Climbing the global peanut hierarchy

Climbing the global peanut hierarchy

Koh-Kae seeks to triple sales to B10bn

Mr Kitsada sees plenty of room for Koh-Kae to expand in Taiwan, Vietnam and Indonesia.
Mr Kitsada sees plenty of room for Koh-Kae to expand in Taiwan, Vietnam and Indonesia.

Koh-Kae, a coconut-coated peanut snack, has set an ambitious target to become the king of nuts in Asia, tripling sales to 10 billion baht over the next decade.

Kitsada Ruayjaroensap, the second-generation owner of Mae-Ruay Snack Food Factory, the producer of Koh-Kae peanut snacks, said the company is led by eldest brother Jumpoth Ruayjaroensap, who is eager to grow the business by expanding production facilities abroad and rebranding this year.

Mr Kitsada, who is deputy managing director of the 43-year-old company, said Koh-Kae is in talks with business partners in Taiwan and Vietnam to produce snacks in those countries. In Taiwan, the company is hiring an original equipment manufacturer (OEM) to make snacks and is looking to form a joint venture with a local snack company for production in Vietnam.

"We've exported Koh-Kae to Taiwan for over a decade," he said. "The market has done quite well, but with the limits of the peanut quota, we cannot expand our business at Taiwan as fast as we want."

Mr Kitsada said Taiwan is a trend setter for the Chinese market. The company wants to pursue growth in Taiwan to stimulate snack consumption in China, which contributes half of Koh-Kae's international sales.

In addition to Taiwan, the company also plans to expand further in Vietnam and Indonesia. It hopes to forge a joint venture with a local snack factory in Vietnam to produce and market Koh-Kae snacks there.

Mr Kitsada said the company is also in talks with local business partners in Indonesia for potential cooperation, which would involve setting up new factories, OEM and repacking Koh-Kae products.

"We want Koh-Kae to be made locally in each market because we don't want Koh-Kae to be a niche product in each country," he said. "We aim to make our product a mainstream product in each market."

Indonesia is promising because the snack market is worth up to 7 billion baht, with a high portion coming from the peanut category.

Mae-Ruay Snack Food Factory was set up in 1964 by founder Chookiat Ruayjareonsap to make fried peanut snacks and shrimp rice chips before expanding to produce Koh-Kae, a coconut cream-based crispy peanut, in 1976. The latter became a favourite in Thai households.

Mr Chookiat eventually stepped down from day-to-day operations, leaving his four heirs to run the company in 2008.

Under the new management, sales of Mae-Ruey have grown by five times to 2.6 billion baht in 2018, from 500 million baht in 2008. Some 80% of sales come from the domestic market and the remainder belong to the export market, spanning over 70 countries.

"Koh-Kae sales have grown at a double-digit rate over the past 10 years, except in 2017-18 when sales were flat because of the country's economic slowdown," Mr Kitsada said. "With several positive factors, we hope the peanut snacks will resume growth this year."

The company will continue to launch new products in the market, putting more focus on Koh-Kae peas, the latest offering aimed at students and first-time workers.

To strengthen the Koh-Kae pea product line among the young customer base, the company will spend 100 million baht to promote the new pea product, hiring well-rounded Thai singer Palitchoke "Peck" Ayanaputra as presenter.

The company also plans to support more farmers to grow peanuts in Sakon Nakhon and Nakhon Phanom to reduce raw material imports from China and India. The company used about 10,000 tonnes of peanuts last year, 1,000 tonnes of which came from local farmers and 9,000 tonnes from overseas suppliers. The company expects to use about 1,500 tonnes of local peanuts this year.

Mr Kitsada expects sales to reach 3 billion baht this year and jump to 10 billion baht in the next decade.

Thailand's snack food market is estimated to be worth in excess of 30 billion baht per year. Peanut snacks made up almost 5 billion baht in 2018.

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