Saha Group, the country's largest consumer product conglomerate, predicts consumer spending will remain weak well into the second half of the year due to the combined impact from the drought, economic slowdown and falling exports.
"We are now very concerned about the serious drought, as it will make life more difficult for farmers and affect the consumption of the grass roots," chairman Boonsithi Chokwatana said.
The economy has been slow in the first half and exports are sluggish while mounting household debt has dragged down people's purchasing power.
Sales of many products are declining. Even instant noodles, which generally enjoy brisk sales when the economy is sluggish, have been affected, with flat growth for the first time in many years.
However, the tourism sector remains strong. Year-to-date tourist arrivals to Thailand have risen by 27.4% year-on-year to 14 million.
"We still hope domestic consumption will pick up considerably next year if exports improve," Mr Boonsithi said.
Boonchai Chokwatana, chairman of Saha Pathanapibul Plc, distributor of Pao detergent and Mama instant noodles, said his company's first-half sales were expected to grow by only 2% year-on-year.
Major necessities such as detergent and toothpaste keep growing, while Mama noodle sales are flat.
"Though our sales will grow at a single-digit rate in the first half, we're satisfied since the overall situation is better than in the same period last year, when there was the political turmoil," Mr Boonchai said.
He has no plan to revise his company's sales target this year, as he believes the economy and purchasing power will be better in the second half.
Full-year sales of Saha Pathanapibul are expected to grow by 7% to 27.8 billion baht this year.
Boonyarit Mahamontri, president of Lion Corporation (Thailand), producer of Pao detergent, said the company would focus more on expanding into Myanmar, Laos, Cambodia and Vietnam, aiming at increasing export sales to 30% of the total in the next five years from 10% now.
Annual sales are expected to reach 20 billion baht in 2020 including 6 billion from exports.
The company plans to spend 500 million baht to expand production capacity of its detergent and other household products by 30% at its factory in Chon Buri's Si Racha district.
Boonkiet Chokwatana, executive chairman of I.C.C. International Plc, the marketing arm of Saha Group, said his company's first-half sales were expected to grow by 3%, driven by major brands Wacoal, Arrow, Lacoste and BSC.
"The growth came from our adjustment of our internal system to increase work efficiency. We believe our sales can achieve 5% growth this year, as we're confident consumer confidence will improve considerably in the second half," he said.
I.C.C. plans to stop marketing its three apparel brands in the second half, but three imported fashion brands will be introduced.
Pan Asia Group, Saha Group's shoe producer, has branched out to the agricultural sector by opening an organic vegetable farm in Khao Yai.
Its vegetables have been sold at supermarkets under The Mall Group. In the next three months, the company will sell vegetables under its own brand at other supermarkets.
The company grows organic vegetables on 30 rai and may increase the plantation area.
Pan Asia has downsized in recent years after contracts with major brands such as Nike were lost to Vietnam and China.