independentl y as they ha ve not submitted financial sta tements to the
government’s Minis try of Commerce. Therefore ma rket sha re anal ysis has been based
on onl y the four bigger players.
In 2011, the ‘branded’ donut ma rket was es tima ted a t a round 2.6 billion baht, with
the following ma rket sha res : Mr. Donut 50%, Dunkin’ Donut 34.3%, Krispy Kreme
10.7% and Daddy Dough 4.3%. In the previous yea r, Mr. Donut claimed to ha ve 60%
sha re of the 2 billion baht ma rket. In a period of 12 months, i ts ma rket sha re declined
by 10% s temming from increased competiti on coming from new pla yers , and the fa ct
the company grew much slower (8.3%) than the overall market (30%).
Brand
Mr. Donuts
Dunkin' Donuts
Krispy Kreme
Daddy Dough
Total
2011 Sales
(MB)
1.320
893
279
113
2.605
Source: Interviews, Internet search, Ministry of Commerce
Product positioning of various brands
Mis ter Donut is the mos t popula r and larges t donut chain i n Thailand with 280 outlets .
They a re everywhere, wi th everything from la rge stores to small kiosks a nd a re
popula r due to thei r cheap pri ce and grea t taste. At Mister Donut, one can buy a
donut for as little as 12 baht (40 cents), whi ch is less than half the pri ce of many other
chains . A new Mr. Donut ima ge tha t was ini tially launched in 2011 crea tes ‘Fun,
Acti ve, Sma rt and Modern’ feeling – also very much appealing to younger cus tomers
es pecially children.
Dunki n’ Donuts is second onl y in popula rity wi th more than 200 shops a round
Thailand and more a ppea ring every month. Dunkin Donuts sta rted a ca mpaign two
yea rs ago called 'Coffee and Donuts', whi ch tried to show cus tomers they ha ve
del icious coffee-based drinks too.
Daddy Dough is a completel y unique Thai brand. Sta rted about four yea rs ago by then
24 yea r old Peter Tha veepolcha roen, he uses the donut recipe his fa ther developed 25
yea rs ago when he ra n a donut shop in the Uni ted Sta tes . Daddy Dough is fa mous in
Thailand for i ts more than 40 di fferent fla vors of donuts , including chocola te,
cinna mon, chocola te, spinach and sesame, and for i ts lower pri ces than the top
Ameri can brand donuts in Bangkok.
PAGE 46
[GEEF TEKST OP]
Krispy Kreme is a leading U.S. branded specialty retailer and wholesaler of premium
quality s weet treats and complementa ry products including its signa ture Original
Gla zed donut. In Thailand, Krispy Kreme is retailed in a s tring of outlets by franchise
holder KDN Co., Ltd. The products a re positi oned as premium quality, thus command
hi gher prices which Thais are willing to pay.
Do Dee Dough is another Thai donut chain owned by famous Thai singer, Tik Shi ro.
Wi th donuts tha t a re supposed to be low-suga r, and wi th the a dded novelty of being
in the shape of a 'D', Do Dee Dough has opened franchises i n the Bangkok suburbs
ins tead of a t the usual ups cale malls. Do Dee Dough donuts come in many di fferent
fla vors and a re extremel y popula r wi th Thais, who love tha t Do Dee Dough is a Thai
compa ny.
Ba pple is brand new in Thailand. It is a Mala ysian donut company (Bi g Apple Donuts
and Coffee) tha t prides i tself on lower calorie donuts . There a re 12 Bapple stores in
Ba ngkok a nd other neighboring provinces.
Mr. Donut
Auntie Anne*
Beard Papa’s**
Dunkin’ Donut
Number of
Outlets
280
105
18
201
KDN Co., Ltd.
Krispy Kreme
7
Daddy
Dough
International
Co., Ltd.
Daddy Dough
30
Name
Central Res taurant
Group PCL
Golden Donuts
Co., Ltd.
Brands
Product Range
Donuts in 19 different
flavors and shapes including
2 Japanese-inspired desserts
Premium donuts (19 flavors)
Classic donuts (14 flavors)
Munchkins
Choco Wacko
Donuts
(classic
and
specialty) in 21 flavors
>50 flavors including g reen
tea, coffee, nut, jam, jellies,
various
chocolates,
all
berries, etc.
Low calorie donuts
Low sugar donuts
Big Apple & Donuts Bapple
12
Do Dee Doughnut Do Dee Dough
Not available
Co., Ltd.
*Auntie Anne serves pretzels and savory bakery products; **Beard Papa’s serves éclairs
N/A = Not Available
Source: Company websites, Ministry of Commerce, Internet search, interviews
1.5
2011 Sales
(Million Baht)
Total: 6,196
Donut: 1,320
893
279
113
N/A
N/A; registered
only in 2012
Cake Specialists
There is onl y one company which ca n be classified as a cake specialty chain because
ba king crea ti ve cakes is their pri ma ry business. This is Boat’s Bakery and Restaurant
Co., Ltd.
For over 30 yea rs , Boat’s Ba kery has become well known for thei r 3D cakes , with
cus tomers choosing from a wide selecti on of designs from sport themed cakes such as
a basketball court or a s wimming pool cake, to animal themed cakes such as the zoo,
ci rcus or sea animals. Perhaps the bigges t Boat’s Bakery fa ns a re children who delight
PAGE 47
[GEEF TEKST OP]
in a n amusement pa rk themed ca ke complete wi th roller coas ters and merry-gorounds . Boa t Bakery also has 3D cakes for all ma jor holida ys such as Valentine’s , New
Yea r’s and Chris tmas , or cus tomers can order a custom made ca ke to perfectl y sui t
any occasion. Despi te i ts phenomenal success, Boa t’s Bakery is still a famil y run
business producing not onl y 3D ca kes, but the finest quali ty homema de ba ked goods
s uch a s pies, puff pastries and breads.
Boa t’s Bakery has four bra nches in Greater Bangkok, including i ts headqua rters in
Nonta buri province.
2.
INDUSTRIAL BAKERIES
2.1
Bread
The bread ma rket in Thailand was valued at a round 10.9 billion baht in 2012 (refer to
demand anal ysis section).
Suppliers include indus trial ba keries tha t produce
pa ckaged bread for deli very to va ri ous outlets, a rtisanal tha t includes in-store bakeries
a nd home-based (cottage i ndustry) bakers, priva te label and others.
Company
President Bakery
C&W Interfoods
S&P
S.T. Bakery
Others
Total
MB
4.588
470
285
170
5.379
10.892
%
42,1%
4,3%
2,6%
1,6%
49,4%
100,0%
S.T. Bakery
0,0
S&P
C&W Interfoods
President Bakery
1.000,0 2.000,0 3.000,0 4.000,0 5.000,0
*Note: Others include artisanal, private label and other players
Source: Interviews, company annual reports, Ministry of Commerce
Million Baht
Wi th i ts highl y popular Fa rmhouse brand, SET-listed President Bakery PCL is the
undisputed leader in the bread market segment gaining 42 percent sha re in 2012. A
dis tant second is C&W Interfoods Co., Ltd. wi th 4.3 percent, S&P Syndica te 2.6 percent
and S.T. Bakery, 1.6 percent. S&P has not reall y focused on i ts bread products
because the company does not ta rget the mass ma rket and onl y depends on i ts own
S&P ba kery outlets for points of distribution.
The two other s mall pla yers C&W Interfoods a nd S.T Bakery a re pa cka ged bread
producers like President Bakery. But unlike their bigger ri val who employs a highl y
effi cient na tionwide dis tribution s ys tem, they do not ha ve thei r own dis tribution
channel. They sell thei r products through wholesaling to small shops and modern
tra de.
PAGE 48
[GEEF TEKST OP]
S.T Bakery, maker of ‘Twist’ brand sliced bread has a production facili ty in Nontaburi ,
whi ch is pa rt of the Grea ter Bangkok Metropolitan Area . The compa ny has reported
declining sales in the pas t couple of yea rs which could be a ttributed to being squeezed
out by President Bakery pa rti cula rl y in 7-11 convenience s tores . President Bakery
dis tributes products through CP All Pl c whi ch opera tes the more than 6,700 7-11
s tores throughout the country. In 2012, President Bakery genera ted 30% of total
i ncome from 7-11 s tores, a huge chunk of its total earnings.
C&W Interfoods opera tes a fa ctory in Ayuttha ya province (whi ch is about 75 km awa y
from Bangkok). Product offerings include sli ced bread under i ts own brand ‘A-Plus ’ as
well as house brands for renowned superma rkets and hypermarkets . The company
a l so makes frozen dough.
Beca use of i ts well-oiled distri bution ma chinery and popula r products , President
Ba kery is expected to continue i ts suprema cy in the pa cka ged bread ma rket for many
yea rs to come. Fa rmhouse has become a household na me and has alwa ys been the
number one choi ce a mong branded bakery products . The company is also the leader
i n i ntroducing new products to customers while competitors are just followers.
PAGE 49
[GEEF TEKST OP]
2.2
Other Industrial Baked Goods
This product segment includes manufa cturers such as UFM Centre Co., Ltd., CP
Retailing and Ma rketing Co., Ltd. (CPRAM), Sun Merry Co., Ltd., President Bakery PCL,
Imperial General Foods Industry Co., Ltd. a nd several other smaller companies.
Company
Products
Bakery
Brands
2011 Sales (MB)
Total
Baked
Goods
N/A
(estimated to
be at least
50% of total
sales
Snack cakes/
confectionery
807
Cakes 139
CPRAM
Dimsum, ready meals, bakery
products
Bakerich, Miss Mary,
Le Pan
7,928
Local/export
sales split:
85%.: 15%
President Bakery
Bread
Cakes & confectionery
5,562
UFM Centre
Bread & sandwiches
Buns
Puffs, pies, pastries (Danish)
Cakes and cookies
Butte r
cookies,
wafe rs,
biscuits, cupcakes
Butter, jam, jelly, dried fruits
Farmhouse
Deliya by Farmhouse
Madame Marco
Good
Morning
Farmhouse
UFM
1,094
875
Imperial
864
Local/export
sales split:
80%.: 20%
364
N/A
Imperial
Gene ral
Foods Industry
Sun Merry
Bread, cakes, pastries and
cookies
Sun Merry
Merry Ann
364
N/A = Not Available
Source: Company websites, Internet search, Ministry of Commerce, Interviews.
In this bakery ma rket segment, CPRAM is the la rges t pla yer. In second spot is
Pres i dent Bakery while UFM Centre’s UFM Bakery House is a cl ose third.
2.2.1
CP Reta iling and Ma rketing Co., Ltd.
Es tablished in 1988, CPRAM is an affiliated company of Cha roen Pokphand Group.
The company ma nufa ctures a nd dis tributes frozen food, prepa red food, chilled food
and bakery products both for the local and interna tional ma rkets . Sales split is about
85 percent domestic a nd 15 percent export.
Current producti on capa city is 1.8 million pieces of dim sum, 280,000 packs of ready
meals and 1.4 million bakery i tems per da y. Ba kery i tems a re distributed through
modern trade outlets incl uding i ts sis ter company’s 7-11 convenience s tore chain,
reta il s tores in gas stations, hypermarkets a nd supermarkets.
‒ Its fla gship brand Bakeri ch ca rries several hundred kinds of freshl y baked ca kes,
brea d and cookies.
‒ Miss Ma ry bra nd of special baked products a re ta rgeted for a ni che ma rket.
Products i nclude fresh cake with different toppings, soft ca ke a nd s oft roll.
PAGE 50
[GEEF TEKST OP]
‒ Le Pan brand products a re aimed a t the mass ma rket. Pri ced and positioned lower
than Bakeri ch, Le Pa n products include soft pan bread, butter bread, roll bun, cup
ca kes and va rious types of sandwiches.
2.2.2
Pres i dent Bakery PCL
Aside from pa cka ged bread, President Bakery also makes pa cka ged sna ck ca kes and
confecti onery tha t a re distributed through wholesaling, while freshl y-baked ca kes a re
sold in superma rkets . These products a ccount for 16-17 percent of the compa ny’s
total ea rnings annuall y. (Pa ckaged bread a ccounts for 75-80 percent). Together with
i ts bread products , President Bakery commands the larges t sales in value of the 2012
ba ked goods market, wi th approximately 22 percent s hare.
2.2.3
UFM Centre Co., Ltd.
UFM Centre (UFMC) is a subsidiary of Uni ted Flour Mill (UFM), Thailand’s oldes t and
la rges t flour mill. UFMC is one of UFM’s marketing a rms in dis tributing wheat flour
and premi xes to the food servi ce indus try, wholesalers , retailers , hotels and bakery
shops. In addi tion UFMC is engaged in running other businesses including UFM
Ba kery, Imperial Baking & Cooking School and UFM Noodle House. UFM Bakery is a
la rge retail ba kery equipped wi th modern ma chinery lines. Besides freshl y baked
brea ds, ca kes, pies, cookies and pas tries, the UFM Bakery also serves sandwi ches and
other sna cks, hot and cold bevera ges, and i ce crea m. These products a re also
del ivered to other outlets in Bangkok.
2.2.4
Sun Merry Co., Ltd.
Sun Merry is a manufa cturer of baked goods such as breads , pastries , cakes and
cookies under the brands of Sun Merry and Merry Ann. Dis tribution channel partners
a re the big pla yers in modern trade: Tes co Lotus , Bi g C, Tops , 7-Eleven, Fa mil y Ma rt,
Ma xva l u a nd Makro. The company also s erves the airlines industry.
2.2.5
Imperial General Foods Industry Co., Ltd.
Imperial General Foods Indus try is a manufa cturer and exporter of confectionery
products , specializing in butter cookies, wafers , bis cui ts, cup cakes and a range of
dai ry products . The company is an a ffilia te of the Kim Chua Group, one of the
country’s leading bakery ingredient suppliers. It deri ves 20 percent of i ts revenues
from export sales to countries in the Asia Pa cifi c region and Oceania . Aside from
produci ng under i ts own Imperial brand, the company is also an OEM and pri va te label
ma nufacturer.
2.3
Frozen Dough
The enti re tradi tional bread or pas try baking process – from dough ma king to putting
the dough in the oven – used to take pla ce onsite (a t the ba kery or bake shop). Now
this is gradually being repla ced by pa r baking a nd ba ke-off concept. The ra w dough is
ba ked normall y, but halted at about 80 percent of the normal cooking time, when i t is
rapidl y cooled and frozen. And the pa r baking process happens off site in suppliers ’
premises. Cus tomers such as in-s tore ba ke shops in hyperma rkets , retail bakery
chains and even convenience stores outsource pa r baking to frozen dough
PAGE 51
[GEEF TEKST OP]
ma nufacturers . Tes co Lotus has been using outside suppliers for a portion of thei r
dough needs in recent yea rs . In 2013, the la rgest discount s tore chain in Thailand will
completel y outsource thei r dough suppl y – whi ch will cut short the baking process and
elimina te the need for dough making ma chinery. Also pa r baked products a re easier
to ha ndle a nd do not need highly-skilled bakers to create the finished baked product.
When the final brea d product is desi red, a pa r ba ked loa f or dough is "finished off" by
ba king i t a t normal tempera tures for an addi tional 10 to 15 minutes a t the bake shop.
The fi nal bread is often i ndistinguishable from freshly baked bread.
The study identi fied some frozen dough manufa cturers /suppliers as shown in table
bel ow.
Company
C&W Interfoods Co., Ltd.
American European Products Co., Ltd.
Wandee Group Bakery Co., Ltd.
Products
Packaged sliced bread; frozen dough
Variety of bakery ingredients
Baked goods; frozen dough
(Supplier to Tesco Lotus)
Strategic Catering Co., Ltd.
Baked goods; frozen dough
(Supplier to Tesco Lotus)
Aileng Industries Co., Ltd.
Bakery ingredients, baked goods, froze n
dough
Folies Co., Ltd.
Frozen bakery a nd cake products unde r
specification such as ready-to-prove, readyto-bake or par baked
Kim Chua Group Co., Ltd.
Bakery ingredients, baked goods, froze n
dough
Jagota Brothers Trading Co., Ltd.
Bakery ingredients, frozen bakery
Note: Frozen dough/frozen bakery represent only a portion of each company’s sales
Source: Company websites, Internet search, Ministry of Commerce, Interviews
PAGE 52
2011 Total Sales
(MB)
470
369
169
75
40
57
4,000
1,269
[GEEF TEKST OP]
3.
BAKERY INGREDIENTS
Suppliers and competi tors in Thailand’s ba kery i ngredient segment can be classified
into two ma jor groups : a) general suppliers tha t ca rry a broad portfolio of food
products including bakery ingredients, and b) specialist suppliers tha t offer one or two
or several ingredients used in the bakery i ndus try (e.g., whea t fl our, butter,
shortening, ba king enzymes/food a ddi ti ves, etc.), and usually also serve other
i ndustries such as food service, confectionery, noodle, etc.
3.1
General Suppliers
This group of suppliers includes , among others, Kim Chua Group, Schmidt, Ja gota and
Ameri can European Products . Together they reported combined ea rnings of 5.78
billion baht in 2011, of whi ch about 75 percent is es tima ted to come from sales of
ba kery i ngredients.
3.1.1
Ki m Chua Group Co., Ltd.
Ki m Chua Group (KCG) positi ons i tself as a complete s olutions provider for the bakery
industry. Wi th es tima ted sales of more than 4 billion baht in 2012, the company is
considered the la rges t among exis ting bakery i ngredients suppliers. Es tablished in
1958, the 55 –yea r ol d company i s also the oldest.
KCG’s product portfolio seems to be the most di verse as the company also distri butes
ba kery equipment and Sunqui ck frui t jui ce concentra te. KCG also runs the Imperial
Ba kery and Food Culina ry School . Toda y Ki m Chua Group is one of the larges t
importers of cheese, dai ry products , confecti onery, and bakery ingredients from
Europe, Aus tralia and U.S.A. The company, through i ts subsidia ries, also locall y
ma nufactures butter, ma rga rine, cookies and other baked goods . It is also the
exclusi ve manufa cturer of Sunqui ck frui t jui ce concentra te distri buted na tionwide.
Another subsidia ry, Imperial Bakery Equipment Co., Ltd., is a distri butor of bakery
equipment and bakers’ wares imported from Taiwan.
While competi tors percei ve KCG as an i mporter of lower grade products , the
company’s business model has proven to be a success . KCG pos ted robus t sales
growths over the past four yea rs , from 2.7 billion baht i n 2008 to 4 billion baht in
2011, a vera ging 13 percent per annum – this despi te the economi c slowdown in 20082009 as a resul t of the global economic recession. To i ts credit, KCG’s pa rtners include
among others highl y reputable mul tina tional OEMs i ncluding FrieslandCa mpina , Emmi
International, Kerry Group, Arla Foods, Delba Backbetrieb and Lactails International.
3.1.2
Ameri can European Products Co., Ltd.
Ameri can European Products (AEP) is an i mporter and dis tributor of premium food
ingredients and products for pas try mainl y from Europe and other pa rts of the worl d.
Es tablished 21 yea rs ago in 1992, the company has buil t up an i mpressi ve clientele
base tha t includes luxury hotels, leading interna tional res taurants , bakery and pastry
shops, retail superma rkets and the a rtisanal pastry i ndus try i n Thailand. AEP’s wide
range of products include ba kery & pastry i ngredients (nut-based special ties such as
PAGE 53
[GEEF TEKST OP]
pralinés , nut powders , trendy French Ma ca roon mi xes), dai ry products , frozen frui ts &
puree, chocolate products for pastry, baking flour, frui ts in light s yrup, dried frui ts and
nuts, etc. The company also dis tributes pastry-related a ccessories such as molds ,
ba king paper, chocolate decora tion, etc. mos tl y from Fra nce. AEP has enjoyed double
di git growth during 2008-2011 wi th sales increasing from 227 million baht in 2008 to
369 million ba ht in 2011 or a CAGR of 17.5 percent – faster tha n KCG’s al though AEP is
onl y l ess than one-tenth the s ize of the leader i n this segment.
3.1.3
Schmi dt Co., Ltd.
Schmi dt is a Thai famil y-owned company was founded in 1960 by a German
entrepreneur. The company is an importer and distri butor of ingredients and utensils
for pastry, bakery and confectionery representing some of the fines t brands in this
segment. The company is also a producer of semi-finished products.
Bakery
ingredients cover a wide range of flour a nd premi xes , bread i mprovers , cake mi xes ,
chocola te couverture, ja ms and gels , creams & mousses, a romas & essences, pastes
and fillings . OEM pa rtners a re mostl y from European countries including Fra nce,
Netherlands , Germany, Ital y a nd Swi tzerland, as well as from the U.S.A. Schmidt
positions the company as a hi gh-gra de supplier of bakery ingredients Cus tomers
comprise confectioners , hotels and res taurants , ca terers , artisanal and indus trial
ba keries. While the company’s sales in 2011 (144 million baht) expanded by 12.5
percent over 2010, the underl ying CAGR over the pas t four yea rs was onl y si x percent
– much slower compa red wi th i ts bi gger competi tors Kim Chua Group and Ameri can
European Products.
3.1.4
Ja gota Brothers Tra ding Co., Ltd.
Es tablished in 1998, Ja gota Brothers Trading is one of the leading suppliers of
innova ti ve food solutions to the food servi ce i ndus try. The company is owned and
opera ted by young and dyna mic entrepreneurs who ha ve steered the company to
phenomenal growth i n both sales and profi tability especiall y during the past fi ve yea rs
wi th sales more than doubling from 638 million baht in 2008 to 1.5 billion baht in
2012. Net profi ts also increased 11-fold duri ng the same period – reinforci ng Ja gota ’s
hi ghl y successful business. The compa ny’s product line includes premi um mea ts and
seafood, European gourmet, dai ry products , sna ck products , Japanese foods, frozen
pas ta , ba kery ingredients & pas tries and frozen bakery. Bakery products a ccount for
about 25 percent of the company’s business or about 375 million baht in 2012. OEM
bra nd pa rtners incl ude CSM Germa ny (Dutch pa rent company) for bread ingredients ,
Hies tand for frozen bakery (Swi tzerland), DLA Na turals for frui t fillings (Philippines ),
and Callebaut chocolate (Belgium). Clients i nclude all l uxury hotels in Bangkok, Sa mui
a nd Phuket, s pecialist bakeries (Yamazaki, Au Bon Pa in, S&P) a nd chain restaurants.
PAGE 54
[GEEF TEKST OP]
OEM Brands /
Partners
Company
Kim Chua Group
American
Products
Molfino Hermanos
Goodman Fielder
Gourmet Cheese
National Foods
Algist Bruggeman
S.A Corman
Shineroad
Dragsbaek
Margarinefabrik
Arla Foods
Seriously
Jean Perrin
Lactails International
Meggle
Friesland Campina
Cheese Specialties
Delba Backbetrieb
European
Puratos - PatisFrance
Elvis Sas
Ponthier
Grands Moulins de
Paris
D’Arbo
Various
suppliers
mostly from France
Jagota
CSM Ulmer Spaz
Hiestand
DLA
Callebaut
Tatua Dairy Products
PAGE 55
Products
Butter & spreads
Margarine & Shortening
Filling & jam
Cheese
Cream/whipping cream
Chocolate
Flour & premix
Frozen dough
Gelatin
Yeast
Improver
Food Items
Nut-based specialties
Dairy products
Frozen fruits and puree
Chocolate products
Flour
Fruits in light syrup; fruit
jam
Non-Food Items
Pastry relate d accessories
such as m olds, silicone
baking
paper,
chocolate decoration, etc.
Bread mixes
Muffin mix concentrate
Pastry margarine
Butter gipfels/croissants
Sweet pastry Danish
Fruit pie fillings
Glazes for hot & cold
applications
Couverture chocolate (da rk,
milk, white)
Whipping cream
2011 Sales (MB)
Bakery
Total
Ingredients
2011: 4,000
3,800
369
300
2011: 1,269
2012: 1,510
2011: 300
2012: 375
[GEEF TEKST OP]
Continued
OEM Brands /
Partners
Company
Schmidt
Dreidoppel
Gelita
Ireks
Patiswiss
Callebaut,
Carma,
Master
Martini,
Ulmer, Wander, Sicao
Victorinox, Modecor,
Wilton, Schneider,
JKV (Nethe rlands),Karl
Fritz,
Matfer,
Thermohause r,
Pavoni,
Anneliese,
Silikomart
Deco Relief
3.2
Products
Flavorings for pastry
Gelatin
Aroma & flavors
Almond pastes; specialty
pastes
Emulsifiers
Chocolate
2011 Sales (MB)
Bakery
Total
Ingredients
144
130
Baking tools & utensils
Aromas & essences
Specialist Suppliers
Specialist suppliers cover the following:
‒ Whea t flour ma nufacturers
‒ Shortening/butter importers and manufacturers
‒ Food enhancers/improvers, baking enzymes, food a dditives, flavors
3.2.1
Wheat flour manufacturers and importers
Whea t flour is the main ingredient in bread and other baked goods . The Thai bakery
industry sources i ts whea t flour demand mainl y from local millers that i mport the ra w
ma terials from the Aus tralia, U.S., India , Ukraine and Canada . There a re also imports
of whea t flour mainl y sourced from Asian countries , wi th Vietnam, Turkey, China and
Japan the four leading exporters to Thailand in 2012 representing 57 percent of the
country’s wheat flour i mports during the year.
Loca l ly milled wheat flour
There a re 11 flour milling fa ctories in Thailand with a dail y producti on capa city of
between 4,000 to 5,000 metri c tons . According to United Flour Mill, the oldest and
l a rgest flour miller i n Thailand, the top six fl our millers are:
‒
‒
‒
‒
‒
‒
PAGE 56
Uni ted Flour Mill Public Co., Ltd.
La emthong Corporation Group
Ba ngkok Flour Mi ll Co., Ltd.
TS Fl our Mi ll Public Co., Ltd.
Ni s shin STC Fl our Mi lling Co., Ltd.
Ki ng Mi lling Co., Ltd.
[GEEF TEKST OP]
Together they a ccount for about three-fourths of the country’s total whea t flour
producti on. Capa city utiliza tion ra tes in ea ch flour mill a re running between 60 and 95
percent (UFM).
Locall y milled whea t flour is used in many indus tries including bakery, ins tant noodles ,
coa ti ng systems and other cooking purposes.
Sales of UFM in 2012 rea ched an es ti mated 3.6 billion baht, of whi ch a t least 50
percent was deri ved from the bakery industry. The compa ny supplied more than 55
percent of whea t flour consumption in this sector (with a total value of a bout 3, 239
mi l lion baht i n 2012).
Imported wheat flour
About 20 percent of Thailand’s dema nd for wheat flour has to be i mported because
exis ting production volumes do not yet full y meet these requi rements. In 2012,
leading exporting countries to Thailand were Vietnam and Turkey a ccounting for 40%
of the total i mports (both in volume and value), while another si x countries
contri buted 45%.
There is demand also for hi gher grades of whea t flour from industrial and retail chain
ba keries. For insta nce, Belgian manufacturer Dossche Mills is known to suppl y i ts high
quality whea t flour to President Bakery and Thai Ai rwa ys Ca teri ng. The flour is used in
va rious bakery applica tions such as bread, pastries and cream fillings . In 2012
Thailand imported some 386 tons of wheat flour from Belgium worth 6.3 million baht
(CIF value). This volume accounted for 0.16 percent of the country’s total wheat flour
imports last yea r – thus s till insignifi cant. Import volume from Germany, Ital y, Fra nce
and U.K. a ccounted for 0.4 percent of the total – also very small compa red wi th the
top exporters.
3.2.2
Suppliers of special dough blends
Griffi th Laboratories Limi ted is a fa mil y owned global compa ny tha t develops and
ma nufactures cus tomized food ingredient s ys tems. Their products include seasoning
blends, dry mi xes , coa ting s ystems , dough blends , crumbs , fla vors , sauces and food
bases. They collabora te wi th food companies, a cross all segments of the food
i ndustry, to i ncorporate these ingredient systems creating delicious food.
The company has a production fa cility in Samutpraka rn province, Thailand. Gri ffith
Labora tories’ dough s ys tems improve texture, performance and fla vor of the finished
products including pizza doughs , panca ke mi xes , biscuit mi xes and many more
appli ca tions . In Thailand the company ea rns 800 million baht per yea r from i ts food
i ngredient s ystems.
3.2.3
Oil and fat suppliers
Ba ked goods use a lot of fa t to produce, but a mounts va ry by product, e.g. bread uses
about 10%, cake 20% and pas try 40% of total quantities of ingredients. Thus this
ba king i ngredient is the s econd most i mportant next to wheat flour.
PAGE 57
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Fa ts used incl ude shortening, ma rga rine and butter – depending on baked product
and desi red quality. For example butter croissants a re much, much more deli cious
tha n the ones using margarine or shortening, don’t they?
Thailand has several producers of butter, ma rga rine a nd shortening; while there is
also a considerabl y signi fica nt volume of imported butter from New Zealand,
Denma rk, France, Aus tralia and Belgium, and i mported ma rga rine from Singapore,
Indonesia, Australia a nd Ja pan.
Lea ding suppliers a re:
‒ Ki m Chua Group Co., Ltd./ United Dairy Foods Co., Ltd.
‒ Fonterra Brands (Thailand) Ltd.
‒ Tha i Dairy Industry Co., Ltd.
‒ La m Soon (Thailand) Public Co., Ltd.
‒ Ki ng Bi o-Product Co., Ltd.
PAGE 58
[GEEF TEKST OP]
Name of Supplier
Products
OEM Brands
Kim Chua Group*
Butter
Fonterra
Liquid butter
Butter blend
Margarine
Butter oil
Lactic butter
Margarine
Butter
Allowrie, Buttergold,
President
Corman
Allowrie, Corman
Dairygold
Imperial
Oldenburger
Meadow Lea
Anchor
Thai Dairy Industry
Butter
Orchid
Lam Soon
Margarine
Zest Gold, Zest, Golden Jade.
Golden Leaf, Moonlight
Zest, Zest Gold, Golden Jade,
Moonlight, Golden Leaf
Fry Fry, Lamsoon
Crown, Pigeon, Yacht, Horse,
and KH
Orchid
Shortening
King Bio-Product
The Thai Dairy Industry
Specialty fats
Margarine &
shortening
Butter
UDF,
2011 Domestic
Sales
(Million Baht)
Total: 3,600
Butter &
margarine: 2,100
Total: 2,337
Butter: N/A
Total: 3,087
Butter: N/A
2011: 658
2012: 593
50
2011 Total: 3,087
2011 Butter: N/A
*Kim Chua Group distributes products of subsidiary company United Dairy Foods, local manufacturer of
Allowrie and UDF brands.
Source: Company websites, Internet search, Ministry of Commerce, Interviews
Local producers
Lam Soon (Thailand) Publi c Co., Ltd. was es tablished i n September 1974 by the La m
Soon Group, expanding i ts palm oil business beyond Singapore and Mala ysia. It
beca me a publi c company and s ta rted trading on the Securi ties Exchange of Thailand
in 1996. Currentl y, the Compa ny manufactures a wide ra nge of extra cted and refined
products incl uding palm vegeta ble oils, ma rga rine, shortening and specialty vegetable
fa ts . It opera tes a crushing mill wi th capa ci ty of 45 tons per hour a t Trang provi nce,
and a palm oil refinery i n Bangpoo Industrial Esta te whose producti on capa city a t
1,000 tons per day or 365,000 tons per year.
According to Lam Soon, the es tima ted capa ci ty utiliza tion of ma rga rine and shortening
producers in Thailand is below 50 percent. There a re 4-5 ma jor pla yers in this
business with Lam Soon ranked number one in the retail bakery channel . Other
known local producers in this ca tegory a re Morakot Industries , Pa tum Vegetable Oil
a nd Ki ng Bio-Product.
King Bi o-Product Co., Ltd. was es tablished i n 2007 to produce shortening and
ma rga rine for bakery products. The company is a member of the King Hua t Group
whi ch consists of flour milling companies , s ta rch factory, sa ck/ba g fa ctory, a
dis tribution a rm and a ma rine terminal. Ki ng Hua t Group ca ters mainl y for the bakery
industry. A rela ti vel y newcomer in the business, Ki ng Bio-Product has not full y
PAGE 59
[GEEF TEKST OP]
realized i ts full ma rket potential, wi th annual output of between 30-40 percent of
ma xi mum capa ci ty. Income deri ved from selling ma rga rine and shortening was 50
mi l lion baht i n 2011, fi ve-fold of sales in 2010.
Morakot Indus tries Public Co., Ltd. and Pa tum Vega table Oil Co., Ltd. a re ma jor edible
oil producers in Thailand. They also produce ma rga rine and shortening as by-products
of the oil refining process . They serve the following indus tries: bakery, ins tant
noodles, dairy, a nd snacks
Uni ted Dai ry Foods Co., Ltd. (UDF) was es tablished by Kim Chua Group to produce
Allowrie butter in Thailand under techni cal coopera tion wi th then PDS Australia (now
Fonterra ). UDF eventually expanded i ts product line to a grea ter di versity of food and
dai ry products including ma rga rine, jam, jell y, pasteuri zed milk, flour mi xes ,
ma ras chino cherries , s yrup and honey. UDF reported 1,878 million baht sales in 2011,
of whi ch butter a nd margarine generated more than 50% of this a mount.
The Thai Dai ry Industry Co., Ltd. (TDI) is a leading manufa cturer of sweetened
condensed milk, evapora ted milk and other milk products under ‘Mali ’ brand; and
butter under ‘Orchid’ bra nd. TDI was formed in 1962 by a group of Thai and Mala ysian
entrepreneurs and the Aus tralian Dairy Produce Boa rd wi th the objecti ve of using
local raw materials in producing dairy products to lessen the country’s dependence on
imports . TDI’s flagship products are sweetened condensed milk and evapora ted milk,
whi ch together genera te the bulk of the company’s income. Butter cons titutes onl y a
small portion of total income. During the period 2008-2010, TDI pos ted an almost fla t
growth in yearl y sales of 3.94 billion baht, 3.96 billion baht and 3.97 billion baht,
respecti vel y. In 2011, annual ea rnings dipped yea r-on-yea r to 3.1 billion baht –
a ttributed mainl y to the grea t flooding in most pa rts of the Central region i ncluding
Ba ngkok which s eriously hampered the distribution activities of the company.
Importers
KCG a nd Fonterra a re the leading i mporters of butter (and cheese) ca tered for the
food s ervice a nd bakery i ndustries.
KCG’ es tima ted i ncome deri ved from selling butter and marga rine is about 55 percent
of total domes ti c sales per yea r or rea ched 2,000 million baht in 2011. This also
i ncl udes butter a nd margarine for retail consumption.
Fonterra Brands (Thailand) Ltd. is an importer and distributor of cheese, butter and
dai ry products made in New Zealand. In Thailand i t ca rries Anchor, Chesdale, Anlene,
Mainland and Perfect Italiano brands . Clients include food servi ce indus try and
i ndustrial bakeries including in-store bakeries in hypermarkets a nd discount stores.
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[GEEF TEKST OP]
3.2.4 Food enhancers, bread improvers, yeast, baking enzymes, emulsifiers, flavors and
food additives
There a re more than 20 suppliers of these types of bakery ingredients in Thailand –
ma king this is a fragmented segment. None of these suppliers ca rry the whole range:
some offer food enhancers /bread improvers and yeast; a few suppliers offer baking
enzymes , emulsifiers and fla vors ; and other suppliers offer fla vors together with
fragrances and other food addi ti ves . Also a number of these suppliers also offer
chemi cals used in the pharmaceutical sector and other i ndustrial sectors.
Some of the prominent pla yers ha ve regional/global rea ch through pa rent companies ;
others are highl y reputable homegrown companies that ha ve been success ful in
runni ng other business units. These include:
•
•
DKSH (Tha iland) Ltd.
Pura tos (Thailand) Co., Ltd.
Some of the other l ocal suppliers include:
• Si a mex Co., Ltd.
• Vi cchi Enterprises Co., Ltd.
• Wi nner Group Enterprise Publi c
Co., Ltd.
• Ra ma Production Co., Ltd.
PAGE 61
•
•
•
•
•
•
DPO (Tha iland) Ltd.
Berli Jucker Specialties Co.,
Ltd.
Nutri ti on SC Co., Ltd.
Ma xwa y Co., Ltd.
AMP International Co., Ltd.
Food Ingredient Technology Co.,
Ltd.
[GEEF TEKST OP]
Name of Supplier
OEM Brands
DKSH (Thailand)
Not available
Puratos (Thailand)
Puratos
DPO (Thailand)
Beneo (Orafti, Palatinit, Remy),
DSM Food Specialties, Frutarom
Hexagon Nutrition, Lecico,
Palsgaard
DSM Food Specialties
Firmenich
Cocoa Dutch
Berli Jucker Specialties
Siamex
Winner Group Enterprise
Rama Production
Nutrition SC
Vicchi Enterprises
PAGE 62
Lesaffre, Martin Braun, Agrano,
Woodland Sunny, Fuji Oil,
Kelston, Colatta
Demarle
Pakmaya
Prima Group
Masson Group
JB Cocoa
Solec™
Litesse®
Whole Cell Yeast
Not available
Instafern
Fibrisol
Frutarom
Australian Dairy Goods
Relevant Products
Enzymes, emulsifiers
and
stabilizers,
preservatives
and
processing aids, glazes,
bakery fillings, and
sweeteners. flavors
Bread
improvers;
Improvers for froze n
bakery products;
Flavors & sourdough;
Specialty bread mixes
Enzymes; Emulsifiers;
Yeast
Bakery, confectionery,
dairy, drinks, fats &
oils, flour fortification
Enzymes
Emulsifiers
Preservatives
Flavors & coloring
agents
Gelatin
Cocoa powder
Baker’s
yeast
improvers
Pastry ingredients
2011 Sales
(Million Baht)
2011: 81,130
2012: 106,590
202
169
323
&
Kitchen & baking tools
Baker’s yeast, bread
improver, ins tant drie d
yeast
Cake wheat flour
Emulsifier
Cocoa powder
Emulsifier
Bakery product
improver
Inactive yeast
Emulsifier
Flavoring agent
Coloring agent
Cocoa powder
Pectin & gelatin
Instant dry yeast
Flavors
Preservatives
Milk
powder
&
derivatives
Emulsifiers & leavening
phosphates
260
1,290
683
467
529
[GEEF TEKST OP]
Continued
Name of Supplier
Maxway
OEM Brands
Viscotex BAK
Relevant Products
Food
additives:
emulsifie rs, stabilizers,
preservatives, flavors
Food Ingredient Technology
DMV, Purac, Kievit, Fuso
Enzymes
Eastsign, Cacao Paramount
Flavors & extracts
Natural preservatives
Baking premix base
Cocoa powder
AMP International
Bio Springer
Inactive dry yeast
Reka Nutrition
Food flavors
Source: Company websites, Internet search, Ministry of Commerce, Interviews
2011 Sales
(Million Baht)
430
297
48
Ma rket sha res of ea ch supplier for relevant products in this segment cannot be
determined in view of the broad range of products that each company handles. Thus
the dis cussion is focused more on ea ch company’s a cti vi ties and range of products and
OEM bra nds represented.
DKSH (Thailand) Ltd. is a mul ti-billion baht opera tion whi ch provi des a complete range
of ma rket expansion servi ces covering sourcing, resea rch and anal ysis , ma rketing,
dis tribution, sales, logis tics , ma nufa cturing and after-sales servi ces for a di versi fied
range of products . Pa rent company DKSH is headqua rtered in Zuri ch, Swi tzerland.
Thei r opera tions in Thailand a re ca tegorized under the following four distinct and
hi ghl y specialized Business Units : Consumer Goods, Heal thca re, Performance
Ma terials, and Technology. They a chieved annual sales of THB 106,589.8 million in
2012 for a phenomenal 31% yea r on yea r growth. The compa ny employs over 10,800
s pecialists a t 221 l ocations across the country.
Under i ts Performance Ma terials Business Uni t – Food & Bevera ges Indus try, DKSH
(Thailand) offers specialty confectionery a nd bakery ingredients including fla vors and
colors , enzymes, emulsifiers and s tabilizers, preserva ti ves , bakery fillings , s weeteners ,
etc.
Pura tos (Thailand) Co., Ltd. is pa rt of the global group Pura tos with headqua rters in
Bel gium. In Thailand, Pura tos operates a fa ctory manufa cturi ng innova ti ve ingredients
and soluti ons for bakers , pa tissiers and chocola tiers. Pura tos runs a verti call yintegra ted plant whi ch manufa ctures i ts own emulsifiers, enzymes, sourdoughs and
yeas t extra cts for making bread and bakery product i mprovers and mi xes. The
company also distri butes these ingredients to end-using customers in the bakery
industry. These include bread i mprovers , modular ingredient solutions , bread flours
and sourdoughs , a cti ve ba kery components, bakery mi xes , ma rga rines and specialty
fa ts , enzymes and emulsifiers, etc. Pura tos also offers pa tisserie product range, e.g.,
cake mi xes, cream mi xes, crea m fillings , fla voring prepa rations and many others . In
Thailand the company also makes chocolates and chocola te and nut-based fillings for
all appli cations in ba kery. The Thai opera tion generated sales of THB202 million in
2011.
PAGE 63
[GEEF TEKST OP]
DPO (Thailand) Ltd. is the local opera tion of DPO Interna tional Sdn Bhd headqua rtered
in Kuala Lumpur, Mala ysia. DPO runs three business units : consumer products, food
servi ce and food ingredients. In food ingredients, the company’s strength lies in the
appli ca tions of baby food, bakery, confectionery, dairy, dri nks , fa ts & oils, flour
fortification, etc. DPO holds sole dis tributorship li censing from some of the reputable
international food ingredient manufa cturers i ncluding Beneo (Orafti , Pala tini t,
Remy), DSM Food Specialties , Fruta rom, Hexagon Nutri tion, Leci co and Palsgaard
a mong others. In 2011, the local company realized total sales of 169 million baht.
Berli Jucker Specialties Ltd. or BJC Specialties is a full y i ntegra ted pa rt of the Berli
Jucker Group of Companies whi ch has accumulated more than 125 yea rs of
experience in trading, manufa cturing a nd servi ces indus tries in Thailand and the Asian
region. BJC Special ties servi ces the enti re bakery i ndus try, from the local baker to the
ma jor indus trialist, providing a full ra nge of quality ingredients . Founded in1971, BJC
Specialties ea rlier focused on basic chemi cals; over the yea rs , the business portfolio
has expanded and now covers a whole range of ra w materials that cover the whole
spectrum including food and non-food. Products offered under the bakery i ngredients
segment include among others enzymes, preserva ti ves, fla vors , gela tin, emulsifiers ,
and cocoa powder. The company’s turnover in 2011 was THB 323 million, of which
ba kery ingredients cons tituted onl y a small porti on. BJC Special ties represents Dutch
gl obal brand DMV Food Special ties’ baking enzymes in Thailand, in addi tion to other
international bra nds such as Emerald Kalama Chemicals , Ta te & Lyle Group, Fi rmenich,
a nd Cocoa Dutch (also from the Netherlands).
The rest of the local suppliers a re full y-owned Thai companies can be grouped in two
ma jor business ca tegories:
(1) pri ma ril y enga ged in the manufa cture, i mporta tion and distribution of basic
chemi cals; a nd
(2) whol esale a nd retail of food i ngredients and miscellaneous products.
Companies classified under the fi rs t ca tegory incl ude Rama Production, Nutri tion SC,
Ma xwa y a nd Food Ingredient Technology.
Ra ma Production Co., Ltd. represents world class manufa cturers of food and
pha rma ceuti cal ingredients and additi ves from Europe, US and Asia. The company has
also es tablished innova tion center provi ding technical support to cus tomers. Some of
the i mported bakery ingredients include yeast for bakery products , ina cti ve whole cell
yeas t for dough conditi oner and softener, emulsifiers, and, a rti fi cial and na tural
s weeteners. Total sales i n 2011: THB 683 mi llion.
Nutri tion SC Co., Ltd. is chiefl y an importer of food addi ti ves and ingredients. For
ba kery applica tions , products ca rried include emulsifiers, fla vori ng a gents , gelling
a gent, coloring agents. Total sales in 2011: THB 467 mi llion.
Ma xwa y Co., Ltd. is an i mporter a nd dis tributor of a comprehensi ve range of
chemi cals used in the healthca re and consumable indus tries . The broad ra nge of
products is sourced from leading producers in the U.S.A., Europe and Asia . Releva nt
PAGE 64
[GEEF TEKST OP]
food addi ti ves for the bakery sector include s tabilizers , emulsifiers , preserva ti ves , and
va rious fla vori ngs (fruit, sa vory, mil k, cream and cheese). Total sales in 2011: THB 430
mi l lion
Food Ingredient Technology Co., Ltd. has more than a decade experience in the food
ingredients business, ha ving developed strong rela tionships wi th i ts global partners
tha t include, among others , DMV Food Ingredients , Pura c, Kievi t, Fus o, Eas tsign and
Ca cao Pa ra mount. Range of ingredients for bakery incl ude: whipping a gents ,
s tabilizer, mal t flour, cocoa power, enzymes (for s team bun, bis cui t/wa fer/cra cker),
sweet fla vors and na tural extra cts , and natural colorants . Total sales in 2011: THB 297
mi l lion
The second group consists of Winner Group Enterprise, Vi cchi Enterprises, Siamex and AMP
International.
Wi nner Group Enterprise Publi c Co., Ltd. has been in the retail business for 30 yea rs
selling a wide range of food ingredients mainl y for the ba kery and food servi ce
industries . Some of the bakery ingredients include baking powder, preserva ti ves ,
brea d improver, whea t flour, sweetener, i cing suga r, cocoa powder, ins tant dried
yeas t, baker’s yeast, emulsifier, and many others . Winner Group’s suppliers include
Pakma ya (Turkey), Prima Group and Masson Group. Total sales i n 2011: THB 1,290
mi l lion
Vi cchi Enterprises Co., Ltd. is a relati vel y newcomer in the food ingredients business
being es tablished in 2004; however the company is powered by highl y-experienced
team that has worked in the food indus try business for more than three decades . The
company ca rries food ingredients under three indus try appli ca tions : dairy,
confecti onery, and bakery. Under ba kery, product offerings incl ude fla vors , milk
powder & deri va ti ves , preserva ti ves, s ta rch, yeast, protein and product i mprovers .
OEM pa rtners i nclude Insta fern, Fibrisol , Fruta rom and Aus tralian Dai ry Goods . Total
s a les in 2011: THB 529 mi llion
Sia mex Co., Ltd. is a distributor of yeas t and bakery ingredients to all segments of the
ba king indus try in Thailand. These include baker’s yeast, improvers and pastry
ingredients . OEM pa rtners include Lesaffre, Ma rtin Braun, Agrano, Woodland Sunny,
Fuji Oi l, Kelston, Colatta, a nd Demarle. Total sales i n 2011: THB 260 mi l lion
AMP Interna tional Co., Ltd. is an i mporter a nd authori zed dis tributor of products for
the food indus try, ha ving worked with overseas manufa cturers and pa rtners in
Europe, U.S.A. and Asia. The company also dis tributes some equipment and tools .
Food addi ti ves and ingredients include yeast extra cts , dried food yeasts and food
fl a vors. Total sales in 2011: THB 48 mi l lion
PAGE 65
[GEEF TEKST OP]
3.2.5
Cheese and cream
A number of leading s uppliers of cheese a nd cream in the i ndustry a re:
•
KCG represents the following OEM bra nds for cheese: Allowrie, Arla , Coon,
Emmi , Fri co, Galbani , Ga rcia Ba rquero, Imperial, MG, Oldenburger, President,
Sa puto, Seriously, Vi king.
OEM pa rtners for cream and whipping cream a re Arla , Shineroad, Oldenburger
a nd President.
•
Fonterra Brands ca rries the following brands for cheese: Chesdale and Anchor
(cream cheese, mozza rella cheese, Colby Chedda r, processed chedda r).
It a l so offers Anchor whipping cream a nd culinary cream.
•
Schmi dt offers non-dairy cream from Denmark (Uniwhip brand).
•
Ja gota Brothers offers Ta tua brand whipping cream from New Zealand.
3.2.6
Couverture chocolate
The following ma jor suppliers of bakery ingredients also ca rry hi gh quality couverture
chocol ates:
•
Ki m Chua Group has a broad ra nge of couverture chocolate and whi te
chocol ate products for the bakery industry from Aalst brand in Singapore.
•
Schmi dt offers high quality chocola te couverture and compounds and has the
fol lowing OEM pa rtners from Europe a nd Asia:
Ca l l ebaut (Belgium)
Ca rma (Switzerland)
Ma s ter Ma rtini (Italy)
Ul mer (Germany)
Wa nder (Switzerland)
Si ca o (Singapore)
•
Ameri can European Products offers chocola te products for pas try from Ca cao Ba rry,
Fra nce.
•
Ja gota Brothers also distributes Ca llebaut couverture chocolates.
PAGE 66
[GEEF TEKST OP]
4.
BAKERY EQUIPMENT
Ea rlier i n the report, i t was observed tha t vi rtuall y all types of bakery ma chines and
equipment used in Thailand ha ve to be imported because the country does not ha ve
the capabili ty and expertise to manufa cture these products . Some supporting
equipment made of stainless s teel, e.g., commercial refri gera tors and displa y cabinets ,
a re ma de l ocally.
There a re about 20 importers of bakery ma chines and equipment in Thailand toda y.
The ma rket s tudy found onl y one dedi cated ba kery equipment supplier – M.K.
Unigroup Corporati on Co., Ltd. The res t a re distributors of a broad ra nge of
commercial ki tchen equipment whi ch includes bakery equipment. Other bakers ’
wa res a re supplied by numerous dealers a nd a gents s cattered across the country.
The s tudy identified fi ve key suppliers tha t i mport the equipment di rectl y from
countri es of origin. These include the following:
•
•
•
•
•
Somervi lle Siam Ltd.
Metro H a nd Res Co., Ltd.
M.K. Uni group Corporation Co., Ltd.
Goodwill Distributor Co., Ltd.
Seven Five Distributor Co., Ltd.
Estimated Market Shares in 2012
Company
Somerville
Metro H & Res
M.K. Unigroup
Goodwill
Seven Five
Others
Total
2012 Sales
(M Baht)
420
350
250
60
47
873
2,000
% Share
21,0%
17,5%
12,5%
3,0%
2,4%
43,7%
100.0%
Source: Company websites, Ministry of Commerce, Interviews
Other suppliers tha t ca rry a few product types a re Sinma g Equipment, Hummel , Rami ta ,
Imperial Bakery Equipment a nd others.
4.1
Somervi lle (Siam) Ltd.
Somerville is the la rgest supplier of both local and imported commercial ki tchen
equipment to Thailand’s food servi ce and bakery i ndus try. Es tablished in 1967, the
company has become the leading producer of commercial kitchen equi pment, offering
cus tom design, manufa cture, ins tallation and after-sales servi ce to the regional food
PAGE 67
[GEEF TEKST OP]
servi ce industry. Thailand being the hub of regional opera tions, the company has also
s et up branches i n Hong Kong & Chi na, the Philippines, Malaysia and Singapore.
Over the yea rs the company has buil t up a s trong portfolio of customers throughout
the Asian region wi th recent projects incl uding hotel and ca tering fa cilities a t
Suva rna bhumi International Ai rport, fa ctories, shopping centers , depa rtment stores ,
hotels and restaura nts, and a comprehensive ra nge of ca tering and ki tchen fa cilities
for commercial applica tions. Somerville has a chieved ISO 9001-2008 certi fi cati on for
i ts range of s tainless steel tables , cabinets , sinks and s hel ves. The compa ny’s
equipment is di vi ded into 3 main product lines : the hot cooking equipment (where
ba kery equipment line is included), the cold room s ys tems and refrigera tion
equipment and s tainless s teel fabri ca ted kitchen equipment. The compa ny is an
importer of about 40 brands of bakery ma chine and equipment from the U.S.A. (e.g.,
Belsha w, Rollma tic, Vul can, Wol f, Hoba rt, etc.), France (e.g., Ca plain, Bonga rd,
Pa vailler), Ital y (e.g., Zanolli, Italpan, Effedue, etc.), Germany (e.g., Eberha rdt,
Wa chtel) and other European countries such as Spain, Denmark and Sweden.
Somerville also ca rries some brands from Hong Kong (Kolb) and China (Bea r). The
company claimed tha t its Thai opera tion ea rned 700 million baht in 2012 of which
about 60 percent was deri ved from bakery equipment line (or 21 percent sha re of
tota l bakery equipment market in the s ame year).
4.2
Metro H & Res Co., Ltd.
The second larges t i mporter and dis tributor is Metro H & Res whi ch has been engaged
in food servi ce business for nearl y 20 yea rs . Thei r wide range of servi ces i ncludes
consulta tion, desi gn, suppl y, and after sales servi ce for commercial ki tchens . Thei r
main clients include hotels , res taurants , coffee shops, fas t food outlets, bakery,
supers tores, hospi tals, clubs and indus trial canteens . The company is now the
exclusi ve distri butor of many ma jor brands tha t include: Hoba rt, Vul can, Electrolux,
Therma , Rational, Rieber, Bonga rd, etc. It is also one of the onl y two ma jor suppliers
found to be importing Dutch-made bakery equipment – Daub brand. Daub is a
producer of bread slicer, divi der, rounder a nd other types of equipment.
Sa l es of Metro H & Res in 2012 reached 350 mi llion baht – quite close to Somerville’s –
for 17.5 percent share.
4.3
MK Uni group Corporation Ltd.
MK Unigroup is a dedi ca ted i mporter and local supplier of bakery lines of equipment.
Es tablished i n 1988, i t grew from a small company to become one of the leaders in
ba kery ma chinery i ndus try. The company offers a wide range of equipments serving
small a nd medium-sized bakery shops as well as indus trial ba keries for both freshl yba ked and frozen products . MK Uni group is the offi cial a gent and dealer in Thailand of
the following brands : Rondo (Switzerland), Smeg (Italy), Sottori va (Ital y), Technoma c
(Ital y), Lian Huat (Mala ysia), Baker Ki ngdom (Taiwan) and Daiei (Japan). The company
boasts of servi ng bi g clients including Thai Ai rwa ys ca tering; hyperma rkets Tesco
Lotus, Big C, Ma kro; Mr. Donut; A-Pl us ; UFM Centre; S&P; CP Retailing & Ma rketing;
and many others . MK Uni group reported an income of 200 million baht in 2011 and
250 million baht in 2012 – wi th a ma rket sha re of 12.5 percent – making the company
the thi rd largest bakery equipment s upplier i n the country.
PAGE 68
[GEEF TEKST OP]
4.4
Seven Five Distributor Co. Ltd.
Seven Fi ve Distri butor has more than 25 yea rs experience in Thailand’s commercial
food servi ce equipment. The company is one of Thailand’s leading food servi ce
equipment and pa rts importers , servi cing a network of over 500 dealers and 25,000
cus tomers all over Thailand and nei ghboring countries. Overall thei r products include
equipments for cooking, food holding, food prepa ra tion, bevera ge, refrigera tion,
ki tchenwa re and also buil t-in s tainless steel kitchens . They servi ce a wide a rra y of
cus tomers including: dealers, gl obal chains , superma rkets , fast food outlets ,
res taurants , bakeries , pubs & ba rs, warehouse retailers , depa rtment stores and
hotels. However, despi te the breadth and depth of the scope of products and
servi ces , yea rl y turnover is onl y between 200 and 300 million baht. Of this, bakery
equipment accounts for only a bout 15 percent.
4.5
Goodwill Distributor Co., Ltd.
Goodwill Dis tributor is an importer, dealer and dis tributor of va rious ki nds of bakery,
ki tchen, beverage, mea t processing and packing ma chinery. It also imports CCTV
s ys tem. Clients include small and la rge bakeries , superma rkets , hyperma rkets ,
industrial bakeries and pi zzerias , restaura nts and la rge ki tchens throughout the
country. The company’s range of bakery equipment include pizza ovens , ba king lines ,
donut s ys tems , mi xers , pas try & bread dough ma king machines, commercial ovens
and many others . Goodwill represents in Thailand the following OEM brands : Sveba Dahlen, Glimek AB, Bea r, Belshaw, Fri ts ch, JAC, Middleby Ma rshall, Ba kers Pri de,
Bl odgett and Edhard.
The company is also an i mporter and dealer of two Dutch brands Daub (already
mentioned under Metro H and Res) and Leventi , manufa cturers of cooki ng and baking
s ys tems i ncluding commercial ovens.
Strengths of OEM Brands
Germany. Brands such as Electrolux, Winterhalter a re known for thei r cutting edge
technology, making their machinery a nd equipment durable --- ‘last a lifetime.’
Swi tzerland. Brands such as Ra tional , etc. ha ve extensi ve experience in the indus try
a nd thus very reliable.
Ital y. Brands such as Zanolli , etc. produce excellent cooking and bakery equipment to
compl ement their famous cuisine.
U.S.A. Brands such as Roll Ma tic, Ki tchen Aid, etc. ha ve a ccumula ted extensi ve
experience in this industry da ting many decades ago. Thus thei r ra nge of equipments
i s highly reliable and dependable.
Chi na . Brands made in China – but wi th European design and pa tent – a re reasonabl y
pri ced retaining the fine qualities of the European OEM bra nds.
PAGE 69
[GEEF TEKST OP]
Netherlands . OEM brands from the Netherlands are not well-known. Companies tha t
ha ve entered the ma rket by wa y of importers include Rademaker, Leventi, Daub and
Capwa y. There could be more Dutch companies but the field survey did not i dentify
a ny others.
PAGE 70
[GEEF TEKST OP]
List of OEM Brands and Type of Bakery Machines by Thai Supplier
Company
OEM Brands
Metro H and Res
Bongard
Daub
Salva
Sanden Intercool
Vac-Star
Zanolli
Rollmatic
Beech Oven
Kitchen Aid
Rondo Doge
Somerville
Somerville
Belshaw
Kolb
JAC
Jiade
Moffat
Rollmatic
Salva
Caplain
Paramount
Bongard
Eberhardt
Erika
Pavailler
Powerline
Doyon
Electrolux
Friul
Rondo
Effedue
Italpan
Sammic
Wachtel
Alto-Shaam
Bakers Pride
Eloma
Garland
Vulcan
Wolf
Hobart
Star
PAGE 71
Types of Machines
& Equipment
Specialist in bakery equipment
Bread slicer, divider, rounder
Bakery & confectionery equipment
Refrigerator, freezer, display case
Vacuum packing machine
Pizza oven
Bakery & pastry equipment
Wood fired ovens
Stand mixer
Dough sheeter, cutting & make-up line
Country of
Origin
France
Netherlands
Spain
Thailand
Switzerland
Italy
Italy
Australia
U.S.A.
Switzerland
2011 Sales
(MB)
Total 300
Stainless steel tables, cabinets, sinks,
shelves
Donut fryer
Donut fryer, bread s lice r, baking oven,
planetary mixer
Bread slicer
Bread slicer, dough sheeter
Bread slicer, convection oven
Bread slicer
Bread slicer, dough shee ter, kneader,
mixer, baking oven, electric oven,
proofer
Dough divider, dough sheete r, kneader,
mixer, baking oven, rotary oven,
planetary mixer, proofer, moulder
Dough divider, dough sheete r, kneader,
mixer
Dough divider, kneader, mixe r, baking
oven
Dough divider, kneader, mixer
Dough divider
Dough divider
Dough divider, dough sheete r, kneader,
mixer, baking oven, rotary oven
Dough sheeter
Dough sheeter, kneader, mixer
Dough sheeter
Dough sheeter
Kneader, mixer
Kneader, mixer
Kneader, mixer
Baking oven, rotary oven
Convection oven
Convection oven, conveyor pizza oven
Convection oven
Convection oven
Convection oven
Convection oven
Conveyor pizza oven, planetary mixer
Conveyor pizza oven
Electric oven
Thailand
Total 2012:
700
U.S.A.
Hong Kong
U.S.A.
China
Australia
U.S.A.
Spain
France
Australia
France
Germany
U.S.A.
France
U.S.A.
U.S.A.
Italy
Italy
Switzerland
Italy
Italy
Spain
Germany
U.S.A.
U.S.A.
Germany
Germany
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Bakery
equipment:
420 MB
[GEEF TEKST OP]
Continued
Company
OEM Brands
Somerville
Seven
Distributor
MBM
Revent
Zanolli
Bear
Bakbar
FEW
PaneM
Five LK
Ronde Doge
Middleby
Marshall
Lincat
Roband
Roller Grill
Zanolli
NTS
M.K. Unigroup
Good Distributor
Rondo
Smeg
Sottoriva
Technomac
Baker Kingdom
Lian Huat
Daiei
Sveba-Dahlen
Glimek
Bear
Belshaw
Daub
Types of Machines
& Equipment
Rotary oven
Rotary oven
Planetary mixer
Proofer
Proofer
Proofer
Proofer
Country of
Origin
France
Sweden
Italy
Denmark
Australia
U.S.A.
France
2011 Sales
(MB)
Dough sheete r, planetary mixe r, spiral
mixer, bread slice r, proofe r, dough
mixer, dough divider, deck oven and
planetary mixer
Dough sheeter
Pizza oven, conveyor pizza oven
China
Total 280
Convection oven
Countertop donut fryer, vertical toaster
Waffle machine, convection oven
Double-deck pizza oven
Deck oven
England
Australia
France
Italy
China
Laminate dough sheeting machine
Convection oven
Hot-bake shop machine ry, spiral mixe r,
bun divider & rounder, rack oven
Blast freezer for frozen dough
Biscuit baking equipment
Revolving tray oven, dough moulder
Samosa, gyoza machine
Different types of ovens
Mixers, dough dividers, others
Mixers
Donut systems
Dough dividers, dough presses, bread
slicers
Cooking and baking systems (ovens, etc.)
Bread slicers
Cooking equipment
Switzerland
Italy
Italy
Leventi
JAC
Middleby
Marshall
Bakers Pride
Gas and electric ovens
Blodgett
Commercial ovens
Edhard
Filler units, cake decorators, accessories
Source: Company websites, Interviews, Ministry of Commerce
PAGE 72
Switzerland
U.S.A.
Italy
Taiwan
Malaysia
Japan
Sweden
Sweden
Denmark
U.S.A.
Netherlands
Netherlands
U.S.A.
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Bakery
equipment:
47
Total 200
Bakery
Equipment:
100
Total 132
Bakery
Equipment:
60
[GEEF TEKST OP]
The followi ng tables provide a summa ry listing of va rious brands and countries of
ori gi n for each equipment category.
Oven (convection oven, deck oven, conveyor oven, rotary oven, pizza oven)
Country
Australia
China
England
France
Germany
Italy
Netherlands
Spain
Sweden
Switzerland
Taiwan
U.S.A.
Brand
Beech Oven, Roband
NTS
Lincat
Roller Grill
Wachtel, Eloma, Garland
Zanolli, Electrolux, Friul, Effedue, Italpan,
Smeg, Zanolli
Leventi
Sammic
Sveba-Dahlen
Rondo Doge
Baker Kingdom
Doyon, Alto-Shaam, Bakers Pride
Proofer
Country
Australia
Denmark
France
Italy
Sweden
U.S.A.
Brand
Bakbar
Bear
MBM, PaneM
Zanolli
Revent
FEW
Brea d slicer, divider, rounder
Country
Australia
China
Netherlands
Spain
U.S.A.
Brand
Moffat
Jiade, LK
Daub
Salva
JAC, Rollmatic
Mi xer (s tand mixer, planetary mixer)
Country
Denmark
France
Italy
U.S.A.
PAGE 73
Brand
Bear
Pavailler
Sottoriva
Kitchen Aid, Vulcan, Powerline
[GEEF TEKST OP]
Dough sheeter, cutting & ma ke-up l ine
Country
Australia
France
Germany
Switzerland
U.S.A.
Brand
Paramount
Caplain, Bongard
Eberhardt
Rondo Doge
Erika
Donut fryer
Country
Hong Kong
U.S.A.
Brand
Kolb
Belshaw
Ba kery & confectionery equipment
Country
Spain
Italy
Brand
Salva
Rollmatic
Hot-ba ke shop machinery
Country
Italy
PAGE 74
Brand
Sottoriva
Regulatory Environment
This section des cribes the current regula tory envi ronment in Thailand for new
businesses especially for Dutch companies tha t a re considering ma rket entry. This
includes releva nt government poli cies, i mport ta ri ff s cheme a nd legal aspects in
s etting up a l ocal operation.
Government poli cies can limi t or prevent new competi tors from entering the Thai
ba kery indus try through li censing requi rements , limi ts on a ccess to ra w ma terials,
polluti on s tanda rds, product tes ting regula tions and other issues. In the same
ma nner, the government can also a ttra ct new players to come and be pa rt of the
dyna mic i ndustry by gi vi ng incentives for i nvestors and entrepreneurs.
Licensing Requirements for Bakery Ingredients and Baked Goods
The Thai Food and Drug Administra tion (FDA) of the Minis try of Publi c Health is
responsible for regulating food control a cti vi ties such as issuance of manufacturing
li cense and importa tion li cense to manufacturer a nd i mporter, respecti vel y;
registra tion of controlled food products * before ma rketing; approval of food
a dditives to be used in foods, labeling and advertising a pprovals.
1. Manufa cturi ng Li cense. Plant la y-out is to be submi tted for approval and plant
inspection by food inspector is requi red before and manufa cturing li cense is
i s sued. This license is to be renewed every three years.
2. Importa tion Li cense. A license is requi red in order to import food into Thailand.
A li censed importer ma y import va ri ous kinds of food provi ding tha t they a re
approved by the Thai FDA. The desi gna ted s tora ge or wa rehouse has to be
inspected and approved by the Thai FDA before a license is issued. An
i mportation l icense is to be renewed every three years a s well.
3. Product Registra tion. If a food product, ei ther manufactured or imported, is
ca tegorized as Speci fic-Controlled Food, i t mus t be regis tered. Anal ysis of the
product as well as details of the process and ingredients , a re requi red for the
registra tion process and the s tanda rd of these food products ha ve to meet the
s ta ndard s pecified in the Mi nisterial Notification.
4. Labeling Approval . Some product such as dieta ry supplement a re requi red to
bea r labels containing Thai language and subjected to be approved by Thai FDA
pri or to sell in the ma rket. For food products , in general , labeling mus t follow
the Noti fications of the Mi nistry of Public Health No.194 (B.E.2544/2001).
5. Advertising Approval . Any form of advertisement for food through any media is
subjected to be approved by Thai FDA. False or decepti ve advertisement on
qua lity or benefit of food is prohibited.
*Annex 1 lists food products into three main ca tegories whi ch determi ne the registra tion or
l i censing requirements for each product. The three food categories a re:
PAGE 75
[GEEF TEKST OP]
1.
Specially controlled foods . Registra tions a re requi red for foods in this ca tegory.
Legal provisions a re related to food s tanda rd quality, s pecifi ca tions , pa cka ging,
and labeling requi rements, as well as other aspects of good manufa cturi ng
pra cti ces.
2.
Rel evant food i tems: Milk products, food a dditives, foods in sealed containers
3.
Sta nda rdi zed Foods . Standa rd foods do not requi re registra tion but thei r quality
and labeling ha ve to meet the s tanda rd requi rements as speci fied in the
Noti fication of the Mi nistry of Public Health.
4.
Releva nt food i tems : Cream, chocolate, palm oil, butter oil , fa t & oil , butter,
cheese, ma rga rine, ja m/jell y/ma rmalade in sealed containers , semi-processed
food
5.
Other Foods. Foods , ra w or cooked, preserved or non-preserved, processed or
non-processed, if not listed under ca tegory 1 or 2 (see the list in Annex 1) will be
considered as general foods . Al though registra tions a re not requi red, general
food products a re controlled and monitored wi th rega rd to hygiene, safety,
labeling a nd advertisement. Foods in this ca tegory ma y be subdi vided into (a)
foods that must bear s tandard l abels a nd (b) other general foods.
Releva nt food i tems : Bread, fla vori ng a gents , processed gelatin and jell y desserts ,
rea dy-to-cook foods, and ready-to-eat foods.
Import Quotas
Under the WTO Agreement (a gri cul tural products), the Thai government has imposed
quota on two food i tems tha t a re releva nt to the bakery indus try. These a re suga r and
dri ed skim milk.
For the yea r 2013, the i mport quota for suga r is 13,760 metri c tons ; a nd 61,840.36
metri c tons for dried skim milk.
Import Tariff Scheme
Whea t & wheat flour
The ta riff ra te on imported whea t has been zero since September 2007. Meanwhile,
the applied ta riff on wheat flour is 5 percent or 0.5 ba ht/kg (whi chever is hi gher),
except wi thin AFTA countries (Brunei , Indonesia, Mala ysia, Philippines , and Singa pore)
and ASEAN-Aus tralia-New Zealand, whi ch has been duty free since Janua ry 2010.
Whea t flour i mports from Vietnam will be duty free i n 2015.
PAGE 76
[GEEF TEKST OP]
Other ba kery i ngredients
Bel ow is a list of a d va lorem ra te on va rious bakery i ngredients i mported under WTO:
• Ba ker’s yeast
40%
• Ma rgarine
30%
• Butter
30%
• Cocoa powder
27%
• Chocol ate slabs, blocks or bars
40%
Source: Customs Department
Ba kery equipment
Import ta ri ffs range from zero to 20 percent, depending on the country of ori gin.
Thailand’s ma chinery imports from bilateral trading pa rtners Japan, China , Australia ,
New Zealand, South Korea, India and members of the ASEAN a re ta riff exempt; whils t
ma chinery and equipment comi ng from U.S. a nd WTO countries ha ve a 20 percent
i mport ta riff.
Regional Operating Headquarters (ROH)
Thailand has a hi gh chance to become the centre for regional opera ting headqua rters
(ROH) of internati onal corpora tions thanks to the forthcoming ASEAN Economi c
Community a nd the country’s strategic location in Southeast Asia.
Thailand’s advantages lie on its networks of modern infrastructures , quali ty skilled
labor, easy a ccess to ra w materials and a ttra cti ve ta x incenti ves, whi ch represent a
cos t-effecti ve inves tment for any companies seeking to cut expenses and remain
competitive a t the same ti me.
The Boa rd of Inves tment is full y supporti ve of internati onal companies settling down
in Thailand to be the hub of thei r regional acti vi ties , a nd is offeri ng an a ttra cti ve ta x
incenti ve pa cka ge that will present signifi cant cos t sa vings. As of 2012, there were 90
ROHs tha t had already been es tablished in Thailand. Refer to Annex 2 for details of
cri teri a, conditions a nd i ncentive package.
Other than regional opera ting headqua rters , the Boa rd of Inves tment is also
promoting the following related a cti vi ties wi th ta x and non-ta x incenti ves, depending
on the nature of businesses.
•
•
•
•
•
PAGE 77
Interna tional procurement offi ces, invol ving sourcing, quality control, and
pa ckaging
International distribution centers
Tra de a nd i nvestment support offices
Di s tribution centers
Res earch a nd development.
[GEEF TEKST OP]
Minimum Wage Policy
The Thai government’s 300 Baht minimum dail y wage policy tha t took effect on 1 April
2013 ha s created a l ot of ruckus from the whole spectrum of the business community.
Prior to i ts implementa tion, the mini mum dail y wa ge ranged from 159 Baht in Pha ya o
(Northern region) to 215 Ba ht in Bangkok and 221 Ba ht in Phuket.
Among ma jor concerns include:
• An i ncrease in production costs without any i ncrease i n production output;
• A s hortage of s killed labor; and,
• Mul tina tional companies wi th large labor forces a re likel y to consider inves ting
i n neighboring countries with more competitive cost s tructures.
In response the Depa rtment of Skill Development under the Mi nistry of Labor, has
announced addi tional training for new and non-skilled labor. However, the wa ge
increase is also an opportuni ty for companies in Thailand to further automa te
ma nufacturing processes.
For employees, the government, and labor unions , the hope is tha t in a time of
economic growth (5% predi cted for 2013) and low unemployment (0.6% a t the end of
2012), increased income for workers will boos t consumption and force producti vi ty
gains and innova tion. This will then dri ve a more balanced, moderni zed, and
competi ti ve economy and help Thailand a void the much-dreaded middle-income tra p.
Indeed, one of the commonl y s tated goals of the new mi nimum wa ge is tha t i t will
push Thai workers to raise thei r own skill levels in prepa ra tion for increased labor
competition with the opening of the ASEAN Economic Community on 1 Ja nuary 2016.
Advoca tes of the poli cy also antici pate tha t the moderni za tion of Thai businesses and
increases in producti vi ty will lead to a reduction in the level of geographical dispari ty
i n Thailand, with fewer workers forced to move to Bangkok for higher wages.
There are fea rs on the pa rt of some employers tha t increased labor cos ts (the new
mi nimum wa ge applies to every empl oyee in Thailand, rega rdless of age, sex, indus try,
or na tionality) will a ffect al ready s truggling SMEs and could lead to employee la yoffs
or even force some SMEs out of business. This could, in turn, nega ti vel y i mpa ct
employment, increase unskilled workers ’ vulnerability, raise the cost of li ving, and
worsen poverty in the country. Many employers fear tha t Thailand’s international and
regional competi ti veness will be negati vel y affected by increased labor cos ts, which
coul d trigger Thai businesses to employ greater numbers of informal labor.
Mi grant workers from Thailand’s nei ghbors , pa rti cula rl y Cambodia , where the dail y
mi nimum wage is barel y US$2.03 and Myanma r where the dail y minimum wage is 58
cents , a re expected to come in even grea ter numbers , a ttra cted by hi gher wa ges. In
fa ct, some Ca mbodian fa ctory owners a re complaining tha t they a re now fa cing a
l a bor s hortage as l ocals move to Thailand for better wages.
PAGE 78
[GEEF TEKST OP]
To obviate experiencing anti cipa ted problems , a number of Thai companies ha ve
s ta rted moving thei r inves tments to Myanma r and Ca mbodia – for the same reason as
ci ted above. To add insul t to injury, a number of new investors that were eyeing
expa nsion in Asia had bypassed Thailand al together and opted to set up opera tions in
La os and Ca mbodia.
Other Government Procedures
Current a pproval process for forei gn employees normall y takes about three to si x
months whi ch is considered too long by internati onal food servi ce opera tors . The
industry is clamoring for speedier and shorter approval of forei gn workers by the
government.
They also would like to i nclude in job contra cts a non-competi tion clause which
prohibi ts a pers on from working for another fi rm in the same indus try within a yea r
after resigna tion. When employees lea ve the company, they ta ke wi th them ‘gua rded
reci pes’ of the bakery or restaurant.
The local s taff shorta ge in the food indus try can be a ttributed to uni versity gradua tes ’
changing a tti tudes as they prefer to run thei r own businesses ra ther than working for
others .
PAGE 79
Overview of Dutch Bakery Industry
Introduction
The Dutch bakery indus try i ncludes indus trial bakeries , a rtisan ba keries, confectionery
and bread and pastry shops. The number of bakeries has declined the last deca des. In
1960 the Netherlands counted more than 10,000 companies a cti ve in the bakery
industry, by now onl y 2,200 a re left. This trend is still ongoing; however the a vera ge
size of the companies is actuall y increasing. Scale is importa nt; therefore the indus try
encounters va rious mergers a nd a cquisitions.
Companies a cti ve in the Dutch bakery i ndus try provide a wide range of products to
ba kers, ca tering outlets , superma rkets and consumers . These include ingredients for
ba keries, final products and bake off products to superma rkets. The Dutch bakery
i ndustry i s vi sualized i n the chain below.
Fi nished product
Intermediate product
Semi -finished product
Trends in the Dutch market
In 2011 Dutch consumers spent more than € 5.1 billion (incl uding ta xes) on bread and
pas try, nea rl y as much as in 2010. Brea d products a ccounted for the ma jori ty of these
expenses (see expendi tures ). Superma rkets had the la rgest ma rket sha re (63%)
fol lowed by bread a nd pastry s hop (28%).
The Dutch bakery i ndustry s hows the following trends:
1. Rising commodi ties pri ces : In recent yea rs the cos ts of commodi ties a re rising.
As a resul t of shorta ge in the world ma rket, procurement cos ts a re increasing
PAGE 80
[GEEF TEKST OP]
and producers cannot totall y pass on this increment in the selling pri ce. This
leads to s maller margins in the production chain and pa rties a re therefore
forced to work more efficiently.
2. Economies of s cale: As mentioned ea rlier there is a trend of s caling and merging
and a cquisi tions ongoing in the bakery indus try, which is visible worl dwide.
Pa rtiall y to work more effi cient and to downgra de opera tional cos ts . In the last
decade mos t of the merging and acquisitions in the bakery industry took place in
Europe (755) and Northern-Ameri ca and Ca nada (326) (Ba kkers wereld, 2012).
Si nce 2006 there is a rela ti ve hi gher number of cross border merging and
a cquisi tions deals than before. It is expected tha t in the coming yea rs there will
be a vas t increase in merging and a cquisitions from wi thin the Asia-Pa cifi c
region. This increase will be partl y focused on acquisitions in developed
economies.
3. Interna tionaliza tion: In segments where ‘time to ma rket’ is less crucial there is a
trend visible where bi g buyers decide to buy international. Eventuall y this might
l ead to more cross-border deals (see trend merging and acquisitions).
4. Regula tions : Hi gher levels of quality, more laws and regulations, certi fica tions
and audi ts lead to necessary i nves tments . For s mall-scale companies these costs
a nd i nvestments can have a s ubstantial i nfluence on the company results.
5. Demand for l uxury products : There is a growing demand for l uxury and
convenience products in the Dutch ma rkets . Pre-baked, packed and ready-to-eat
products a re getting more popular.
6. Heal thy a nd safe products : There is a growing awa reness for products whi ch
focus on healthy li ving. Examples are products wi th less salt (& fa t), gluten free
products a nd products focusing on a s pecial diet.
7. Cha nging pa ttern in consumption: Consumers tend to eat more out of home
tha n they used to do a few years a go.
Opportunities and threats
As a resul t of the above-mentioned trends , companies a re confronted wi th a changing
competitive landscape.
Opportunities
• Di et products, using l ess salt, s ugar free products and bread with added vitamins
• Res ponsible produced, biological a nd a uthentic products
• Out of home products
• New products a nd diversification of the product range
• Growth expected in the bake-off subsector
PAGE 81
[GEEF TEKST OP]
Threa ts
• Sca l ing is getting more important: ‘eat or get eaten’
• The tra ditional clientele is getting older
• The di versi fi cation in bread and pastry products a t supermarkets has influence
on the ma rket s hare of the artisan bakery
Dutch presence in Thailand
The overall presence of Dutch bakery-rela ted companies in Thailand is limi ted with
onl y a few pla yers ha ving entered or supplied Dutch bakery products. At present we
ha ve identi fied two Dutch companies tha t ha ve established thei r opera tions locall y
and a few companies tha t ha ve local presence wi th their main opera tions s till in the
Netherlands.
Mos t of those companies a re known for suppl ying products, mainl y ingredients and
equipment, and have set up l ocal offices for distribution purposes.
One of the most notable companies tha t supplies equipment is Rademaker BV, a
premier manufa cturer of bakery equi pment from the Netherlands . Their l ocal a gency
representation in Thailand functions as a dis tributor and sales offi ce. Besides thei r
agency in Thailand they also ha ve regional presence wi th sales offi ces and a gencies in
Si ngapore, Malaysia, Indonesia, Taiwan, Australia a nd Vi etnam.
Another nota ble company tha t supplies ingredients is Koninklijke Zeelandia Group
BV, whi ch through its subsidiaries, engages in the development, production, sale, and
dis tribution of ba king ingredients for the bread and confectionery ma rkets. Al though
they do not ha ve local presence, PT Zeelandia Indonesia distributes thei r products to
several countries , among others : Singapore, Mala ysia, Vietnam, The Philippines and
Tha iland.
Then there is Koniklijke FrieslandCampina BV tha t supplies consumer products such
as dairy-based bevera ges, infant & toddler nutri tion, cheese and desserts in many
European countries, Asia and Afri ca . Thei r products are also supplied to professional
cus tomers , i ncluding cream and butter products to bakeries and cateri ng companies .
They a re acti ve in Thailand but ha ve yet to expand thei r opera tions here outside of
thei r core-business - dairy.
Steensma (Thailand) Co., Ltd., is a manufa cturer of preserved/candied fruits based in
Chia ng Mai . The fa ctory in Thailand onl y produces ra w ma terials for the pa rent
company Steensma B.V. l ocated in the Leeuwa rden, Netherlands . Promoted by the
Boa rd of Inves tment, Steensma (Thailand) mainl y produces fermented papa ya and
calabash. These products a re suita ble for the food industry, i ncluding bakery. At
pres ent, Steensma (Thailand) exports 100% of their products to the Netherlands.
Siam Makro PLC is enga ged in a cash and ca rry wholesaling/retailing of dry goods as
well as fresh items wi th 61 s tores na tionwide. It also opera tes an in-s tore ba kery shop
in all branches . Thei r in-s tore bakery is a ‘side’ business wi th onl y 1.3 percent of thei r
total sales. However i t sees an a vera ge growth of 20 percent ea ch yea r, owing to
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increase in consumption of bread, cakes and pas tries mainl y by Thai cus tomers .
Es tablished in 1988 as a Dutch chain of wa rehouse clubs , the ma jori ty of Dutch-owned
s tocks was acquired by CP Al l Pl c in April 2013, a nd is now majority Thai-owned.
Nonetheless the company retains the inherent characteristics of a s uccessful Dutch
bus iness operation a nd will continue to be known as such for years to come.
Overall the presence of Dutch compa nies a cti ve mainl y in the bakery indus try is still
rela ti vel y insi gnifi cant. However there certainl y is potential for the above-mentioned
companies to expa nd further into Thailand. The main reason for this is the observed
growth, expansion and interes t of exis ting compa nies acti ve in bakery-related
segment. A company worth mentioning to support this is DKSH (Thailand) Ltd, the
leading Ma rket Expansion Servi ces Group wi th a focus on Asia tha t has recentl y
commissioned a s ta te-of-the-a rt innova tion center to introduce new concepts and
i ngredients to the confectionery a nd bakery i ndustry i n Thailand.
Refer to Annex 3 for a more detailed discussion on this chapter.
PAGE 83
Business Opportunity Analysis
The Thai bakery sector presents several business opportuni ties whi ch could be
grouped as follows:
‒ Tra de opportunities;
‒ Investment opportunities; a nd,
‒ Technical cooperation opportunities.
1
Trade opportunities
1.1
Import of raw materials/ingredients
Thailand is self-suffi cient for gra nulated suga r a nd fa t (butter/ma rga rine/shortening);
but there a re s till some imports of these products . For the other ba kery ingredients ,
the country is highl y dependent on i mports , whi ch crea tes vast opportuni ties for
forei gn-based manufacturers to s upply the market.
There is grea t potential to sell hi gh-gra de ingredients to hotels . For ins tance,
Ananta ra Ba kery of the hotel chain uses onl y hi gh quali ty ingredients imported from
Europe and the U.S. for ma king breads , cakes and pastries for distribution to the food
servi ce and ca tering sectors . Luxury hotels wi th in-house bake shop number about
500 in Thailand; and they make freshl y baked bread and bakery products dail y for
s ervi ng guests, retail sale and / or delivery to outside customers.
To be a cceptable to ba kers , ‘new’ ingredients , or new brand of i ngredients needs to
undergo a lengthy process of product tes ting. Normally the ingredient needs to be
tes ted a t the client’s R&D lab where all product quality tes ts and anal yses a re
conducted. The process ma y take months a nd even a yea r but the end-resul t can be
rewa rding. The brand (supplier) will be a trusted pa rtner forever. While product
quality is the number one cri terion in selecting a new s upplier or brand, pri ce is also a
key fa ctor in the final evalua tion. Thus the new product will ha ve to pass the product
qua lity s tandards and also be competitive with other brands a vailable i n the market.
Whea t and wheat flour
While the bakery sector mainl y uses locally-milled flour, the basic raw ma terial which
is whea t, is all imported. At present, whea t exports i nto Thailand origina te mostl y
from the U.S., Aus tralia, and Canada whi ch ha ve been the country’s long-term trading
pa rtners for whea t. Opportuni ties for other countries to export wheat into the
country a re l ow.
On the other ha nd, Thailand s till has to import whea t flour because exis ting
producti on volumes do not full y meet local demand. Some 200,000 to 250,000 tons of
whea t flour a re imported ea ch yea r worth 3 to 3.5 billion ba ht. In the bakery sector,
medium to high-grade types of whea t flour a re imported from the U.K. U.S.A., Russian
Federa tion and Europe (e.g., Belgium, Germany, France, Ital y, Ukraine). Leading
industrial bakeries, hotels and ca tering companies look for high quali ty whea t flour
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used in va ri ous appli ca tions such as brea d, pas tries, and cream fillings . This is clearl y
a n opportunity for wheat flour producers overseas.
Yea st
Thailand has a few producers of yeast and yeast extra cts used in food, pha rma ceuti cal
and animal feed industries ; but the volume and quali ty for bakery appli ca tions do not
meet the industry’s requi rements . Therefore the country i mports mos t of i ts
requi rements for ba ker’s yeast and ina cti ve dried yeas t used in bread making and
other bakery prepa ra tions . Ea ch yea r the country i mports yeas t products worth 400
million baht per yea r. There is a mi x of suppliers from Asia (Vietnam, China, Japan)
and the West (U.S., Belgium, France, Germany, Ital y, the Netherlands , etc.). Some
OEM brands whi ch ha ve local presence a re Bruggeman, Pura tos, Pakma ya, Ins tafern,
Bi o Springer, AB Ma uri, Lesaffre, Agrano, etc.
Food a dditives, enhancers, i mprovers, flavors a nd a roma
This group of bakery ingredients is vi rtuall y all imported for lack of local production
capability. Annual demand for these hi ghl y-specialized and functi onal products in the
ba kery indus try is worth a round 500 to 600 million baht. Some of the global OEM
bra nds or compa nies tha t suppl y the ma rket incl ude: IREKS, Pura tos , Solec, Li tesse,
Fi brisol, Viscotex BAK, DSM Food Specialties, Firmenich.
Cocoa powder/Couverture chocolate
Demand for cocoa powder and couverture chocola te in blocks (whi te, milk, da rk) is
worth a round 800 to 900 million baht per yea r. There a re two or three cocoa powder
blenders in Thailand whi ch mainl y suppl y to the food servi ce indus try; but couverture
chocol ate is imported entirely.
‒ For cocoa powder, top fi ve exporters to Thailand in 2012 were Indonesia,
Mala ysia, Singapore, France and Netherlands wi th a combined value of 1,048
million baht a ccounting for 97 percent of total imports . Import from the
Netherlands was valued at 40 mi llion baht.
‒ For chocolate and other food prepa ra tions containing cocoa, top exporters in
2012 were China , Mala ysia, Indonesia, Ital y, Belgium, Swi tzerland, U.S. and
Japan a ccounting for 76 percent of total imports worth 3.8 billion baht. Import
from the Netherlands was worth 61 million baht a ccounting for less than 2
percent.
Some of cocoa powder/chocolate suppliers to Thailand include Colatta (chocola te
compounds), Cocoa Dutch (cocoa powder), Callebaut (couverture chocola te), Ca rma ,
Ma s ter Ma rtini, Wander, Ul mer, Sicao, Aalst, Ca cao Barry, etc.
1.2
Import of baking equipment
Except for some s tainless steel ca binets and refrigera ting equipment, pra cti call y all
types of large and small bakery equipment used in the country a re i mported. Ma jor
importers ca rry a broad range of commercial kitchen & bakery equipment i ncluding
va rious types of oven (convection ovens , deck ovens , conveyor pi zza ovens , wood-
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fi red ovens ), proofers , dough sheeters /cutting/ & ma ke up line, mi xers , donut fryers ,
hot ba ke shop machinery, a nd bread slicers/dividers/and rounders.
2010
Unit
8438.1010.001 Bakery machinery
1,427
8417.2000.000 Bakery ovens
3,951
Sub-total
5,378
8438.2010.000 Machinery for the 80
manufacture
of
confectionery, cocoa
or chocolate
HS Code
Product Description
Total
5,458
M Baht
275.7
121.8
397.6
220.6
2011
Unit
4,120
1,041
5,161
58
618.2
5,219
M Baht
415.7
270.5
686.1
62.9
2012
Unit
2,157
1,273
3,430
327
M Baht
477.2
317.4
794.5
257.1
749.0
3,757
1,051.6
Source: Customs Department
For bakery oven and other types of ba kery ma chinery, Thailand’s import during 20102012 i ncreased from THB398 million in 2010 to THB795 million in 2012 for a yearl y
growth of 41 percent; in terms of unit, the number decreased from 5,378 to 3,430
units impl ying tha t the a verage uni t pri ce of bakery equipment increased during the
three-year period. This could mean tha t larger equipment was i mported i n 2012
compa red to 2010 or 2011.
Among OEM suppliers of ba kery equipment in Thailand include Wa chtel , Eloma and
Ga rland (Germany); Rondo Doge (Swi tzerland); Zanolli, Electrolux, Smeg (Ital y);
Leventi (Netherlands); Sveba-Dahlen (Sweden); NTS (China); Daub (Netherlands); and
ma ny bra nds from Australia, Spain, England and France.
Despi te the emerging presence in Thailand of equipment made in China , the ma jori ty
of industrial and retail baker chains still prefer equi pment made in Europe – percei ved
as reliable, durable a nd highl y-effi cient. Expansion of in-store bakeries in dis count
s tores and supermarkets presents a promising upwa rd trend in demand for baking
equipment. Moreover, the rising trend of bake-off concept in convenience s tore
outlets , e.g., 7-Eleven’s Kudsan Bakery & Coffee, will dri ve the need for more ovens
a nd baking utensils.
“With a suitable partner / supplier who already has the experience and clientele
base in the bakery and food service industries, foreign OEMs can thrive in this
environment. It would be a good start to approach Metro H and Res or Somerville.”
Dech Sangsrijan
President, Thai Bakery Association
1.3
Import of packaging solutions
There is a ni che demand for i mported specialty flexible pa cka ging solutions used for
desserts such as moon cakes . For ins tance, S&P Syndi ca te, the leading ba kery &
res taurant chain i mports all of i ts plasti c pa cka ging for moon ca kes from Japan – as
there is no local supplier that can produce a ccording to the compa ny’s ri gid
specifi ca tions : flexible pa ckaging tha t maintains freshness of moon cake for a number
of weeks.
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Other pa ckaging ma terials tha t tend to be imported include clip lock and bread bags
(by President Bakery); for other baked goods such as sna ck bread, the company
s ources l ocally from i ts trusted suppliers s uch a s Dai-Ichi Pa ckaging.
1.4
Other opportunities
Aside from the abovementioned product ca tegories , the ba kery sector offers a range
of other opportuni ties , for ins tance i n servi ces (e.g., traini ng, educa tion) and IT
solutions . The sector experiences shorta ge of skilled manpower because new
gradua tes prefer ma naging thei r own business ra ther than working in hotels and
res taurants to gain experience. A solution could be training people that ha ve the
interes t, but lack proper educati onal ba ckground, in ba kery s chools and training
centers outside the a cademic s ystem.
Sea mless intera ction of production processes in the ba kery indus try is crucial – and an
IT solution such as integra ted automa tion s ys tem for bakery production processes
could be the answer. This would cover both softwa re and ha rdwa re tha t would
automa te the producti on process – from receipt of raw ma terials / ingredients to
producti on and pa cka ging to finished product s hipment. La rge-s cale indus trial
ba keries a re known to al ready employ automa ted s ys tems for the production process ;
but a full y integra ted s ys tem that deli vers ma ximum quali ty at reduced cos t ma y still
be la cking in most fa ctories . Other IT solutions sui table for s mall and medium-sized
bus inesses a lso have good prospects i n the bakery s ector.
2.
Investment opportunities
Investment i n the Thai bakery s ector ca n ta ke several forms:
‒
‒
‒
‒
Acqui sitions/ Joint venture/Greenfield i nvestment
Fra nchising
Regi onal Operating Headquarters
Technical Cooperation
For inves tors who a re l ooking for business expansion in Southeast Asia, Thailand is a t a
vanta ge posi tion. The country enjoys a s tra tegi c loca tion and serves as a ga tewa y into
the heart of Asia – home to what is today the largest growing economic ma rket.
Poli ti cal s tability has increased and Thailand’s economi c momentum has s trongl y
improved after severe external shocks . However, future poli ti cal and commercial risks
will largel y depend on domes ti c poli ti cal developments and global economi c clima te
as Thailand’s economy remains pri ma ril y export-dri ven. Annex 4 provides a brief
di s cussion of ‘why Thailand’ could be the best choice for i nvestment.
2.1
Acquisition/Joint venture/Greenfield investment
Gi ven the growth potential of the Thai bakery s ector a nd Thailand’s increasing
pos ition a s ‘regional hub,’ Dutch s trategic i nvestors s hould consider entering into
equity pa rtnerships with l ocal counterparts through a cquisition, joint venture or other
s tructures.
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One i mmediate opportunity i s setting up a local blending facility for premixes a nd
other fl our mixes. The Thai bakery i ndustry ma inly i mports premixes, ca ke mixes and
other fl our mixes from overseas suppliers. This market is worth about one billion baht
per yea r. The blending factory ca n s erve not only the domestic market but the whole
of ASEAN. Tra ding between ASEAN countries is highly conducive because of zero
ta ri ffs on commodities tra ded between member nations.
The blendi ng operati on could also appl y for promotional incenti ves from the
government’s Boa rd of Inves tment (BOI) as this falls under the Lis t of Acti vi ties Eligible
for BOI Promotion, in pa rti cula r, Secti on 1: Agri cul ture and Agri cul tural Products, s ubsection 1.11 manufa cture or preserva tion of food or food ingredients, using modern
technology (except drinking wa ter and ice cream).
Depending on the production technol ogy a nd techni cal specifi ca tions of the finished
products , the flour blending opera tion ma y be classified under ei ther of the following
s ub-sections:
1.11.3 Ma nufacture or preserva tion of food made from rice or cereal; or
1.11.6 Ma nufacture of food i ngredients.
These acti vi ties are further classified as ‘pri ori ty’ a cti vi ties by the BOI – whi ch gi ves the
fol lowing i ncentive package to promoted companies:
1. Exempti on of import duty on machinery, regardless of zone (location);
2. Ei ght-year corporate i ncome ta x exemption, regardless of zone (location);
3. Other rel evant l ocation-based i ncentives.
2.2
Retail Bakery Franchising
The success of retail chains in Thailand’s bakery la nds cape ca nnot be overemphasized.
From homegrown entrepreneurs (e.g., S&P, Coffee Beans by Da o, Little Home Bakery)
to regional pla yers (e.g., BreadTalk, Secret Recipe) and gl obal investors (e.g., Au Bon
Pain, Mr. Donut, Dunkin’ Donuts ), a vi d consumers could not seem to ha ve enough of
them – alwa ys exci ted to try new sweet a nd sa vory crea tions , anyti me, anywhere.
The business is worth more than 9 billion baht per yea r and s till growing. In fact, retail
ba kery cha ins are the fastest growing segment in Thailand’s bakery s ector today.
Krispy Kreme, the donut fra nchise from the U.S., is the mos t recent franchise opera tor
tha t entered Thailand’s bakery indus try in 2010. Sales in 2011 registered more than
three-fold increase over the i nitial yea r of opera tion; whereas net profi t grew more
than four times . At present Krispy Kreme has seven stores in Bangkok, and has plans
to open more branches ea ch yea r – in line wi th the pa rent compa ny’s global s tra tegy
to nea rly double the number of i nternational s tores from 460 to 900 by the yea r 2017.
Why i s this strategy working?
“You give credit to the brand. Where we go people are lined up to be there. It’s
amazing. You wouldn’t think Thailand would even be aware of it, but for many
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weeks there was always a line at that shop. When you look at the potential in
places like China and India, it’s pretty enormous. It’s kind of exciting to see that
even though it’s the biggest part of who we are, it’s nowhere near a mature
stage. There are years and years of growth out there for us.”
Jim Morgan
CEO, Krispy Kreme Doughnut Corp.
Thus there a re opportunities galore for retail fra nchising. But as in any kind of
business, for every opportuni ty there comes risk. Some pointers in a successful retail
opera tion include:
‒ Fi rs t and foremos t, the key is loca tion, loca tion, loca tion! A retail franchise is
dri ven by s olid, consistent traffi c. Chosen loca tions or terri tories should support
a reta il franchise. Some competition is fi ne, but not too much.
‒ Second aspect is sma rt choi ce of bakery delights . It is great to be crea ti ve and
innova ti ve, but Thais generall y would not like the taste of licori ce in their bread
or pa s try! A s urvey of consumer ta stes a nd preferences would be useful.
‒ Another i mporta nt aspect is the empl oyment fa ctor. There is a need to hi re,
train and retrain – as well as la y-off employees that underperform. Human
resources a re a big pa rt of opera ting retail franchise concept, and becomes even
more as the fra nchise expands to opera te mul tiple loca tions. Finding and
keeping quality and loyal employees can be a challenge – especiall y in
cos mopolitan Bangkok where the younger set, while eager to lea rn, can be also
s wa yed easily by the ‘greener pasture a t the other side of the fence.’
We expect the Thai ma rket to be recepti ve for typi cal Dutch franchise concepts like
‘het Stoepje,’ ‘Bakker Bart’ a nd others.
2.3
Regional Operating Headquarters
Dubbed the ga tewa y to Asia, Thailand is in the bes t posi tion for global companies to
set up thei r Regional Opera ting Headqua rters (ROH). Compa red wi th Singapore and
Hong Kong, the cos t of doing business in Thailand is still much cheaper; besides the
ki ngdom offers equally modern, i f not more advanced, infrastructure and reasonabl y
skilled labor force. Moreover, the Boa rd of Inves tment offers a ttra cti ve ta x incenti ve
pa ckage to promoted ROH.
For exa mple, MNCs such as DSM Food Special ties could consider reloca ting their ROH
to Tha iland.
2.4
Technical cooperation
The Netherlands is one of the world’s la rges t a gri cul tural exporters and this is an a rea
wi th opportuni ties for closer co-opera tion with Thailand beca use the country is
s trongl y dependent on food exports and can take advantage of Dutch expertise and
techni cal coopera tion. Food processing, pa ckaging, food control and logisti cs a re all
important a reas for possible future coopera tion. This could well be extended to the
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ba kery indus try whi ch is constantl y looking for innova ti ve and crea ti ve products to
a ttra ct a huge customer base.
For these kinds of coopera tion, the Dutch government provi des subsidies to both
Dutch company a nd its local (Thai) pa rtner. Annex 5 provides brief des cripti on of
va rious subsidy progra mmes provided by the Dutch government, e.g., Pa rtners for
Interna tional Business, Ma tchmaki ng Fa cility, Pri va te Sector Inves tment Progra m
(PSI), Fund for Dutch Enterprises (FOM) a nd others.
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