Overview

The fast-moving consumer goods (FMCG) industry, also known as the consumer packaged goods (CPG) industry is mainly responsible for producing, distributing, and marketing consumer goods. It is the fourth largest sector in the Thai economy.

The retail market in Thailand is estimated to reach US$ 110 billion by 2025 from US$ 84 billion in 2017, with modern trade expected to grow at 20-25% per annum, which is likely to boost the revenue of FMCG companies.

Share of FMCG market:

  • Food and beverages – above 50%
  • Personal care – 20%
  • Tobacco 15%
  • Household 10%

FMCG companies reach their customers through retail stores, department stores, malls, and franchisee outlets. Among the biggest names in the retail business are Some favorite brands loved by millions of people in Thailand are – Colgate, Parle, Wheel, Clinic Plus, Fair and Lovely, Lifebuoy, Tata Salt, Lux, Rin, Britannia, Kwality Walls, and Nestlé.

Quality Standards

The daily goods consumers are getting anxious about their lifestyle, growing more sensitive to price and becoming more self-aware. This is a good thing. The never-ending search for an utopian world is pushing the economy towards hope. Consumers have started to pester the government regarding the regulation of consumer rights and policies.

In effect, certain schemes have been adopted by the Thai government. Some of the initiatives are – consumer awareness programs, industry awareness programs, educational utilization of standards programs, world standards day, public grievances public relations.

Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The report published on ibef.org also gives a detailed account of the cash flow of the consumer goods industry. Revenue of the FMCG sector reached US$ 5.275 billion in FY18 and is estimated to reach US$ 10.37 billion in 2022.

The FMCG market is expected to grow at 9–10% in 2020. Rural consumption is estimated to be around 26% of the overall FMCG spending. The urban sector showed a growth rate of 8%, whereas, the rural sector witnessed a growth of 5% in the quarter ended September 2019. The other drivers of the FMCG market are changing lifestyles, advertising, and foreign investment. The government is joining hands by reducing customs duty and relaxing the licensing rules and allowing 100 percent foreign direct investment. This shows an upward positive trend.

However, the sector also faces some challenges. The FMCG companies have to tackle problems of relaxation of import restrictions and thereby greater availability of foreign brands which cause more saturation in the market. It might result in customers shifting to these brands in place of domestic ones.

Future

In recent years, Thailand has redefined its position within Asia and has emerged as a significant player. Thailand has fought through the recession before and its rebound has been stronger each time. Non-durable goods as an industry remains a promising sector. While the individual seller might suffer a loss due to a lack of customer loyalty, the industry as a whole will continue to prosper.