Retail closures spark concern over Thai FMCG market

Thailand’s Fast-Moving Consumer Goods (FMCG) market is in dire condition with several retailers shutting down as consumers are hit by falling purchasing power and rising household debt, an industry expert said on Monday.

FMCG – relatively cheap, fast-turnover goods such as food, toiletries and cleaning products – make up the largest segment of consumer goods and are distinguished from high-priced purchases such as vehicles.

Ouychai Rangchaikul, first executive vice president at Loxley Plc, said the situation is especially bad in upcountry areas where increasing numbers of low-income earners are spending only on necessities, leading to retail closures. 

Some of these retailers have been in the FMCG business for more than three decades, he told the Nation on Monday.

Loxley Plc has been trading in FMCG, information technology, energy, and services for more than 80 years.

Ouychai said the government’s state welfare card scheme stimulated the FMCG market over the past three years but sales are now declining as saturation point is reached.

“There have been no new tangible measures to boost the economy in the past nine months,” he said. “Meanwhile, manufacturers have been raising their prices due to rising costs, while consumers are suffering from rising debts and higher cost of living, including rising utility expenses.”

Ouychai said he saw no sign of recovery in the FMCG market in the second half of this year.

To survive this year, he advised FMCG operators to “help each other” by being more flexible with their trading partners when it comes to product orders and debt collection.

“Manufacturers and distributors can also help by hosting sales promotion campaigns to attract consumers,” he added.

Pavita Tohtubtiang, vice-executive chairwoman of Kuang Pei San Food Products Plc, manufacturer of the Pumpui canned fish brand, said the company’s sales in Q1 this year were roughly the same as last year.

“The canned fish market contracted last year compared with 2022, when people were buying canned foods in bulk due to concern over COVID-19,” she said. “The market is gradually returning to the normal state. However, competition is becoming fiercer due to the introduction of several new food products.”

Pun Paniangvait, general manager at Thai President Foods Plc, manufacturer of Mama instant noodles, said sales of Mama in Q1 grew 1.36% year on year, which he considered underwhelming.

However, Pun said the slow sales were not due to a lack of consumer purchasing power but because more people were eating out and watching their spending at the end of the month.

“We expect the instant noodle market to grow 3-5% this year,” he said, adding that Thais currently consume about 53 packs of instant noodles per person per year, up from around 45 previously.