AN OVERVIEW OF THAILAND’S BEVERAGE INDUSTRY
Tropical climate, a high proportion of youths in total population, continued expansion of modern trade outlets, new product developments in flavors, and exciting marketing and promotional campaigns by beverage producers have been key industry growth drivers for Thailand’s beverage industry.
Amid rising health awareness, what consumers perceive as healthy — bottled water, RTD tea, energy drinks and juice — have been able to register steady growth rates, while carbonated drinks have registered modest growth rates, compared to their brisk growth a few years back.
Though on value basis, carbonated beverages still rule the overall beverage market with a share of about 40 % of overall the beverage industry. But, much like the global trend, carbonated beverage consumption is declining on per capita basis, however, not as steep as the European or American markets. Coca-Cola and PepsiCo together had an 85% market share in the Southeast Asian country back in 2009. But as of last year, the figure had shrunk to about 70%. The rise since the end of 2012 of Est Cola, produced by Thai beverage maker Sermsuk, has altered the landscape. Sermsuk had bottled and distributed Pepsi on behalf of PepsiCo for six decades, until the partnership was dissolved after a failed 2010 hostile takeover bid by the U.S. Company.
Bottled water consumption, with a value share of 24 %, is growing very rapidly. In fact, Thailand is the world’s seventh largest bottled water consuming country, according to the statistics from the USA based Bottled Water Association. With a consumption of 3,624 million gallons in 2015, the country’s bottled water consumption registered a CAGR of 12.5% during 2010 - 2015. Bottled water is the most important sub-segment for PET bottles consumption as PET bottles dominates this sub-segment with more than 90 % share of the packaging.
Ready to Drink Tea or RTD Tea is one of the most important beverage categories in Thailand. The sub-segment is one of the key demand drivers for PET packaging, as more than the 80 % of RTD Tea is consumed via PET bottles. In 2017, RTD Tea market was worth 13,237 million Baht, which slowed down 8.7 % in comparison to a year earlier, as a result of intense price competition, a slowdown in economy, and adjusted selling price due to the excise tax among green tea. At the end of year 2017, Oishi had a market share of 40.6 %, followed by Ichitan at 22.4%, YenYen 10.4% , JubJai 5.6 % and others accounting for the rest 21.0 % of the market share.
PET PACKAGING IN THAILAND
Growing popularity of beverages, changing consumption and lifestyle patterns and emergence of a number of beverage producers have given PET preform and bottle producers a host of opportunities in Thailand. Beverage producers are increasingly looking to differentiate their products from the competitors. This factor and the emergence of modern retail, which highly favours the PET packaging due to ease of handling and low cost have resulted in steady growth of the PET industry in the country’s beverage packaging industry. PET bottles are becoming indispensible for packaging of carbonated soft drinks, bottled water, ready-to drink tea, energy drinks and functional drinks. PET packaging has been able to gain huge share in the overall beverage industry at the expense of glass containers and metal packaging in recent years. Bottled water is currently the most attractive sub-segment for PET performs and bottle producers due to the current volume and annual growth rates. According to The Thai Beverage Industry Association, about 92 % of the bottled water was consumed through PET containers in year 2016.
Boonrawd Brewery’s Singha Water, Sermsuk’s Crystal and Nestle’s Pure Life brand are the current market leaders, accounting for more than 50 % share of the total market. PET’s challenger in this sub- segment, glass bottles merely account for 6 % of the market share in packaged water, while the rest 2 % is held by small plastic glasses. Carbonated beverages are the other major market for PET containers. These containers have almost taken the whole market in the larger (500 ml and more) sizes of packaging. Smaller sizes like 200 ml, 250 ml, 300 and 350 ml are continued to be dominated by glass and metal packaging. According the Thai Beverage Industry Association, PET packaging accounts for 53 % of total volume of carbonated beverages, followed by glass at 28 % and metal packaging ( steel and aluminium cans) at 12 %. The rest 7 % is divided between HDPE, PP thin walls and cardboard containers. In 2016, Thailand consumed 413,000 tons of PET. Preforms and containers accounted for 88 % of the consumption, while PET sheets accounted for the balance 12 % of the consumption.
COMPETITION FROM GLASS AND METAL PACKAGING IN THAILAND
Over the last twenty years global beverage producers have realized that it is not the product alone, which encourages and grows sales. The container and packaging must play their part in safeguarding the beverage, offering appropriateness to the intended outlets and delivering maximum convenience to the consumer. PET packaging has scored well above its competitors in beverage packaging in most of the counts. Though, there have been limitations in terms of material and ease of filling, but advance in materials and technology in the PET industry has been able to remove many of these difficulties in last few years.
On a per capita basis, Thailand is one of the largest users of container glass in the ASEAN region. Country’s leading container glass producers such as Bangkok Glass Industry, Thai Glass Industries and Siam Glass Industry account for more than 7,500 tons per day of glass containers for different sub- segments of beverage, food and pharma industry. PET packaging has been able to increase its share at the expense of glass bottles in last years. The only citadel for glass container and metal can producers are small sizes (200 – 350 ml), where PET packaging has been unable to make significant in-roads. But, with the fast pace development in technology and materials, PET packaging is expected to gain a respectable share in these segments in the coming years.
PETFORM (THAILAND) LIMITED
A subsidiary of largest PET resin producer, Indorama Ventures Public Company Limited, Petform (Thailand) Ltd. was established in 1996 to serve the PET packaging industry of Thailand. Over the years, the company has become a leading producer of PET preforms, PET bottles and plastic closures for food, beverages and other sub-segments Petform is a joint venture between Indorama and Sermsuk Public Company Limited, the exclusive bottler for major beverage producer, Est in Thailand. Indorama entered the PET business in 1995 with the establishment of a PET facility in the country with a capacity of 20,000 tons per year. In 1996, Indorama and Serm Suk PLC (then a bottler for Pepsi in Thailand) entered into a JV of downstream PET business of producing PET bottles and preforms.
Through organic growth, strategic acquisitions, and expansions the company currently operates 27 production facilities across 16 countries with a combined capacity to produce 4.4 million tons of PET materials. After the start up of AlphaPet facility at Decatur in USA, the company has become the largest PET producer in the world.
In Thailand, the company has an installed capacity to produce 3,517 million PET preforms and 1,465 million of PET bottles per year.
The Petform (Thailand) Limited packaging facility is headquartered in Lopburi, Thailand, and produces PET preforms, PET bottles and HDPE closures for carbonated soft drinks, water and other applications. The plant is backwardly integrated with the company’s IRP/AsiaPet PET facility. In 2012, Petform expanded with new lines in Nakhon Ratchasima (Korat) and within the IPI complex in Rayong. The Lopburi plant has an annual capacity of 905 million preforms, 420 million bottles and 1,548 million closures, while the Nakhon Ratchasima site produces 180 million bottles and the Rayong site produces 456 million preforms.
PETPAK COMPANY LIMITED
Petpak is among the leading producers of PET preforms and bottles for Thailand’s beverage industry. The company is owned by Bangkok Glass, which has a 60% share in the company. Other shareholders in the company include the bottling company Thai Nam Thip, major Thai beverage producers Sermsuk and Green Spot, closures producer Crown Seal, and Japanese major Toyo Seikan.
In 2015, Petpak, whose main plant is in the Ayutthaya province, responded to the growth in demand for PET packaging in Thailand with the opening of a second manufacturing base for PET preforms in Suratthani in the south of the country.
Adisak Sukprasert, General Manager at Petpak says: ”PET container industry has enjoyed above-average growth in Thailand. Our country is only just beginning to discover the bene ts of plastic packaging, and the prospects, therefore, are positive. We want to take advantage of the trend in the best possible way. We see ourselves in a pioneering role for Thailand and are introducing products and processes from Europe.”
SRITHAI SUPERWARE PUBLIC COMPANY
Srithai Superware Public Company is among the leading PET preforms and bottle suppliers to Thailand’s beverage industry from its Suksawat plant. For the year 2017, the food & beverage packaging sub-segment accounted for 42 % of total revenue of 9,577 million Baht for the company.
In 2017, the Thai Beverage Public Company Limited, one of the largest beverage producing companies in Thailand and the ASEAN region, decided to set up its own PET-preform to meet the captive demand for its beverage operations.