Amway sees growth slow with drought

Drought and falling farm prices will see direct-sales company Amway (Thailand) turn in only modest sales growth this year to 16.3 billion baht.

Those negative factors and the ongoing economic slowdown have hurt consumer spending, particularly in rural areas, with rubber and rice prices down and farmers earning less, managing director Kittawat Ritteerawee said.

"This has made demand for many Amway products, especially in the agriculture-related category, decline significantly," he said.

This year, sales of Amway's agricultural products are expected in a range of 500-600 million baht, down from 1.2 billion in recent years.

The purchasing power of upcountry consumers has seen a clear drop, while Bangkokians' spending remains healthy.

Urban dwellers have growing concerns about health and well-being, leading to a double-digit rise in sales growth for food supplements this year, on a par with last year's growth.

Mr Kittawat said demand for food supplements, which are 40% of company sales, had continued to grow in the past three years, with high brand loyalty among Thais.

"Whatever the economic situation is, our company will continue to expand the direct-sales business in Thailand," he said.

Amway has earmarked 300 million baht to convert 30 Amway shops in prime locations to a more modern concept over the next four years.

Nationwide, there are 83 Amway shops where members can buy products.

The company spent 22 million baht to open a modern-concept shop on Sukhumvit Soi 54, aimed at enhancing the brand experience and serving 300,000 Amway business owners and members in Bangkok.

The move is part of a strategy to access more young "lifestyle" customers under the 10-year AmwayNext strategy.

The new shop is tipped to broaden opportunities in the Amway business.

Under the modern concept, the Sukhumvit Soi 54 shop features product demonstrations, a shopping zone, a business presentation area and a cafe.

"Our Soi 54 branch has a new look that seeks to be a second home for Amway business owners. Feedback has been positive after one month of operation," Mr Kittawat said. "So far we don't see any positive factors boosting the local economy next year, but we believe general purchasing power will be better than this year and the economic situation not worse than this year."

About the author

Writer: Pitsinee Jitpleecheep
Position: Business Reporter