Making Mama instant everywhere

Making Mama instant everywhere

The noodle giant grows in Myanmar and Cambodia.

Mr Pipat says the company bought a 10-rai plot in Mandalay for an instant noodle factory.
Mr Pipat says the company bought a 10-rai plot in Mandalay for an instant noodle factory.

As the domestic market matures, the amalgamated firm of two listed companies under Saha Group is seeking more market opportunities overseas and plans to spend over 200 million baht to set up instant noodle factories abroad in 2018.

Pipat Paniengvate, the company's chief executive, said Thailand's instant noodle market is becoming saturated, with annual consumption per person of 49 packages, more than three times the global average of 13.3 packages.

"The market has grown at a slower pace over the past few years because of Thailand's declining population growth," Mr Pipat said. "The company is looking for more opportunities outside the country."

A Stock Exchange of Thailand statement in October 2017 approved the delisting of securities for Thai President Foods Plc (PF), the maker of Mama instant noodles, and President Rice Products (PR) after the two companies fulfilled the requirements for amalgamation, including registration, and allowed shares of the amalgamated firm to be traded on the SET using the ticker symbol TFMAMA.

Under the new shareholding structure, TFMAMA is 25% held by SET-listed Saha Pathana Inter-Holding (SPI), the investment holding firm of Saha Group, 16% by Nissin Holdings and the rest by the Chokwatana, Tatiyakawee, Poonsakudomsin and Paniengvate families.

Thai President Foods runs five factories in Thailand and four overseas, in Hungary, Cambodia, Myanmar and Bangladesh.

Mr Pipat said the company will spend 100-200 million baht this year to set up a Mama instant noodle factory in Mandalay, Myanmar. It already runs a Mama factory in Yangon.

"We bought a 10-rai plot in Mandalay years ago, but we are awaiting approval of a construction permit from local authorities," he said.

The company hopes to start construction soon and begin operations in 2019.

With the new factory in Mandalay, the total production capacity of Mama in Myanmar is expected to double to 10 million pieces per month.

"Consumers' response to Mama in Myanmar is very good," Mr Pipat said. "We control about 70% of the market, and sales are expected to reach 650 million baht in 2017."

Petch Paniengvate, head of the company's overseas investment, said the company has already bought a four-rai plot in Phnom Penh, Cambodia to set up a Mama instant noodle factory in the near future.

The executive did not disclose the investment budget for Cambodia.

Thai President Foods operates one factory in Phnom Penh and expects sales of about 300 million from the Cambodian market in 2017.

According to Mr Petch, the overseas operation in Hungary, set up four years ago, is expected to yield more prospects in the region.

"We earn a profit of about 5-26 million baht per month from the Hungary factory," Mr Pipat said. "We plan to expand the Mama production capacity at this factory in the near future to tap into more European markets such as Croatia and Serbia."

Sales from instant noodles in Hungary are estimated at 250 million baht for 2017.

"At present, we make profit from all three factories except the Bangladesh factory, which remains in the red," Mr Pipat said.

Although there are 160 million people in Bangladesh, Mama sales are only 50 million baht per year.

"Our instant noodles in Bangladesh are not popular because instant noodle packages are priced the same as street food prices, unlike Thailand, where the price of instant noodles is four times lower than for street food," Mr Pipat said. "Moreover, there are 24 instant noodle factories operating in Bangladesh, up from three factories four years ago when we started production there."

To offset the loss, the company is considering exporting its instant noodles from Bangladesh to India in the future.

Mr Pipat said the company is also reconsidering a plan to expand into Africa.

The company meant to set up a factory in Ghana a few years ago, but halted progress for safety reasons.

"We've been invited by our friends in South Africa to expand Mama instant noodle in the region," Mr Pipat said. "We're aware of the huge opportunity for Mama over there, but we first need in-depth information on the market."

According to Mr Pipat, without local connections and enough information about China and Vietnam, the company still baulks at expanding in those markets.

Thai President Foods expects consolidated sales to have increased by 3% to 10.65 billion baht in 2017. Of total sales, about 80% are from the domestic market and the rest from overseas operations and exports.

Some 10% of Mama sales stem from premium products. The company plans to double the proportion of premium product sales to 20% in 2018.

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