Non-alcoholic sales increase
Despite the outbreak, Thailand's non-alcoholic beverage consumption in the first quarter this year grew by 1.3% in value terms, but contracted by 0.6% in volume, says market researcher Nielsen Company Thailand.
Chinta Srichintangul, executive director for retail measurement services, said the top three growth categories were functional drinks, drinking water and soft drinks.
In 2019, sales of functional drinks grew 20% and increasing sales momentum continued to the first quarter of this year with 15% growth, reflecting the trend for health products and several functional products setting affordable prices.
"Functional drinks continued to grow because many new products were launched to stimulate the market since last year. People consumed more functional drinks, particularly vitamin drinks, amid the pandemic in the first quarter," said Ms Chinta.
Drinking water and carbonated soft drinks in the first quarter of this year grew by 5% and 4%, respectively.
According to a source from the beverage industry who requested anonymity, the market size of drinking water and soft drinks in Thailand is estimated to be worth 38 billion and 56.0 billion baht, respectively.
The research house reported sales of fruit juice in the first quarter this year contracted by 6% in terms of value and 5% in terms of volume, while ready-to-drink green tea for the period shrank by 5% in terms of value and 6% in terms of volume.
"There is still high demand for healthy drinks, but for the mid- to low-income market, companies have to shrink the product size for them to afford their offerings," Ms Chinta said.
Despite the first-quarter uptick, Piyajit Ruckariyapong, chief executive of Sappe, the marketer for Sappe and Beauti Drink beverages, expects the non-alcoholic drink market in 2020 to contract because of the pandemic, widespread drought and the domestic economic slowdown.
"In keeping with slowing consumer purchasing power, we reduced the size of Beauti Drink bottles sold at traditional trade channels," Ms Piyajit said.
The company plans to focus more on traditional trade as more people shop at grocery stores close to their home because of the pandemic. Sales from traditional trade (mom-and-pop shops) is expected to increase to 45% of total sales from 40% last year. The remaining 55% of sales will come from modern trade channels (supermarket, hypermarket and convenience stores).
"After the pandemic, people will continue to be concerned about health. The company plans to add new healthy beverages and vitamins," she said.
Tan Passakornnatee, president of Ichitan Group, said his company also adjusted its strategy by launching smaller packages.
"Consumer response to the smaller package has been good as it fits lower purchasing power. Sales of small beverage packages increased by 2.5 times over those of regular size," Mr Tan said.
The company is adopting a three-pronged strategy: the launch of healthy products; oversea business expansion; and new businesses in high demand amid the pandemic such as sterilisation and organic vegetables.