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Category: Food

Retail News Asia is committed to providing both local and global retailers with the latest Food and Food & Beverage news throughout the Asian market. This on a daily base.

  • Thai farmers receive government loans to stabilize market prices

    Thai farmers receive government loans to stabilize market prices

    Thailand is the world’s second largest rice exporter, and it is confronted by a fall in prices that has mostly affected the rice farmers, with prices hitting a thirteen months low. Now the Thai Government has taken action and has proposed a set of measures with would help alleviate the pressure from the country’s rice farmers.

    According to Thailand’s Minister of Commerce Apiradee Tantraporn, rice farmers will receive 10,500 baht, or 299 US dollars, for every tonne of white paddy stored. The measure is aimed at all Thai farmers, with those who store Thai Pathum Thani fragrant rice to receive 11,300 baht, that is 322 US dollars, per tonne.

    “The overall budget is set at 18 billion baht ($514 million). This is to help relieve grievances farmers are facing while the main crop is being harvested,” Mrs. Apiradee Tantraporn told journalists.

    Last week, the government announced it would offer loans worth 1,3 billion US dollars to jasmine rice farmers, if they store the grain for at least six months to slow down market supply.

    Another measure the government has taken is easier access to open rice paddy markets. Mrs. Tantraporn said this is in order to boost competition among rice farmers and for their benefit, in the middle of this period’s price depression. According to state officials, in the province of Udon Thani’s retail centres and PTT gas stations, markets will be opened in the next weeks. Here the farmers will be allowed to sell their rice and negotiate the prices directly with the buyers, circumventing the need for intermediaries.

    Action is also taken in Lopburi and Sukhothai, where the government and other agencies have joined forces in order to promote and allow farmers to sell their rice directly. In Sukhothai, milled rice was on sale at up to 40% discount prices, while in Lopburi, the Si Sa Ket police was put together a market for farmers to sell the rice to their families and police staff.

    In total, there will be no less than  109 open markets organised in 44 provinces, all with the sole purpose to to help farmers sell rice paddy directly to consumers.

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  • Finnish Hartwall Original Long Drink now in Hong Kong

    Finnish Hartwall Original Long Drink now in Hong Kong

    Since the summer of 2016 there is new beverage on the market in Hong Kong that originates in Finland – the legendary Hartwall Original Long Drink. This world’s first long drink was originally developed for the 1952 Helsinki Olympics, a very innovative product back then, to say the least: a cocktail in a can, easy to serve and ready to drink.

    It has been a Finnish success ever since but only as recently as in 2015 also been taking Sweden by storm.

    “Hartwall Original Long Drink was supposed to be served only for the Olympic visitors, but since Finns fell so much in love with it, the production has continued ever since. Moreover, it even created a whole new category of ’long drinks’ in Finland – better known as ’lonkero’ among the Finns”, says Eeva Ignatius, Brand Manager of the Hartwall Original Long Drink.

    Hartwall Original Long Drink is a mix of Finnish premium gin and grapefruit soda. “The gin manufacturing process is a carefully cherished artisan work, and the drink is still produced according to the original recipe from 1952.

    All the gin ingredients are hand-selected, and the final quality is ensured with triple filtering. The original taste, a mix of gin and grapefruit, is totally unique and cannot be found anywhere in the world.”

    Year after year, Hartwall Original Long Drink rules the sales statistic as Top 1 alcoholic beverage in Finland. “It is a true Finnish icon and many Finns consider it as our national drink. Even the package symbolizes our national heritage as the blue and white colours come from the Finnish flag. The thin white stripes on the other hand symbolize the running track of Helsinki Olympic stadium and remind us of the history.”

    Now Hartwall Original Long Drink has started to conquer the world, with the long-waited sales started in Sweden in April 2015, resulting in immediate success. At the same time, Hartwall signed a distribution contract in the Netherlands and Belgium.

    “Hartwall Original Long Drink was originally invented to be shared with the world and now it is about to happen”, Ignatius concludes.

    Now the Finnish “lonkero” is sold in 900 7-Elevens around Hong Kong, as Hartwall earlier in 2016 started cooperation with major distributors in Japan, Taiwan and Hong Kong.

    In In Taiwan, the local retail store chain Simplemart added Hartwall Original Long Drink to its selection in its 500 stores.

    “We were not expecting such huge success. In Hong Kong, for instance, many shops are struggling to meet the high demand. The sales figures of long drink are ten times higher that those of a famous international beer brand that was launched using the same retail channel,” says Matti Ristola, Director of Export at Hartwall.

    hartwall-long-drink2

    “The unique taste, great story and easy-to-identify container of Hartwall Original Long Drink have become popular across the world. Furthermore, the long history and strong success of the beverage in the Finnish market give it credibility; before winning over consumers, we must attract distributors to the product,” says Eeva Ignatius.

    “Hartwall has a fine history as a provider of Finnish products that spans 180 years. Finns love our brands, and our foothold in the Finnish market is strong. I believe that many of our high-quality brands that are successful in Finland have what it takes to succeed also abroad. The success story of Hartwall Original Long Drink is a good example of this. Exports are an important part of our growth strategy, and we will continue to investing in them in the future,” Hartwall CEO Kalle Järvinen says.

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  • Instant noodles sales slumps in China

    Instant noodles sales slumps in China

    Instant noodles, once an easy meal for millions of Chinese workers, is getting less popular. Workers scrapping instant noodles are seen as a symbol of the chaining lifestyle of the working class. The sales of instant noodles fell 12.5 percent last year. The King of noodles in China, Taiwanese Tingyi, known for its brand Master Kong (Kong Shifu), was evicted from the Hang Seng Index on the Stock Exchange of Hong Kong in September. Its profits declined by 60 percent last year. According to Bloomberg, this is a classic example of the economic and demographic transition in China.

    Between 2003 and 2008, the instant noodle market has exploded in China, from $ 35 billion to 59 billion yuan ($ 4.7 billion to EUR 7.9 billion). At the time, Chinese growth exceeded 10% of the average (14.2% in 2007). The industry flourished with the boom of construction, heavy industry, and the low-end factories, which needed cheap labor. The coast provinces attracted millions of migrant workers, who relied on these convenient meals.

    Unfortunately for the noodle industry, China has developed. Today, the 25 cents noodle is less exciting. Because of the policy of one-child, the Chinese population of working age began to decline in 2010. And by 2015, for the first time in 30 years, the population of migrants has declined, after having exceeded 250 million.

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  • Mobile marketing cuts printing cost for Pizza Hut

    Mobile marketing cuts printing cost for Pizza Hut

    With over 70 restaurants in the city, half of Pizza Hut’s business in Hong Kong is dine-in. This gives the diner a great incentive, but at the same time, huge pressure to improve its customer experience.

    In 2014, Pizza Hut started its mobile marketing campaign project. The primary objective was to better serve its customers. Additionally, it wanted to cut out a huge portion of its printing costs on direct marketing materials.

    Pizza Hut has been a customer of Salesforce. “When we started the mobile marketing campaign project in 2014, however, we didn’t know that Salesforce Marketing Cloud could help us to manage marketing campaigns,” said Ravel Lai, group IT director at Jardine Restaurant Group Hong Kong and Macau, in an interview with Computerworld Hong Kong. Jardine Restaurant Group operates Pizza Hut and the KFC restaurants throughout the city.

    Lai’s team studied different marketing solutions and decided to adopt Salesforce Marketing Cloud. “We considered other marketing tools such as those from Oracle and Adobe. We had even approached IBM, but they didn’t have a marketing solution,” he recalled.

    Evaluating a marketing solution was different from that of an IT solution. “This was not a traditional ERP solution, but something new to the IT team. We invited the marketing people and bosses at Pizza Hut and KFC to view the solution demo, and then we let everybody vote,” Lai said.

    Extra 7-10% revenue

    “We were not trying to solve a particular technology problem, but to improve on our marketing campaign management,” said Lai.

    In the past, Pizza Hut used to mail cash coupons to its customers. This involved different stages of production, which were all time-consuming, such as graphic design and printing, before it can finally distribute and mail out the coupons.

    With the new solution, conducting mobile marketing campaigns has become much easier. Now, Pizza Hut would only need to involve an in-house graphic designer to design the digital marketing material, which could be ready for distribution in just two hours.

    “Last year on one rainy morning, I asked my team to send a mobile message along with a coupon to our customers. After preparing the customer segmentation, we decided to send the message to 15,000 housewives and office workers at around 11:00 am to catch up with lunchtime at noon,” said Lai. “The results were good, as we generated an extra 7-10% in revenue for the day.”

    90% printing cost savings

    In the past, Pizza Hut used to distribute paper coupons to customers. The printing and mailing costs involved had been 10 times higher than if the marketing campaigns were conducted on Salesforce Marketing Cloud.

    “This is a very good tool for us to do the job. Instead of sending physical leaflets, we now use the mobile marketing platform, which incurs just 10% of the original printing cost,” said Lai.

    “Besides, the replacement of physical leaflets with mobile marketing messages makes Pizza Hut more environmentally friendly, too.”

    Express ticket

    According to Lai, many restaurant groups have developed their own mobile applications, but their primary function is largely limited to remote ticketing. “When everybody does the same thing, we ask ourselves, ‘How should we do it differently?’”

    To distinguish its restaurant mobile app from the competition, Lai borrowed the idea of “Fast Pass” from Disneyland theme park. A Disneyland Fast Pass allows a visitor to shorten his or her waiting time by getting a pass in advance for selected attractions, and return within specific timeframes.

    Using Pizza Hut HK’s mobile app, a user can obtain a queue number before they even reach the restaurant. This cut down the time and money required for us to issue queue numbers.

    By doing proper customer segmentation on Salesforce Marketing Cloud, Pizza Hut can send messages to customers whose last visit was over one month. The typical message would read: “Dear customer, you visited us one month ago and purchased a meal in our restaurant. We are so sorry that you had to wait for 15 mins. Here is an express ticket for you so you can jump queue upon your next visit. The express ticket is good for two weeks,” Lai suggested.

    Loyalty points reward system

    Pizza Hut HK’s mobile app also provides a points rewarding system. With every HK$5 of purchase at the restaurant, a customer gets one point. “With 50 points, our customers can redeem four pieces of chicken wings,” Lai said.

    Pizza Hut’s loyalty points are transferrable. “When you come to the restaurant with your friends, you and your friends can combine the points together to redeem the reward, for example, 50 points for a pizza,” said Lai.

    Social CRM

    With Salesforce Marketing Cloud, Pizza Hut’s mobile marketing campaign platform has enabled the restaurant group to tap on social CRM. “When I sold the idea of social CRM to the management, I emphasized not just on the benefits, but the improvement on the customer journey,” Lai said.

    Regarding Pizza Hut’s implementation of mobile marketing campaign project, Lai summed up, “If I do it now, I am the pioneer. If I do it later, I would just be a follower.”

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  • Zhouheiya fast food chain to list in Hong Kong

    Zhouheiya fast food chain to list in Hong Kong

    The initial public offering of Zhouheiya, a Hubei province-based fast food chain known for its spicy-braised duck neck and other ready-to-eat snacks, opened for subscription in Hong Kong, looking to raise up to HK$3.3 billion ($425.7 million).

    The braised food producer and retailer, scheduled to make its trading debut on Nov 11, will sell 424 million shares at an indicative range between HK$5.8 and HK$7.8 apiece.

    Founded in 2002 in Wuhan, Hubei province, Zhouheiya beefed up its business footprint in 38 cities across 12 mainland provinces with 715 self-operated retail stores.

    Executive Director Hao Lixiao told a news conference in Hong Kong on Monday that the company is always looking to expand into the Hong Kong and Macao markets. However, he didn’t reveal a detailed timeline, adding that the firm still deals with the local licenses, not to mention that product research and the buildup of sales networks also takes time.

    Zhouheiya’s Hong Kong IPO highlighted an industrywide trend of mainland duck-food manufacturers floating public shares. Competitors like Jiangxi Huangshanghuang Group listed in Shenzhen back in 2012, while Hunan Juewei has been stuck for more than two years in the Chinese mainland’s clogged pipeline of IPOs.

    “Such a trend indicates that growth of mainland duck-food chains has somewhat run into a bottleneck which pushes them to raise capital via public listings as a growth booster,” said Zhu Danpeng, a researcher at the China Brand Research Institute.

    With rival Hunan Juewei being trapped in a big logjam of mainland IPO filings, Zhouheiya’s decision to join in a cluster of mainland food companies floating in Hong Kong appears to be a time-saving move.

    Choosing Hong Kong as a listing destination helps companies jump the long IPO queue in the Chinese mainland, but low valuation in the Asia’s financial hub remains a sure thing. In particular, Hong Kong investors still view food stocks listed there as generally expensive options, which may explain why some believe shares of Zhouheiya are priced a bit too high, said Hannah Li, a Hong Kong-based strategist with UOB Kay Hian.The IPO logjam that has long beset mainland catering companies accessing mainland capital markets was spotlighted when high- and mid-end restaurant chain Xiao Nan Guo Restaurants Holdings, and hotpot chain Xiabu Xiabu turned to Hong Kong to list in 2014.

  • Record demand for New Zealand avocados in Korea

    Record demand for New Zealand avocados in Korea

    The death of Thailand’s long-serving monarch may be affecting the buying behaviours of Thai consumers but export group leader AVOCO says any shortfall of New Zealand fruit sold will be more than made up in AVOCO’s other markets.

    Thailand is in official mourning following the death of King Bhumjbol Adulyadej on October 13. Popular tourism events have been cancelled and entertainment has been banned for 30 days as Thai people closely observe this period as a sign of respect to the 88-year-old monarch who ruled for seven decades. With fewer people dining out and industries temporarily shutting down, export activity to Thailand has slowed, says AVOCO and AVANZA’s market manager for Thailand, Carwyn Williams.

    “Sales have definitely changed and we are keeping a close eye on what impact this event will continue to have on avocado export volumes to Thailand,” says Mr Williams. “Correspondence has been difficult as business takes a back seat for Thai people during this time. This illustrates the importance of having a diverse range of export markets and the silver lining for us is that we can direct more fruit to our strong performing Korean market.”

    Shipments of New Zealand avocados to South Korea have reached an industry high with 209,000 trays planned for export this season. Worth about $6 million to the total industry, it is three times the volume exported last year.

    The greater volume reflects the industry’s larger national crop in 2016-17 but more importantly the work AVOCO has put in, under its AVANZA brand name, to promote New Zealand avocados and drive consumption in Asia.

    After a short crop of 2.5 million trays last season, about 5.1 million trays will be exported in 2016-17 – exceeding the previous record of 4.5 million trays two years ago.

    AVOCO will handle the bulk of New Zealand’s crop and this season will export about 3.1 million trays, with 83% destined for Australia. The remaining 17% will be sent to various Asian markets, including Japan, Thailand, Singapore, India and Korea and marketed under the AVANZA brand.

    AVANZA is responsible for 85% of all NZ exports to Korea this season, shipping more than 7000 trays a week over a 25-week supply window. Compare that to last year when AVANZA’s total contribution was just over 65,000 trays.

    Changing diets and promotion of avocados as a healthy food option means the superfood is in demand more than ever in Korea, which has a population of 50 million people. Korean imports of avocados between January and August this year from all origins, including Mexico and the US, was 347,000 trays – an 83% increase on avocado imports during the same eight month period in 2015.

    It’s likely New Zealand avocados will make up about half of all avocado imports this year to Korea where AVANZA market manager Martin Napper says retail and wholesale buyers can’t get enough of the fruit.

    “Korea has been a rapidly growing market for avocados. Two years ago, New Zealand shipped close to 72,000 trays to Korea – anymore and the market could tip over very quickly. But this year, we’ve received unprecedented interest. Avocados have just hit a nerve.”

    Korea, unlike other Asian markets, prefers large size fruit, which gives AVOCO a valuable supply avenue outside Australia for fruit above a certain size profile. The larger size premium fruit (16/18/20/24ct) is retailing for NZ$4 per piece this season which Mr Napper considers to be a “reasonable price point”, given the nature of the product and the inclusion of duties.

    New Zealand’s Free Trade Agreement ratified with Korea in September last year saw the 30% tariff on New Zealand avocados drop to 24% at January 1. The tariff drops 3% annually until it is eliminated in 2024. Mr Napper says that while the duty is still a hindrance to AVANZA, currently accounting for up to US$10 for every bulk carton shipped to Korea, demand for avocados continues unabated.

    “There’s recognition that healthy food items command a premium price and consumers are prepared to pay that.”

    While other New Zealand exporters have shipped fruit to Korea in small volumes in recent years, AVANZA has led the way in developing the market, partnering with similarly health-focussed brands at retail events designed to raise awareness about the health benefits and versatility of New Zealand avocados. This year, they’ve partnered with Korea’s second largest dairy company, Maeil Dairies, to cross-promote smoothies using avocados and soya milk. By the season’s end, Koreans will have taken part in more than 1000 in-store demonstrations promoting AVANZA avocados since 2014.

    AVANZA has also collaborated in the market with the Avocado Industry Council which has helped to promote New Zealand avocados on a website designed specifically for a Korean audience. The NZAIC Korean website offers recipe ideas and fruit handling information to inspire and educate the Korean consumer. It has also engaged Korean celebrity chef Hong Shin Ae to front tasting events and meal demonstrations using avocados.

    “The AIC has also undertaken social media research to better understand the buyer behaviours of consumers throughout Asia. That information is fed back to us to tailor our own marketing strategies to reach our targeted consumer, which in Korea is a woman, aged 20-45. She values health and beauty and makes all the household buying decisions.”

    Additionally, AVANZA has made efforts to educate retailers handling the fruit. Technical consultants Colin Partridge and Jerome Hardy have visited Korean retailers to instruct them on techniques to ripen fruit correctly which have been critical to boosting sales. Supermarkets have been encouraged to put ripe, ready-to-eat fruit on display alongside hard, green fruit – a strategy that can result in a 300% increase in sales because people buy more often and consume the day of purchase.

    “Displaying ripe fruit is a step forward by retailers who would never have done that even two years ago due to perceived wastage. But they recognise now that avocado is an important retail category for them and any wastage will be more than offset by increased sales,” says Mr Napper.

    “It’s one of the experiences we’ve taken out of our market presence in Japan where New Zealand avocados are more established. We’ve noticed the difference these strategies have but timing is everything and Korean retailers are recognising now that avocados are a growth category for them and they’re worth the investment.”

    Nearly 800 avocado growers across Northland and the Bay of Plenty supply AVOCO. Harvesting got underway in the Far North in late-August and will continue until February.

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  • Chinese firm plans to process re-fresh cod products for Shanghai retail

    Chinese firm plans to process re-fresh cod products for Shanghai retail

    Beiyang Jiamei Seafood, a Chinese processor switching its business from exports to imports, plans to expand into re-fresh products for the domestic market.

    The company, which is based in Qingdao, hopes to start processing re-fresh, packaged cod products for retail in Shanghai early next year, said Peng Song, its general manager.

    “We have in mind selling re-fresh cod and redfish. I think cod, both Atlantic and Pacific, can be very big in the Chinese market,” he told.

    If this model works, it could then be applied in other Chinese cities, he said. “I think we would be the first company in China to do this,” he said, during the China Fisheries & Seafood Expo.

    The company is also starting to sell frozen cod products into Chinese retail, wholesale and foodservice.

    “For the big, longline Pacific cod, we cut it into steaks. For the Atlantic cod, we make loins, portions and J-cuts,” he said. “I do think this item will boom in China, in a very short time.”

    Chinese in coastal cites do eat Pacific cod, he said, as the same species that is caught by Russians and American vessels is also in Chinese waters.

    But, the species is not sold as “cod” and consumers are unfamiliar. “The catching is inconsistent, so people do not like to promote it. The species may not be new, but to name it Pacific cod, Atlantic cod, that is new,” he said.

    The company is also putting the Marine Stewardship Council (MSC) logo on its cod retail bags.

    “We now have most of our products MSC approved. I think that is the future,” said Song.

    “The MSC is also fully traceable, from catch-to-plate. That is a powerful message for the Chinese consumer, who is worried about food safety,” he said.

    Promoting the traceability angle of the MSC logo is the best way to expand in the China market, he said, due to the concerns over food safety in China.

    Shift to domestic sales

    Beiyang Jiamei now generates around $35 million from domestic sales, as well as the same amount from re-processing and exporting.

    For the re-processing business, cod, haddock and arrowtooth flounder are the main species, he said.

    The company only started doing domestic sales in 2011. Beiyang Jiamei is selling into wholesale, into retail and foodservice, and also via online stores on JD.com and Tmall.

    Beiyang Jiamei’s main brand is “Sea Mix”, but it also has another for families, “Dinosaurs”. Also, the company is launching a high-end brand, “Prime Catch”, for crab and other more expensive items.

    A big focus of the domestic business, including e-commerce, is coldwater shrimp. Beiyang Jiamei imports around 5,000 metric tons of coldwater shrimp a year.

    Due to the quota cuts for coldwater shrimp in Canada, the company is now importing more vannamei from Ecuador and also red shrimp from Argentina.

    “We use coldwater shrimp to open the door to the supermarkets. Then, we try and introduce our other products to them. Coldwater shrimp will remain the most important item to us,” he said.

    “Needless to say, the high prices of coldwater shrimp mean vannamei has taken a share of the market,” said Song.

    “The price is RMB 91.50 ($13.53) per kilogram. This is the same price as L1 [Argentine shrimp] or 30/40 from Ecuador,” he said.

    “In China, if you entertain a guest, you want the bigger size to create a good impression”, meaning the vannamei and Argentina shrimp has a strong appeal, he said.

  • Russian chocolate, beer and baby food companies aim to conquer Asia

    Russian chocolate, beer and baby food companies aim to conquer Asia

    Every time Chinese President Xi Jinping visits Russia, he asks for some Russian ice cream. As a result of this craving, Russian President Vladimir Putin presented a whole box of ice cream to his Chinese counterpart at the G20 summit.

    Chinese tourists share their leader’s love for Russian ice cream so much that there are rumors that China is planning to build its own Russian ice cream factory. Consumers from across Asia are increasingly buying Russian food products thanks to a recent growth in exports from Russia.

    Chocolate

    Alyonka, Babaevsky and Rossyia chocolate bars, which are popular among tourists, are now being exported to Asia.

    “Alyonka is the most popular brand of chocolate that is being sold in China, but Babaevsky and Vdohnovenie chocolate bars are also becoming popular,” says Denis Usalev, marketing manager of Uniconf, which owns all three brands, and is the largest confectionery holding in Eastern Europe.

    He adds that sales of Alyonka grew six-fold year-over-year in China in 2015 and the company expects to see even more growth in 2016. Chinese consumers can buy Russian chocolate through ecommerce platforms as well as in local shops.

    Russian companies are also looking beyond China, and are obtaining Halal certification to compete in Muslim countries in Asia.

    Waffles and biscuits

    The Russian confectionary industry is developing new products specifically for the Asian market to cater to local tastes.

    “Korovka waffles with milk and chocolate fillings is our main driver of sales in China,” says Usalev. “Also around 50 per cent of Alenka biscuits are exported to China.”

    The Jubilee sugar cookies brand was launched in early 1913 and gradually became very popular in Russia. In 2007, Mondelēz International Inc acquired the brand and renamed it to belVita Breakfast. In 2015 belVita Breakfast biscuits were introduced in China and Indonesia . The company has become a global breakfast icon, with sales growing at about 20 per cent annually over the last few years.

    Healthy snack bars

    The organic food market segment has been growing rapidly for years. In 2015, Take a Bite was launched in Hong Kong, China and Singapore. The Russian company relied almost exclusively on retail sales in local super markets, but today buyers can purchase Take a Bite from the TMALL online store.

    Another Russian healthy food brand ECO botanica, which is owned by Uniconf, is also looking to tap into the Asian market.

    “Sales in China grew tenfold in the first nine months of this years,” says Usalev. Next month we will launch the ECO Botanica store on the Alibaba platform.”

    Baby food 

    The leader in the baby food market in Russia, Frutonyanya has also entered the Chinese food market.  “We’ve already received two 40-feet containers of Frutonyanya products and are now waiting for the third one,” says Artem Zhdanov, co-founder and marketing director of UChina, which is helping the Russian baby food company enter the Chinese market.

    “The first consignment went to our Chinese partners, distributers, trade platforms and a food exhibition to enhance brand recognition and to promote the brand name.”

    The company has more than 200 products including fruit drinks, jellies, desserts, fruit puree, milk and milkshakes. It will launch a separate line for pregnant women and breastfeeding mothers.

    Beer

    Baltika, a favorite of former U.S. Ambassador to Russia Michael McFaul, became the first Russian beer to be exported to Asia. It is now available in Vietnam and Malaysia.

    The Russian beer brewer, Ochakovo established licensed production in Japan in 2016. Since July 2016, the company has been supplying three types of canned beer. Ochakovo has also launched beer exports to China.

  • Vinamilk enters Thai market

    Vinamilk enters Thai market

    The Vietnam Dairy Products Joint Stock Company (Vinamilk), Vietnam’s largest milk producer, has selected Top Most Enterprise (TME) – a Thai company – to distribute Vinamilk products in Thailand, a dairy product market worth about $1.7 billion/year.

    Siwat Thamaranothai, TME’s managing director, told the Bangkok Post that he suggested TME serve as the Thai distributor after enjoying Vinamilk yoghurt during a trip to Vietnam.

    The company launched Vinamilk yoghurt in the Thai market at selected modern retail chains such as Lawson convenience stores and The Mall and Foodland supermarkets three months ago.

    This product is priced at 17-19 baht, higher than other brands. TME expects to cover all distribution channels in the second quarter of next year.

    Most Enterprise also plans to launch Vinamilk UHT milk.

    Vinamilk was the only dairy company in Vietnam to make the list of the Top 300 most dynamic companies in Asia, as recently voted upon by the Nikkei Asian Review.

    Its products are now sold in nearly 200 stores in 45 provinces in Vietnam and in more than 43 countries, such as Cambodia, Thailand, South Korea, Japan, China, Turkey, Russia, Canada, and the US.

    The company has also bought a 22.8 per cent stake in Miraka from New Zealand, 70 per cent in Driftwood in the US, and 51 per cent in Angkor Milk in Cambodia, as well as a subsidiary in Poland as a gateway to Europe.

    It plans to build a new milk powder plant in Vietnam next year and will expand production at its New Zealand plant, which is operating at full capacity.

  • Packaged food in Thailand – impulse and health to drive premium segments

    Packaged food in Thailand – impulse and health to drive premium segments

    After a period in the economic doldrums, Thailand looks set to be a potential opportunity for domestic and international food manufacturers marketing premium wares. Poorna Rodrigo surveys what is driving demand for premium products in south-east Asia’s second-largest economy.

    A string of political crises may have weakened consumer spending in recent years but Thailand’s economic growth accelerated in 2015 and the country’s GDP in the first half of 2016 was faster still, suggesting south-east Asia’s second-largest economy could again present a lucrative opportunity for premium packaged food markets.

    And there is optimism among industry watchers about demand for packaged premium brands despite the possibility the wave of bomb blasts this summer could affect tourism, which is a driver in the trend of premiumisation and some concerns over the levels of household debts in Thailand.

    The appetite for packaged premium brands remains strong and is expected to grow – and trends including impulse and health are expected to be key to the development of the more premium parts of the market.

    Overall, packaged food sales (retail and foodservice including premium) soared from US$8.06bn in 2011 to US$11.07bn in 2015, according to data from UK-based market researcher Euromonitor International, with sales projected to continue to grow through 2020, albeit at a slower pace.

    The rate of growth in the sales of more upmarket products is predicted to rise, according to Yongyut Ongwattanapat, a Bangkok-based senior manager at US market research company Nielsen. “Premium food grew at four per cent, while the non-premium category grew around six per cent in 2014. Premium food sales are expected to grow around six to seven per cent within the next two years,” Ongwattanapat says.

    Reflecting the growth in the size of Thailand’s middle-class, the increase in premium goods sales is shaping Thailand’s fast moving consumer goods industry, Ongwattanapat explains. One common theme persuading consumers to pay more for premium foods is the ability of brands to “convey functional benefits” Ongwattanapat says. For example, products claiming to have lower or less sugar, high in fibre and protein, organic, and 100% juice content are becoming more appealing to Thai consumers.

    A spokesperson from Euromonitor says the urban lifestyle of many modern Thai consumers is encouraging them to spend more, despite higher living costs and debts. For example, World Bank data says out of 67.9m people overall, nearly 10m live in the capital Bangkok. New product launches are well received, as “adventurous tastes drive consumer willingness to spend on new experiences,” the spokesperson says. “Impulse and indulgent packaged food products” have been instrumental in boosting retail value sales growth, the spokesperson adds.

    Fonterra, the New Zealand dairy giant, has a growing business in Thailand, with its foodservice-oriented business, Anchor Food Professionals, central to its strategy for growth in the category. Anchor Food Professionals supplies a range of dairy products to foodservice and convenience store outlets in Thailand. That part of Fonterra’s operations in Thailand “has seen double-digit growth in the past few years”, Paul Richards, managing director of Fonterra’s branded business in the country, says. Richards points to one category benefiting from growing demand for convenience. “There’s huge potential in the premium segment of the bakery category where more Thai consumers with higher incomes demand greater variety and western-influenced options,” Richards says.

    Looking at other factors industry watchers see as driving demand for premium food, data from UK-based market intelligence firm Mintel suggests wealthier consumers are becoming more interested in ethical food. According to Mintel’s 2016 Asia and Pacific (APAC) consumer lifestyle study, this year 31% of urban Thai consumers prefer products that carry an environmental certification from a credible government or non-profit organisation, Jane Barnett, the firm’s head of insights for South Asia-Pacific  says. This means having a “stamp of approval” from a known organisation works well with consumers, Barnett says, adding this cohort of consumers is willing to pay more.

    She continues: “Forty per cent of metro Thai consumers are willing to pay a premium for products that are safe to use, such as products that have no additives and 27% would pay a premium for products that are natural for example organic or uses pure, naturally-sourced ingredients.”

    A growing fondness for healthier food is also opening doors for foreign investors: 66% of metro Thai consumers hope to achieve eating a healthier diet in 2016, according to Mintel data. Barnett believes “more opportunities for imported health foods in the market will arise”.

    According to Dee Richmond, general manager of AgriSource Company Ltd, a food and agriculture firm based in Bangkok, there is increased interest in quality from Thai food manufacturers in US pulse-based food products such as peas, beans, chickpeas and lentils

    “We have not yet seen very many new products yet, but there are a record number of research and development trials with US pulses taking place in snacks, canned foods, and other value-added products,” she says. “We are also seeing increased availability of US pulse ingredients, including pulse starch, pulse flours, and pulse protein.” Dry pulses provide a hard-to-beat nutritional profile for food processors looking for healthy ingredients, being rich in protein, soluble and insoluble fibre, antioxidants, vitamins, minerals and low in fat and oil content, she adds.

    This premium health-based positioning is even extending to snacks. Bangkok-based snack maker Hanami Foods Company Ltd, a subsidiary of Friendship Company Ltd, sells the Snack Jack extruded green pea snack, while Modern Food Industries (India) Ltd, based in Thailand’s central Pathum Thani province, also produces green pea-based snacks.

    However, the growth in demand for more premium products has also seen some food companies misusing ‘premium’ labelling, forcing the Thai ministry of public health to implement additional controls, according to Siradapat Ratanakorn, a regulatory affairs consultant and food technologist at the Bangkok-based south-east Asian leading law firm Tilleke & Gibbins International.

    “If a food company wishes to claim ‘premium’ on a food label, it needs permission from the Food and Drug Agency, who decides these requests on a case-by-case basis,” Ratanakorn says. For organic products, certification from an official government agency body or approved by an authorised agency official is necessary, he adds.

    Thailand has lagged the growth of some of its neighbours in recent years but there have been signs the country’s economy is getting stronger. There are some concerns about whether Thailand’s high levels of tourism will be affected by the bomb blasts this summer, while household debts could dampen growth. But the continued growth in the country’s urban middle class looks set to drive incomes and, trends including impulse and health, could present opportunities at the more premium end of the market.

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  • Pernod Ricard TR sees Q1 improvement in Korea

    Pernod Ricard TR sees Q1 improvement in Korea

    According to Pernod Ricard travel retail witnessed an “improving trend in travel retail Americas” with a “return to growth [and] better performance from duty free across zone, product mix and pricing.”

    However, the travel retail division admitted that it battled a ‘difficult environment’ in Asia for Q1 ‘impacted by tough commercial negotiations’. More positively the same division said that Korea duty free appeared to show improvement.

    A sales decline for travel retail in Europe was apparently caused by weakness in Eastern Europe; something which the company has been battling for the last few years.

    Pernod-Ricard-Q1-FY2017

    Highlights from the Pernod Ricard Q1 FY2017 results. The company does not share its travel retail results, but does provide some commentary on the division.

    Group wide, For FY17, as indicated in September, Pernod Ricard expects good sales growth to continue in USA, India, Jameson and innovation. It also expects sales to improve vs FY16 in China, Absolut and Chivas.

    There will be a ‘continued focus on the operational efficiency roadmap and priority brands and innovations’ and ‘continued deleveraging and strong cash flow generation’.

    Pernod-Ricard-house-of-brands

    Pernod Ricard shares its strong lineup of strategic brands (for the whole group).

    For FY17 the company is looking for organic growth in profit from recurring operations between +2% and +4%.

    *Shipments brought forward from July to June2015 ahead of back-office mutualisation between Ricard and Pernod on 1 July 2015.

  • First Tous les Jours Mongolia store opens

    First Tous les Jours Mongolia store opens

    Korean bakery Tous les Jours has opened its first stores in Mongolia as it broadens its Asian footprint.

    Two Tous les Jours Mongolia shops have opened in Ulaanbaatar in what the company sees as another step in its plan to become a global bakery brand.

    Tous Les Jours Mongolia 2

    Besides Mongolia, the brand’s parent CJ Foodville has 270 Tous les Jours stores in seven countries: Cambodia, China, Indonesia, Malaysia, the Philippines, the US and Vietnam.

    It is the first international bakery to open in Mongolia, where K-pop has amassed a considerable following, raising the profile and acceptance of Korean brands in general – especially music, food and fashion.

    Tous Les Jours Mongolia 3

    A local master franchise has been appointed to lead the brand’s roll-out

    The Korea Times reports that the company’s first Mongolian store in downtown Ulaanbaatar opened on October 31, drawing more than 2000 customers and generating over US$8600 in sales.

    A CJ Foodville spokesman said Tous les Jours opened its second shop at the Shangri-La Mall this week, attracting twice the number of customers it expected.

    tous-les-jours-mongolia

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  • Indonesia en route to popularize tropical fruit

    Indonesia en route to popularize tropical fruit

    Thousands of farmers under East Kalimantan farmers group Gapoktan find it unfortunate that people outside Indonesia are missing out on their home-grown fresh and juicy mini papayas, bananas and dragon fruits.

    So far, most of their fresh fruit products are only consumed by locals buying from nearby markets due to a lack of infrastructure, making it expensive to deliver fruit across the country, let alone export them.

    Indonesian fruit exporter EK Prima Ekspor Indonesia, a subsidiary of the United Arab Emirates’ retail giant LuLu Group International, knows firsthand how selling prices at the consumer level end up depending more on transportation costs than on production costs.

    “Transportation — from farmers to warehouses to airports and finally to the destination country — is very expensive. If our unique fruit doesn’t appeal to consumers, we could lose out to other countries, especially if they can produce similar fruit for cheaper prices,” said Irawan Santoso, head of the fruit and vegetable division of EK Prima.

    Indonesia also has mangosteens, rambutans, snake fruits, jackfruits, soursops, breadfruits, guavas and starfruits that grow in the tropical country, but they are not frequently consumed globally or even domestically.

    The government aims to boost tropical fruit production by expanding land for fruit plantations while also improving infrastructure and transportation systems to decrease high distribution costs, as part of efforts to be the biggest tropical fruit producer in Southeast Asia by 2025 and in the world by 2045.

    President Joko “Jokowi” Widodo acknowledges that this is no easy task, especially with farmers’ preferences to use land for high-yielding commodities, such as palm oil, rather than fruit, which takes time to return on investment. Poor infrastructure has also driven up logistics costs for years.

    “If we can have 14 million hectares of oil palm plantations, we should also be able to have that much land for fruit,” Jokowi said during the opening ceremony of the four-day Fruit Indonesia Festival 2016 in the Jakarta Convention Center parking lot on Thursday. The President handed out various tropical fruits to children to remind people of the “love local fruit” movement.

    “If you see a lack of supporting infrastructure that could hamper distribution, please let us know,” he told the audience consisting of scientists, fruit planters as well as local and international trade delegates.

    To expand plantations, provincial administrations have been instructed to provide local farmers with 5 to 50 ha of land for fruit planting per business unit, as part of the bigger goal to provide 400,000 ha of land in Java, Kalimantan, Sulawesi and Sumatra.

    The program started with 100,000 ha in cooperation with state-owned companies. State plantation firms under PTPN also asked to start cultivating their under-utilized land for fruit production.

    “The state firms have been very enthusiastic to give sections of land for fruit plantations. They are used to producing palm oil, rubber, tea and other commodities but not fruit. So, a new management specializing in horticulture needs to be formed,” Bogor Agriculture Institute (IPB) rector Herry Suhardiyanto said.

    IPB is now studying a possibility to form another state company to develop horticulture based on the State-Owned Enterprises Ministry’s request.

    The business community is hopeful that the vision of becoming the world’s largest tropical fruit producer will be honored over time.

    “Let us not change the policy and vision every time we change presidents,” said Karen Tambayong, head of horticulture development with the Indonesian Chamber of Commerce and Industry.

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  • How Nestle plans to grow in travel retail

    How Nestle plans to grow in travel retail

    Nestle’s travel retail unit is a US$100m-plus business, which generates the lion’s share of its revenue from confectionery. Stewart Dryburgh, who heads the company’s travel retail business, says the sector, while a small part of the Nestle empire, presents a strong growth avenue for the group. However, Dryburgh acknowledges it is also a competitive and fast-paced channel and those companies that want to cash in need to navigate some unique challenges. Katy Askew spoke to Dryburgh to find out more.

    Nestle generates more than US$100m in annualised revenues through its dedicated travel retail unit, which has gained market share since the world’s largest food maker set it up in 1999.

    The KitKat maker is aiming to capitalise on the expansion in international travel retail, which it expects to see as air travel continues to grow. “There were roughly 3.45bn individual airport travellers last year. Roughly split 50-50 between domestic and international. And that is projected in the next ten years to basically double to over 7bn by 2025,” Stewart Dryburgh, the general manager of Nestle’s international travel retail unit, stresses.

    However, this expanding consumer base makes the high-traffic sector a highly competitive one in which to operate. “Most people want to play here that is for sure,” Dryburgh says. “You have got at the moment [almost] 3.5bn people travelling through airports every year. And if you take the top 50 airports – the likes of Heathrow, Frankfurt, Singapore, Dubai, JFK – internationally there are 1bn travellers going through those airports every year. So there is a huge audience there in what is a relatively limited number of locations that they are going through.”

    Standing out in this competitive environment – especially because consumers are not expressly travelling though terminals to shop but as part of their journey – is one of the key challenges for companies operating in the sector.

    “That is a perpetual challenge no matter what channel you are in. A brand has to work hard to understand consumers needs and remain relevant. I have worked in big domestic markets like the UK, in emerging markets like India and I have looked after some of Nestle’s biggest brands including KitKat. No matter where you sit it is a challenge. Our challenge in this particular industry is to engage in a way that is relevant to the moment that consumers are experiencing. And that is a journey.”

    Of course, there are different types of journey, Dryburgh continues. This gives rise to two distinct need-states Nestle wants to meet through its travel retail range. “It may be a business journey and if they are heading out they might want to take a gift to somebody who they are going to meet, or they might be heading back and want to take something to their loved ones. You might be going off for a long weekend and you want something more snacking oriented. There is a mix if you come very specifically into the confectionery world of gifting chocolate and consumption chocolate. The whole world of millennial consumer and the emerging middle-class consumer in Asia and LatAm continually creates opportunities for us. Then it is understanding how they can be relevant.”

    Within the travel retail channel, chocolate and confectionery “comfortably” account for 80% of Nestle’s sales, Dryburgh notes. “The main category focus is chocolate and confectionery for the simple reason that is one of the key categories within the [travel retail] industry,” he observes.

    The pressure cooker atmosphere of the channel means that trends born out in travel retail frequently develop ahead of the winder market, Dryburgh suggests. “I think as a whole this industry has done things that have been pushing the envelope. I think the challenge is always to stay ahead because often what you see being executed in this industry at certain premium price points then becomes translated into domestic markets. The continual challenge is to stay ahead of that curve.”

    Dryburgh points to Nestle’s decision to expand its Cailler brand via the travel retail channel as part of a push to internationalise the 200-year-old brand of premium Swiss chocolate.

    “We have been focusing in particular on Cailler as a first instance. It is one of the strategic priorities that has been called out by the organisation. Cailler is the original Swiss chocolate brand. It is the home of chocolate in Switzerland. It dates back to 1819 and Francois-Louis Cailler who set up the company making chocolate in the factory where we are [still] manufacturing at the foot of the Alps.

    “This is an undiscovered diamond that Nestle has been sitting on. I would say, Lindt & Sprungli have done an outstanding job of driving the premium end of Swiss chocolate without a doubt, I take my hat off to what the team from Lindt have done. However, Nestle is sitting on the first and the original Swiss chocolate. It is a strong brand in Switzerland, but we have not done a good job of internationalising it.”

    This year, Nestle kicked off “activations” first in Swiss airports, Geneva and Zurich. The company then piloted the brand in Dubai and Singapore, the “two big hub airports heading east”. Dryburgh says this roll out has gone “extremely well”. Marketing has included virtual reality point of sale activities to communicate the brand’s heritage and build a rapport with consumers.

    Rolling out the brand to travel retail is a “premier example” of how Nestle’s travel retail business works to add value to the industry, Dryburgh says. “The way you add value is giving consumers a reason to buy because they are going to get something they can’t get at home. That is one of the things that people look for when they are travelling, part of the experience.”

    Ultimately, Nestle does plan to broaden Cailler’s base, but the company does not intend to roll the brand out in traditional retail channels. “We are going to go high-end with this particular brand. I think the focus is very much on leveraging the travel retail channel as a spearhead in giving consumers the chance to engage with the brand in the first place and then encouraging them out.”

    While confectionery sales dominate Nestle’s travel retail sales, Dryburgh says the trend-setting nature of the sector and evolving consumer demand mean in the longer term the company is likely to capitalise on opportunities to exploit other categories.

    “You will be aware of Nestle’s journey in the direction of health science, delivering nutrition via food and health benefits via food, which is something that has historically always been part of what food brings you. Over the centuries people have understood the more holistic benefits that food can bring when consumed in the right way. That is also where our company is heading. For the future, [our travel retail business] tends to be far broader than confectionery and it will be far broader than that as consumer needs change with ageing populations. In the short term it is still going to focus on confectionery,” he says.

    Nestle is also taking advantage of some niche opportunities in travel retail that are created by local conditions, Dryburgh continues. For example, the company has developed “interesting” business selling milk powders in the Middle East.

    The company spotted an opportunity to cater to “blue collar workers” who have come from the Indian sub-continent to places like Dubai as part of the city’s construction boom. “These individuals have a once a year trip home and the opportunity to sell them milk powder was a very interesting one… What we discovered along with the airport authority was the opportunity to sell a relatively bulky, relatively heavy product like 2 kgs of milk powder in the airport duty-free store. The reason the consumer wanted to buy it there was because they didn’t have to put it in their checked luggage and they could carry it on the plane. It is a very simple little story but it is a hugely successful business. And that is about understanding your local consumer and local needs. That is something that is relatively unique to the Middle East.”

    While Nestle picks up local opportunities such as this, they are not the “core thread” of the business because it would “create such complexity that it wouldn’t be worth focusing on,” Dryburgh adds.

    Nestle’s focus on international brands, such as KitKat or Cailler, does not mean the company does not tailor its offering to cater to local preferences. “You have to deal with regional taste and you have to understand who is flying where. Often, in the bugger hub airports certain airlines fly through certain terminals… You have to tailor your offering subject to the terminal and the airport. If you have a brand that is a global proposition – like KitKat or Cailler – well that proposition is quite universal it is just a function of how you communicate or engage with consumers around it.”

    Those operating in the travel retail sector face some unique channel-specific challenges. According to Dryburgh, while branded manufacturers still have negotiations around pricing “the environment you work within and also the margin structures” are specific to the channel.

    “This is different because of the nature of the industry. Effectively, the way the industry is set up now, the airport authorities as a general rule of thumb earn around 70% plus of their revenue comes in now from non-aeronautical sources,” Dryburgh explains.

    “The very clever game that the airport authorities play is for the main duty-free store they auction the space off. The retailers come and tender for a five or ten-year contract. But it is a very different world to a domestic supermarket world… retailers either win the tender or they don’t, you are either in or out. That means they have to put a very specific sum of money on the table as a guaranteed payment to the airport on an annualised basis. And therefore they demand extremely high margins from brand owners to be in the stores.

    “The big four categories – tobacco, alcohol, perfumes, cosmetics – they are all offering 80-85% margin that is being earned by the retailer. But the retailer is having to earn that money because they are paying extremely high rental costs to the airport authorities. The airport authorities are the ones making the money, and they are ploughing it back into infrastructure because the whole sector has seen a dramatic growth curve. More people are flying so they have to invest in the infrastructure.”

    Overall, Dryburgh says the underlying growth drivers for travel retail are “extremely positive”. However, the sector does face exposure to “very big peaks and troughs” that track ahead of the economic growth curve.

    “For example, when 9-11 happened people tended to travel a little less and people weren’t shopping. The same when the SARS epidemic hit SE Asia back in 2003. That basically stopped people travelling in Hong Kong, Bangkok, Manilla. The industry collapsed. The Singapore industry collapsed. You can get some significantly negative downturns.

    “You can also get some significantly positive upswings. When the globalisation trend was at its peak you had some more Russians travelling, more Brazilians travelling, more Chinese travelling. There were some extremely positive growth years for the industry. It tends to follow a more exaggerated curve than global GDP growth – you get very strong years and negative years. It is more of a roller coaster in that sense.”

    The Nestle executive concedes this aspect of travel retail makes the business more difficult to manage. “If you have a crystal ball and you know what is coming you can do it very easily. But without one it is not so easy to call what is coming. It is one of the first discretionary spend items that goes. It is a challenging channel because of the peaks and troughs, but it is also part of the fun.”

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  • MPPA opens its premium supermarket format in Denpasar, Bali

    MPPA opens its premium supermarket format in Denpasar, Bali

    The Foodmart Primo is a professionally designed upmarket supermarket with a café, “boutique” bakery and restaurant, offering a high level of local and imported goods in a pleasant ambience for a more enjoyable shopping experience.

    Director of Foodmart Operations, Dave Rao stated “Level 21 Mall is a life-style mall. Our presence is to provide a “one-stop” experience for the customers, whereby they can enjoy shopping at the various outlets as well as eat, drink and get their complete daily/weekly groceries at Foodmart Primo – all under one roof. Our assortment also includes handicrafts, souvenirs, aromatherapy, local snacks and more to cater to the large tourists precence in Bali.”

    ”To date, the Company had already established a presence in the Kuta area and has been looking for an opportunity to venture further into the residential parts of Bali. So when a location in the Level 21 lifestyle mall in Denpasar became available, MPPA took the opportunity to open another Foodmart Primo there.” he added.

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