The state-run Dairy Farming Promotion Organisation (DPO), the manufacturer of Thai-Danish dairy products, expects its sales in fiscal 2019, starting Oct 31, 2018, to reach 10.5 billion baht, up 5.12% from the previous year.
Narongrit Wongsuwan, DPO's director-general, said to achieve the target the organisation plans to expand the business in both the domestic and international markets next year.
For the domestic market, the DPO plans to open 40-50 new Milk Land shops under a franchise system across the country.
DPO opened its own Milk Land shops this year, aiming to access young customers so they would increase their dairy consumption.
There are six Milk Land shops nationwide now. Two shops are in Muak Lek, Saraburi, and one each in Phitsanulok, Ayutthaya, Pak Chong (Nakhon Ratchasima) and at the Iconsiam mall in Bangkok.
Mr Narongrit said the company will allow its sales agents or general investors to apply for Milk Land franchises next year.
Franchisees will have to pay 1 million baht for a shop covering 20 square metres, 1.4 million for 21-40 sq m, and 1.8 million for a shop sized over 40 sq m.
The company estimates it will take about six years to break even. A franchise contract is for six years.
The Milk Land expansion aims to cash in on the continuous growth of chilled dairy products.
Some 95% of DPO's total sales come from UHT products. The company plans to explore more sales opportunities from chilled dairy products, he said.
DPO is spending 40 million baht to renovate its milk factory in Chiang Mai province. The company will restart operations there in February 2019.
A processing plant in Muak Lek, where a variety of dairy products under the Thai-Danish brand are made. WICHAN CHAROENKIATPAKUL
The factory will make Thai-Denmark chilled dairy products such as pasteurised milk, drinking yogurt and ice cream, with capacity of about 15 tonnes per day.
The expansion abroad involves appointing a sales agent this month for its UHT milk in Cambodia, and two agents in Myanmar.
The company is in the documentation process to appoint two agents in Malaysia and China.
With these plans, sales of Thai-Denmark dairy products overseas are expected to rise to 1.3 billion baht in fiscal 2019, up from 1.1 billion in fiscal 2018.
DPO reported in fiscal 2018, ending Sept 30, 2018, its sales increased to 9.56 billion baht, up 15.2% from 8.3 billion. The company had a net profit of 310 million baht.
DPO expects sales of 10.5 billion baht in 2019 and 11.7 billion in 2020, said Mr Narongrit.
The company buys 700 tonnes of raw milk from 44 dairy cooperatives across the country.
The total raw milk output from all dairy cooperatives is about 3,300 tonnes per year.
The per capita consumption of dairy products in Thailand is 17-18 litres per year. DPO wants to raise that figure to 25 litres per year in the near future, he said.
"Overall UHT milk sales in the first 10 months of this year declined by 2-3%, and our sales from October to December were below our target," said Mr Narongrit.
"I am quite worried about consumer spending power in the year to come."