Good prospect for fast-moving goods

The market last year witnessed a change in consumer behaviour and spending in the Bt500-billion FMCG industry, which was adversely influenced by the country’s macroeconomic situation, general manager Howard Chang said yesterday
This year, however, the government’s infrastructure investment will help improve the still-sluggish economy, creating jobs and stimulating local consumption, despite the Bank of Thailand having recently cut its 2015 gross-domestic-product growth forecast from 4 per cent to 3.8 per cent, he said. “The growth in FMCG business should be better than GDP growth,” Chang said, adding that Kantar Worldpanel had seen an improvement in terms of sales in this segment during the first two months of the year.
This year’s improvement in January and February probably partly reflects the lower base in the same period last year, when the Kingdom was mired in political and economic uncertainty, he acknowledged.
However, household debt remains a long-term challenge for the government as it tries to drive the domestic economy, he said.
The central bank has forecast that the ratio of household debt to GDP will continue to surge, rising to 85 per cent by year-end, from the current level of around 80 per cent.
According to a survey by Kantar Worldpanel, last year was not a good year for the local FMCG sector, as its expansion was at the lowest level since 2004, when Bangkok International Airport was closed for some time following its occupation by protesters.
With a sample size of 4,000 respondents in both urban and rural areas, the report found that FMCG business growth had slowed last year because consumers shopped less often and cut back on non-essential items, selecting instead to up-size and look for more value. Given such a change in behaviour, hypermarket operators suffered the most from reduced purchasing frequency, facing a drop of 12 per cent from the 2013 level.
Convenience stores, however, enjoyed an increase of purchasing frequency and the number of purchased units, the survey found.
In terms of product categories, consumers cut their purchases of ready-to-drink tea, mouthwash, stain remover, liquid soap, snacks, hair-styling products and conditioner, facial cleansers and infant milk.
The head of the research firm suggested that marketers and FMCG companies should understand these behavioural changes and prepare a proper trade and sizing strategy in response. “They should focus more on communicating a product’s core value and function, and not just on low price or promotion,” he added.