Sales of instant noodles are expected to grow by only 1.4% this year to 15.4 billion baht due to weak consumer spending, particularly from the grass roots, says Thai President Foods Plc (TPF), maker of Mama instant noodles.
Pipat Paniangvait (second from right), chief executive of Thai President Foods, joins other company executives to promote Mama's new product, stir-fried rice vermicelli.
The industry's modest sales growth is the lowest in 42 years since the company has been in the instant noodle business.
TPF chief executive Pipat Paniangvait said sales this year had grown at the lowest rate in more than 40 years due mainly to the declining purchasing power of grass-roots people affected by lower farm product prices and delayed payments from the rice-pledging scheme.
Normally, sales of instant noodles in traditional packaging are very good when the economy is not good.
But this year has been different, with instant noodle sales rising at a slower rate.
Sales of traditionally packed instant noodles have seen zero growth, while sales of cup noodles have grown by 7.95%, lower than last year's rate of 20.3%.
"This reflects weak consumer purchasing power," Mr Pipat said.
TPF's sales this year are expected to grow by only 0.2% to 10.2 billion baht.
However, net profit is forecast to rise to 1.46 billion baht from 1.41 billion last year, an increase of 3.55%.
President Suchai Ratanajiajaroen said net profit would continue to increase since operating costs could be controlled and ingredients sourced from elsewhere.
The company will next year spend about 400 million baht to install new machinery to replace its existing equipment in order to boost production efficiency at its instant-noodle factories in Rayong and Lamphun provinces.
It has earmarked 100 million baht next year to make its own plastic noodle cups to prolong the shelf life of instant noodles. By doing so, it will help the company to enhance production efficiency.
Another 100 million baht will be spent to increase the production capacity of Mama cup noodles by 30% to about 40 million cups a year.
The Mama instant-noodle producer believes the Thai instant noodle market is saturated, so it will focus on expanding abroad.
Currently, TPF has instant-noodle factories in Cambodia, Myanmar, Bangladesh and Hungary.
"We're set to double our sales to 20 billion baht in 10 years, half from at home and half from exports," Mr Pipat said.
The company will spend 200-300 million baht to build a second Myanmar factory next year.
Saudi Arabia will be a new investment destination in the near future, while production plans for Ghana has been postponed for a while.