Diversify into innovative products to survive

To ensure recovery of the food industry amid these negative factors, it should focus on innovative products and health foods, which will continue to be major concerns for consumers, according to panellists at a seminar.
At the seminar on “Industry Meets Innovation: Food Industry Recovery” organised by the National Science and Technology Development Agency, experts in the food business told entrepreneurs to focus more on innovation to escape high competitiveness and ensure survival of their businesses after the floods.
Sura-at Supachatturat, manager of the strategy department of the National Innovation Agency, said more food firms could face difficulty next year after the flood crisis because of higher wages and weak spending sentiment.
He said that although few food companies closed down before the flooding, more – particularly small and medium-sized enterprises – would face challenges next year because they have low financial liquidity and are not open to innovations in their industry.
According to the National Food Institute and the Industrial Works Department of the Industry Ministry, three food companies with combined initial investment worth Bt29 million and 11 employees shut down in the first eight months of this year. Eight new firms with combined investment of Bt41 million started business during
 the same period, with 60 new jobs created. Before the flood crisis, the Thai food industry was expected to enjoy 12-per-cent growth in export value to Bt900 billion this year, based on an increase of 18.9 per cent to Bt563.88 billion in the first seven months. However, that forecast may not be achieved now, since some plants had to close temporarily during the flooding, while some exporters had to delay their shipments.
As a strategy to recover and diversify the Thai food industry, Sura-at advised enterprises to focus on the health-food trade.
He said functional foods, organic foods, medicinal products, and novel or nano-foods would be key to producers serving the changing demands of consumers.
Markersearch.com projects that the value of functional food and beverages will grow significantly next year, by 31 per cent to US$74 billion (Bt2.3 trillion) for beverages and by 23 per cent to nearly $119 billion for foods.
Thus food enterprises should focus more on this kind of product to retain their competitiveness.
The leading players in functional foods are in Japan, which has about 38 per cent of the global market, followed by the United States with 31 per cent.
Kasikornbank Research Centre reports that Thailand has only a very small share of the global market for functional foods, as the value of such products was about Bt19.5 billion in 2009.
Sura-at said the Thai food industry still had plenty of room to grow in the global market if it focused more on global trends and responded to consumers’ demands. The major focuses of consumers would be on the “four Bs”: brains, beauty, belly (weight management), and well-being.
Wannop Visessanguan, director of the food biotechnology unit of the National Centre for Genetic Engineering and Biotechnology, said research and development and education were keys to business success.
He said technology would continue to play an increasing role in the food industry, particularly after the flood disaster. Enterprises should also focus more on food safety and quality.