Experts mull Chinese expansion of food, beverage brands in Thailand

The aggressive expansion of major Chinese food and beverage brands is significantly impacting Thai businesses.

The food and beverage industry in Thailand is being closely watched after the announcement of expansion plans by numerous new brands from China. These are entering the market using a similar strategy: expanding into community areas, near BTS stations, and not just limiting themselves to shopping malls while offering competitive prices.

For example, Mixue, offering bubble tea and soft-serve ice cream; Ai-cha, an ice-cream brand from Indonesia; WEDRINK, a Chinese franchise brand for bubble tea and ice cream; Zhengxin Chicken, a Chinese fried-chicken franchise with pieces starting at 15 baht; and Cotti Coffee, a Chinese coffee franchise priced at around 55 baht.

This competition not only impacts major players in Thailand but also affects small vendors in markets and pushcart sellers.

At a seminar hosted by the University of the Thai Chamber of Commerce, which introduced Thailand's first master's degree program in restaurant management, Thai entrepreneurs and experts in the food and beverage industry discussed this issue extensively.

Jullakiat Sinchaichukiat, founder and chief executive of Baramizi Group, said that considering the overall landscape of the Thai restaurant business, a substantial influx of Chinese brands with lower costs and higher capital is expected. 

To address this, he emphasised the importance of building strong brands and acquiring extensive knowledge. 

Building a brand is akin to creating a business asset, he said. Thailand needs to join forces to create global brands and enhance brand value. For Thai brands, the focus should be on promoting Thai cuisine from Thai brands, not just food from Thailand. 

However, growing a brand sustainably requires significant know-how because a brand is an intangible asset that can generate substantial value, such as brand equity. For restaurant brands, licensing can be a strategy to enhance brand value and facilitate global business expansion, potentially generating hundreds of billions of baht and stimulating the Thai economy.

"Restaurant brands must develop systems and focus on brand building. Simply offering delicious food and well-designed spaces may no longer be sufficient in today's competitive environment," Jullakiat said.

Thanapong Vongchinsri, managing director of Penguin X Co Ltd, and co-founder of the restaurant business Penguin Eat Shabu as well as the owner of the Torpenguin page, expressed an interesting perspective on Thai restaurant brands in the global market. While Thai cuisine is globally recognised, there are no globally known Thai restaurant brands.

Furthermore, he pointed out that many Thai restaurant brands have recently been importing a significant amount of vegetables and mushrooms from China.

"It's ironic that we call Thailand the 'Kitchen of the World' and export food ingredients globally, yet we don't have a single global restaurant brand, even though Thai cuisine ranks among the top five in the world," he remarked.

Sethaphong Phadungpisuth, managing director of Gnosis Co Ltd, highlighted data from the Thai Chamber of Commerce indicating that there are around 160 Thai restaurants in Shanghai, but only a couple of them are owned by Thais. 

Moreover, an initial assessment of Thai restaurants in China revealed that they import only two products from Thailand: ginger and pepper. Holy basil (krapao) is not imported as it can be grown locally in China. In contrast, many restaurants in Thailand rely heavily on imported vegetables from China.

"Thai restaurants in China are impressive. When you dine there, they provide instructions on how to enjoy the food, and most of the restaurants adhere to the Thai restaurant concept meticulously. They are very skilled, and the consistency across all restaurants is remarkable," he noted.

Kittidet Wimonrat, also known as iTAN, a food critic, marketing expert, and owner of the restaurant Phed Mark, emphasised the heightened importance of branding in challenging economic times. For every entrepreneur, maintaining brand recognition and ensuring that customers remember their brand is crucial. This involves keeping the brand's existing standards and consistently delivering a positive experience to customers. 

He also highlighted the availability of various knowledge resources and courses aimed at promoting and developing Thai brands.