Fiercer competition and limited distribution networks have prompted SET-listed President Bakery Plc, a maker of baked goods under the Farmhouse brand, to keep exploring alternative and creative channels for sales.
Vending machines, like those that dispense canned soft drinks and coffee, are the latest distribution channel.
According to Apisate Thammanomai, deputy managing director of President Bakery, the company has sold Farmhouse bread and bakery products through vending machines at hospitals, universities and factories for years to test the market response.
In an initial step, the company imported vending machines from China and installed them at Siriraj Hospital, Ramathibodi Hospital, Chulalongkorn University and other institutions.
The company has 40 vending machines installed across Bangkok.
"We have received good feedback from customers, particularly at hospitals," Mr Apisate said. "But the vending machine channel is a bit challenging because the investment cost is pretty high, while our products are priced at just 10-15 baht each and purchase demand varies almost every day."
Nonetheless, Mr Apisate said vending machines provide an opportunity to bring Farmhouse closer to customers.
The company has joined King Mongkut's University of Technology North Bangkok to develop a Farmhouse prototype vending machine to replace expensive imported machines.
Apichart Thammanomai, the company's managing director, said that while competition is fierce, growing demand for bread and other bakery items continues increasing because of the changing lifestyles of consumers who prefer maximum convenience.
Moreover, the expansion of Western restaurants nationwide has helped foster Western culture and consumption habits.
Mr Apisate Thammanomai .
According to Mr Apichart, apart from the existing distribution channel of Farmhouse via Good Morning Farmhouse kiosks that sell sandwiches near office buildings and vending machines, the company continues to look for new channels to sell products.
In the latest development, the company is exploring the possibility of selling Farmhouse products at skytrain stations.
"We are still optimistic about the future of the bakery and bread business in Thailand because of the increasingly urbanised nature of society," Mr Apichart said.
Thailand's bread and bakery market are estimated to be worth 20 billion baht in revenue each year. The consumption of bakery and bread products remains relatively small in Thailand. Thai consumers buy 2-3 kilogrammes of baked products a year on average.
In contrast, consumers in Japan buy an average of 10-15 kilogrammes of bread each year.
In a bid to cope with the future growth of bread, Mr Apichart said the company will build a new bread and bakery factory on a nine-rai plot and renovate its existing factory in Lat Krabang Industrial Estate, which was established more than 25 years ago.
With this new investment, the existing factory will be extended and the production capacity of bread products will rise by an additional 20%. Details of production capacity were not disclosed.
The company expects to start construction of the new factory next year and take two years for completion.
Sales of Farmhouse in the first half of the year grew by just 2%, much lower than earlier expectations of 5-7% growth.
The weak growth was attributed to the fragile spending power of low- and middle-income earners.
With new marketing plans, however, Farmhouse expects sales to fare better than in the first half of the year and reach 8 billion baht by year-end.
The company reported that sales shrank 1.5% in 2017 to 7.44 billion baht, with a net profit of 1.33 billion baht, down from 1.46 billion baht in 2016.
Of total sales, 90.2% came from wholesale sliced bread, hot dog and burger buns, snack cakes and sweet bakery goods, with 6% from fast food and catering and the remainder from export and retail bakery under the Deliya and Madame Marco brands.