Packing it in: Local firms hold their own while competing alongside global giants

Producing far more food than the country’s population consumes domestically, Thailand’s agro-manufacturing industry is a major export sector and is home to a number of large operations run by some of the world’s largest food processors. Of the $28.88bn in agro-manufactured products exported in 2011, sugar accounted for the greatest value at $16.85bn followed by canned, prepared or preserved fish worth $2.94bn for the 781,140 tonnes shipped, according to data from the Bank of Thailand. Other processed agricultural products shipped in significant quantities include the 215,491 tonnes of crustaceans exported ($2.1bn), 441,610 tonnes of poultry ($2.05bn), 641,167 tonnes of pineapple ($666.06m), 459,471 tonnes of other fruits and vegetables ($860.43m) and 300,508 tonnes of prepared cereals, flours and starch ($860.41m).

MORE TO COME: These figures are expected to continue to grow in 2012, particularly processed chicken, tuna and shrimp products due to limited inventories in the US, European and Japanese markets. In addition to strong export figures, Thailand’s domestic packaged food market also ranks among the global top 10 by retail volume growth, according data from Euromonitor International, a leading global market research firm. The country’s packaged food consumption grew by 5.1% in 2011 when it reached 3.31m tonnes. Both prices and demand of packaged food are expected to rise in 2012 (particularly for pork, chicken and shrimp) due to the lingering effects of the 2011 floods on supply.

LOCAL HEAVYWEIGHTS: Alongside international outfits such as Kraft, Nestle, Unilever, Del Monte, Dole, Grampian, Cargill, PepsiCo, Procter & Gamble and Kellogg’s, there are a number of domestic firms which have flourished in Thailand over the years, including the Stock Exchange of Thailand-listed Thai Union Frozen Products (TUF) and Charoen Pokphand Foods (CPF).

With 2011 revenues of BT206.1bn ($6.6bn) and profits of BT20.78bn ($662.9m), the fully integrated CPF and its 127 subsidiary companies is a major player in the food processing sector. The firm’s primary products include chicken, turkey, pork, animal feed and shrimp, and it also has livestock and food retailing businesses. Of 2011 revenues, 61% were from domestic sales, another 25% came from exports of meat, semi-cooked meat, fully-cooked meat and ready-to-eat products, and the remaining 14% of revenue came from overseas operations in Turkey, Russia, Laos, Taiwan, the UK, Malaysia, India, China and the Philippines.

In 2011 CPF decided to increase its presence in the world’s largest single market through the BT63bn ($2bn) take over of its Hong Kong-listed affiliate CP Pokphand Company (CPP). Financed through a BT20bn ($638m) share swap and BT40bn ($1.3bn) debenture issuance that gave CPF a 74% stake in CPP, the move will vault CPF into the second-largest market share position for animal feed in China and the number one slot in Vietnam, as well moving up the ranks in the global livestock and aquaculture producers.

The world’s largest canned tuna producer, Thai Union Frozen (TUF) grows and exports seafood products such as shrimp, salmon, tuna and sardines. The company accounts for a 60% share of all canned sardines exported, along with 40% of frozen and canned tuna, 35% of canned pet food and 10% of frozen shrimp, according to TUF’s 2011 annual report. Its largest market in 2011 was the US, which accounted for 36% of all sales, followed by Europe with 32%, Japan (10%), Thailand (10%), Africa (3%) and a number of other destinations.

Total revenues for TUF in 2011 amounted to BT99.59bn ($3.2bn), up from the BT72.81bn ($2.32bn) recorded in 2010, while net profits increased from BT2.87bn ($91.6m) to BT5.08bn ($162.1m). TUF also acquired a 40% stake in another Thai seafood company Pakfood in December 2011, which will be involved in both domestic and international output production.

Other major agro-industrial firms making everything from canned vegetables to frozen chicken include Saha Pathana Inter-Holding, Patum Rice Mill and Granary, Royal Friesland Foods, Betagro, Saha Farms, Ajinomoto, Effem Foods, GFPT Public Company and Thai Agri Foods.

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The Report: Thailand 2012

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