Packaged rice: Over 250 brands | Bangkok Post: learning

About retail

Selling rice in bags marked with a brandname to stores or delivering direct to homes remains a profitable business.

Packed rice, the rice packaged in small convenient plastic bags found on store shelves (not the heavy rice sacks found in old-style markets) is a profitable business. There are around 200 rice packer companies with over 250 brands selling the 40-50 billion baht of packed rice sold in the modern trade channel each year.

Click button to listen to Rice Packer Profits to download
Economics

Rice packers eager for continued high margins

21/02/2012
Walailak Keeratipipatpong

The domestic rice trade remains profitable despite rising costs because of higher pay due to the state's pledging scheme.

With over 5 million tonnes of rice to trade, competition is likely to heat up this year as packers plan promotional campaigns.

"The profit margin for packed rice is as high as 20%," said Paisarn Tantiponganant, marketing manager of Tanyatip Inter Trade Co.

Modern shops normally demand 10% profit margin and rice packers get another 10%, said Mr Paisarn, who operates home-delivery service for Tanyatip brand packed rice.

High margins have attracted nearly 200 packers to the segment, featuring 250 brands to scrap over 40-50 billion baht of packed rice in the modern trade channel.

But C.P. Intertrade Co projects the value of rice in the commercial market could reach 150 billion baht this year, combining sales from 3 million tonnes of traditional trade and 2 million tonnes of modern trade.

Even as rice prices rise, packers who purchased the commodity before the pledging programme began are enjoying large margins, he said.

"Retail prices haven't increased that much, so it's assumed most packers bought earlier," he added.

He expects prices to rise once stockpiles are used up unless the packer is able to source cheap rice.

The Internal Trade Department reported paddy prices for Hom Mali jasmine sold in the Northeastern provinces last week of 15,000 to 16,000 baht a tonne. This would make the cost for a tonne of milled rice 23 baht a kilogramme. A tonne of milled paddy affords about 660 kg of rice.

White rice paddy was sold at 9,600 to 11,000 baht per tonne, meaning a price of 14.40 to 16.60 baht/kg for milled white rice.

Milled rice sold in Bangkok last week for 3,000 baht a 100-kg sack or 30 baht per kg for Hom Mali rice, and 15.30 to 16.30 baht per kg for white rice.

Meanwhile, retail prices for 5 kg of packed rice is 190-250 baht a unit, or 38-50 baht per kg for Hom Mali rice. Prices for white rice is more varied because of several grades and blends, ranging from 130-165 baht or 26-33 baht per kg.

Rice does not have high brand loyalty because the quality doesn't differ much, making marketing promotions essential, said Mr Paisarn.

Tanyatip is going to stick to home-delivery service with occasional promotions to keep its 20,000 customers intact, he said.

C.P. Intertrade reports the packed rice segment has grown by double-digits the past few years, reflecting the growth in modern trade that is convenient for consumers.

Last year convenience shops rose 12% to 8,450 stores. Medium-sized outlets including Tops rose by 8% to 174, while large shops such as Tesco Lotus, Makro, and Big C grew by 4% to 250.

(Source: Bangkok Post, Economics, Rice packers eager for continued high margins, 21/02/2012, Walailak Keeratipipatpong, link)

Rice Retailing Vocabulary

retail - selling a product in small quantities in stores (See Wikipedia)

rice packers - companies that put rice in small bags and then sell to stores, marketing and building a brandname for their product
packed - when some good or product is put in a bag or package (before it is put on store shelves0
packed rice - rice put in small bags (before it is sold in stores)

eager - wanting to do or get something very much or enthusiastic about something that will happen กระตือรือร้น

profit - money that you make from selling goods and services after all your costs have been paid กำไร
margin - a difference
profit margin - the difference between the cost of producing a product and the price that the product is sold for to customers as a percentage of the selling price; compares the profit a company makes from a product and the money sales revenue from the product; often seen as a sign of the general efficiency of the company (See Wikipedia)

high margins - high profit margins, profitable product 

rice packers eager for continued high margins

domestic - within the country ภายในประเทศ
trade - the buying and selling of goods การค้าขาย
domestic rice trade - the buying and selling of rice inside the country

remains profitable despite rising costs - still have profits (=revenue - costs) but costs are rising, so less profits

scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
the state's pledging scheme - the government system for keeping the price that farmers receive for their rice high

The domestic rice trade remains profitable despite rising costs because of higher pay due to the state's pledging scheme.

competition - when two or more companies try hard to get the same customers  
competition heats up - increasing competition (more intense, like boiling water "heating up")

campaigns - a long series of events staged to achieve a goal or to promote something (for example, an "anti-smoking campaign"
promotion (noun) - 1. activities done in order to increase the sales of a product or service; a set of advertisements for a particular product or service; 2. special deals with a cheap price for a product (the definition commonly seen used in Thailand)
promotional (adjective)
promotional campaigns - a long series of events over time to advertise a product and let customers know about the product

With over 5 million tonnes of rice to trade, competition is likely to heat up this year as packers plan promotional campaigns.

brand - a type of product made by a particular company ตรา, ยี่ห้อ (products with well-established names that people remember, that create a certain image and expectations about the product)

"The profit margin for packed rice is as high as 20%," said Paisarn Tantiponganant, marketing manager of Tanyatip Inter Trade Co.  Modern shops normally demand 10% profit margin and rice packers get another 10%, said Mr Paisarn, who operates home-delivery service for Tanyatip brand packed rice.

segment - a part of something ตอน; one separate part of a bigger whole ส่วนต่างๆของสังคม
market segment - a group of possible customers who are similar in income, age, habits, etc, likely to buy the same sort of things (See Wikipedia)

scrap over  - fight or compete over something
scrap over 40-50 billion baht of packed rice

channel - a way of getting something done ช่องทาง); to direct something into a particular place or situation ใช้ไปในทาง
trade channel - a sales channel; distribution; a way of selling a product; a way of getting a product to customers;  a way in which a company makes its products available to customers (See Wikipedia)

traditional - things that have existed for a long time (clothes, music, customs, etc.)
traditional trade - the way the buying and selling of a good has been done for a long time (example: buy a big bag 20 kg bag of rice at the market)
modern trade - the modern way to buy and sell a good (example: buy rice in a small bag with a well-known and advertised brand name at the 7-11 down the street open 24 hours a day)
modern trade channel

commercial - for business purposes
commercial market

enjoying large margins - making high profit margins

High margins have attracted nearly 200 packers to the segment, featuring 250 brands to scrap over 40-50 billion baht of packed rice in the modern trade channel. But C.P. Intertrade Co projects the value of rice in the commercial market could reach 150 billion baht this year, combining sales from 3 million tonnes of traditional trade and 2 million tonnes of modern trade. Even as rice prices rise, packers who purchased the commodity before the pledging programme began are enjoying large margins, he said.

stockpiles - large amounts of something stored for future use กองสินค้าในโกดัง
stockpiles used up - stocks sold already; finished

source (noun) - the place or person something comes from or starts at, or the cause of something ต้นกำเนิด, แหล่งกำเนิด
source (verb) - look for a place to buy a good or product that you need
source cheap rice - look for cheap rice to buy

"Retail prices haven't increased that much, so it's assumed most packers bought earlier," he added. He expects prices to rise once stockpiles are used up unless the packer is able to source cheap rice.

paddy - rice after it has been harvested from the field ข้าวเปลือก
milled paddy - rice that has been dehusked, dried and made ready to sell in stores
sack - the big bag that rice is put in after it is milled

The Internal Trade Department reported paddy prices for Hom Mali jasmine sold in the Northeastern provinces last week of 15,000 to 16,000 baht a tonne. This would make the cost for a tonne of milled rice 23 baht a kilogramme. A tonne of milled paddy affords about 660 kg of rice. White rice paddy was sold at 9,600 to 11,000 baht per tonne, meaning a price of 14.40 to 16.60 baht/kg for milled white rice. Milled rice sold in Bangkok last week for 3,000 baht a 100-kg sack or 30 baht per kg for Hom Mali rice, and 15.30 to 16.30 baht per kg for white rice.

retail - to sell directly to the public for their own use ขายปลีก
retail prices - the price in stores

grade - a level of quality: low, medium or high grade
grade of rice

blend - a mixture of different kinds of things
blend of rice - a mixture of different kinds of rice

several grades and blends of rice

Meanwhile, retail prices for 5 kg of packed rice is 190-250 baht a unit, or 38-50 baht per kg for Hom Mali rice. Prices for white rice is more varied because of several grades and blends, ranging from 130-165 baht or 26-33 baht per kg.

loyalty - support that you always give to someone or something because of your feelings of duty and love towards them ความจงรักภักดี
brand loyalty - when people continue to buy and use a product, never change and start using a different product (brand switching or brand aversion) (See Wikipedia)

essential - necessary and important ที่จำเป็น ที่สำคัญ
X makes Y essential - because X is true, doing Y is important  
marketing promotions -

Rice does not have high brand loyalty because the quality doesn't differ much, making marketing promotions essential, said Mr Paisarn.

stick to - don't change; continue what you are doing now
intact - continue without change or reduction; without losing anything สมบูรณ์ ไม่บุบสลาย
keep its 20,000 customers intact

Tanyatip is going to stick to home-delivery service with occasional promotions to keep its 20,000 customers intact, he said.

double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
digit - one number: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9
grow by double-digits - grow at a 10% rate or more

convenient - easy to use; an easy way to do something
consumers - people and familes that buy things in stores
convenient for consumers - easy to use for people who buy things in stores

convenience - the quality of being suitable for your purposes and needs and causing the least difficulty ความสะดวกสบาย
convenience shops - neighborhood stores such as 7-11 or Family Mart that are near the home or workplace and therefore "convenient" to use
outlets - stores selling a product, retail outlets ร้านค้า

C.P. Intertrade reports the packed rice segment has grown by double-digits the past few years, reflecting the growth in modern trade that is convenient for consumers. Last year convenience shops rose 12% to 8,450 stores. Medium-sized outlets including Tops rose by 8% to 174, while large shops such as Tesco Lotus, Makro, and Big C grew by 4% to 250%.