Market View Videos:
Thailand Video Transcript
Thailand is a rapidly developing country which has experienced constant GDP growth for the last decade. Affluent Thai consumers are international travelers, and demand a very diverse cuisine. This is a big opportunity that has been, and will continue to be realised into the future.
“Thailand is an important trading hub for the rest of Asia. So a lot of product comes into Thailand, both as ingredients for re-manufacture or as finished products, which then get exported to the rest of what's called the Greater Mekong region; which is Cambodia, Lao, Burma and Vietnam, so it's quite an important trading hub. And, the last point is that it's a big tourist destination.”
Thailand’s food retail and food processing sectors are highly developed. In the South-East Asian economic crisis of the late 1990’s, many European retailers such as Tesco, Carrefour, Macro and Big C mostly focused on Thailand and took advantage of the low prices. These companies aim to supply a diverse range of international foods.
“The other key point with food retailers, in 2005 Australia signed a Free Trade Agreement with Thailand called TAFTA, the Thailand Australia Free Trade Agreement. This liberalised trade in almost all food products going into Thailand, so by 2010, 95 percent of all tariff items are now reduced to zero. Again, that has given some great opportunities for Victorian companies. For some fresh products, it's a longer phase-in period and for beef, for instance, it takes until 2020, and for some fresh fruits and vegetables it might take until 2015. But, nearly all fruit now comes in duty free, and most other grocery products. So, this is a real competitive advantage for Victorian and Australian companies over our competitors in the USA and Europe. The other thing about retail is that they demand very good quality and they're prepared to pay for it. So, a lot of the systems that we've got in Victoria which are well-established in the domestic market, are valued in the Thai market. Food-processing is a major sector. Thailand is one of the largest food exporters in the world, but they need to import a lot of products to add value to and to use as part of their ingredients. So dairy ingredients and grains are needed for a lot of the products they produce, both for domestic consumption and for further export.”
Thailand is the largest tourist destination in Southeast Asia. They have a well-established hotel and restaurant sector, which requires servicing with a range of products that Australia has strong capabilities in producing.
“Thailand has a very well developed eating out culture if you like. So most of the major chains from around the world like McDonald's, KFC, Oeshi, most of the Asian food service convenience sector is growing strongly and again, thay are sourcing for products. And the last sector is the convenience sector and a company like 7-Eleven with 5000 outlets is again importing more products. The major challenges are, although we have the Thailand Free Trade Agreement, there is still some implementation issues. But their actual ability to implement some of these new agreements is quite difficult. Their government sector is quite small, and sometimes there can be holdups at the ports. The other issue is just in terms of the changing demographics in Thailand and the growth in the market. Bangkok is easily supplied, but once you get to the other major sectors, other places like Phuket, Chiang Mai, Chiang Rai, Pattaya, sometimes the logistics are not completely, well not as well established as you'd like.”
At the moment, the food processing sector is the major market. Dairy ingredients, grains and oils are growing, and as Thailand continues to be a major food processor, Victorian companies will be able to continue to grow those markets.
“I think the most opportunity from our point of view, although it's only a middle of the range part of the business at the moment, is packaged products and fresh products going into food retail. In the last four or five years, that market has grown fivefold, and I’d expect it to continue to grow strongly.”