By Suwatchai Songwanich
Chief executive Officer,
Bangkok Bank (China)
A recent report by US consultancy Bain & Company said consumption of chocolate, chewing gum and candy had registered double-digit falls in China in the first half of 2017. However, other categories such as yoghurt and packaged water have been doing very well. Bain said this was “evidence of Chinese consumers’ continuing passion for health and wellness and their rejection of products considered less healthy, such as chewing gum and confectionery”.
People are also eating more fresh fruit and vegetables, according to data from Euromonitor which recorded a four per cent rise in 2016. China now consumes 40 per cent of the global total, and as people’s purchasing power grows at more than nine per cent per year, demand for food products is expected to continue rising.
Thailand’s longan producers are among the beneficiaries of the healthy eating trend. At a recent business matching event with China’s Tmall.com website, a significant demand surge was reported with orders of 8,000-10,000 tonnes worth more than Bt200 million expected this year.
Demand for organic foods has also spiralled, with sales of organic packaged food and beverages in China predicted to deliver strong year-on-year growth of close to 20 per cent in 2018. This is higher than the rest of the Asia Pacific region, which will experience greater than 10 per cent year-on-year growth in 2018.
Thailand’s Ministry of Agriculture and Cooperatives is keen to make the most of this demand. It has a goal of making Thailand the organics leader of Southeast Asia, increasing both organic farming land area and organics revenue by 20 per cent annually for the next five years.
The challenges are considerable. The market’s barriers to entry are high, for both growers and businesses. For example, farmers have to factor in start-up costs, because their income declines during the two to three years needed to convert fields to chemical-free cropping for exports. There are also reduced crop yields associated with organic farming compared to conventional agriculture of up to approximately 61 per cent less per hectare, depending on the type of crop.
Nevertheless, officials are working to build awareness, help create value-added products, and expand overseas markets. Thailand is a world leader in farm products, which comprise more than a sixth of the nation’s exports. And Thailand is a net exporter of food, with a respected national brand. This positive positioning should help sellers of exportable organic products like rice, premium fruit, coffee and tea build their presence in China where the value of organic food and beverage sales is projected to continue growing in coming years.
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