| Thailand's
Retail Canned Tuna Market |
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There are
currently four leading brands in Thailand's canned tuna
market. Pattaya Food markets the Nautilus brand, which
accounts for 50% of the domestic market, Thai Union Manufacturing's
Sealect accounts for 25% of the market, while TCB and
Ayum each have 8% of the market. The remainder is shared
among more than 10 other brands.
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Domestic
tuna consumption currently accounts for just 10%
of the country's production, generating some 500-600
million baht per annum. Recently, production of
canned tuna in Thailand and neighboring markets,
such as the Philippines, Malaysia and Indonesia,
has slowed down. Thailand is currently producing
1,100 tons per day, whereas output stood at between
1,600-1,700 tons per day in Q3, 2000. However, the
domestic market has been developing in terms of
product. |
Tuna spread and specialty items
like canned tuna curries are now gaining in popularity.
Canned specialty products like tuna curries have enjoyed
up to 15% growth, while the growth for tuna spread stands
at 140%. The tuna spread market is more or less controlled
by the Nautilus and Sealect brands, which each have 50%
of the market.
Competition in the canned tuna market has become tougher
because of two factors. Firstly, the price of raw materials
has decreased, and secondly, with fewer orders from overseas,
tuna packers have greater spare production capacity to
produce for the domestic market. These players will aim
to seize the biggest chunk of the local market in this
environment.
Recently, the price of canned tuna in oil has fallen to
between 25-30 baht per can. In response to the competition,
one leading brand has even dropped its price to 23.50
baht per can for a promotional campaign, while 'buy 1
get 1 free' campaigns mean that consumers sometimes pay
as little as 15 baht per can. Tuna in brine is expected
to expand its market share when compared with tuna in
oil due to perceptions of added health benefits. Prices
of these products are expected to remain stable.
Why have prices been under
pressure?
Thailand's tuna market still has growth potential. The
canned tuna category has enjoyed double-digit growth over
the past three years due to tremendous efforts by the
brands to encourage consumers to buy more tuna through
advertising campaigns and promotions. Up until now, more
than 80% of sales have been generated in Bangkok and other
major cities. There is still room for the market to grow
in line with the development of suburban and rural areas.
Every brand is currently sacrificing its profit to stimulate
trials and achieve brand loyalty in the longer term. Gaining
brand loyalty is the only guarantee for long-term survival,
and the only way to enjoy the benefits of market growth
and potential. Since more than 14 brands are available,
each brand is vying for market share, resulting in lower
prices. Consumers are therefore enjoying 'freedom of choice'
in the market, and do not seem ready to settle with any
particular brand.
Raw material prices and demand on the world market
are low. Since the raw material price has been consistently
low for some time, each brand has allocated more
funds for promotional activities. Moreover, a lack
of demand in the world market has put pressure on
all the tuna packers to do everything they can to
increase sales, and keep production stable. |
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What does the future hold?
In the short term, the retail price will remain low or
possibly fall further. In the longer term, if the raw
material price and/or demand in the world market increases,
brands will not be able to tolerate losing their margins
and prices will have to increase. However, intense competition
will continue to be the theme, since brand loyalty remains
the ultimate goal. In the long term, when the domestic
market matures, some brands will not be able to survive,
and those that are left will focus more on generating
profit. Once this takes shape, competition will become
less intense.
Source: FoodMarketExchange.com |
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