Water takes fizz out of Thai soft drinks market

- Last updated on GMT

Related tags: Soft drinks, Soft drink, Bottled water, Carbon dioxide, Canadean

Thailand's tropical climate has fuelled the country's thirst for
soft drinks, with consumption growing steadily in recent years,
according to market analysts Canadean. Bottled water and
other 'healthy' drinks are the main drivers of growth - but this in
turn has eaten into carbonates' share of throat.

The Thai weather has helped to maintain a healthy soft drinks market despite the combined threats to Asian-wide tourism posed by 9/11, Bali and more recently, the outbreak of SARS, the report suggests.

The bottled water market has almost tripled in the last decade and now accounts for almost 40 per cent of all soft drinks consumed in Thailand.

The trend towards healthy living and the aggressive promotional activity undertaken by larger suppliers have generated plenty of demand for Thailand's abundant ground and spring water supplies. Per capita consumption is still relatively low though, and added-value segments such as flavoured water are still very much in their infancy, offering considerable opportunities in the future.

Furthermore, the rapid expansion of hypermarkets and convenience stores - driven in part by major European retailers - should add further impetus to home consumption, Canadean suggests.

But growth could be curbed by factors largely out of the control of the major water suppliers. For example, the HOD sector (home and office delivery) has grown rapidly in recent years, but household deliveries are becoiming increasingly hampered by traffic congestion in the larger cities such as Bangkok, meaning that growth is limited to workplace consumption.

Water is not the only category to have performed well over the last few years. Juice, nectars and still drinks have all shown solid growth, again eating into the carbonates market. These three product segments have all benefited from consumers becoming increasingly health conscious, and nwe product development has been strong as companies seek to capitalise on this important trend.

Iced and ready-to-drink teas are also perceived as being healthy drinks, and showed spectacular growth in 2003 thanks to extremely competitive pricing and the support of significant promotional expenditure, Canadean said.

But if the share of throat enjoyed by carbonates is declining as a result of increasing sales of other drinks, in simple volume terms the category goes from strength to strength, according to Canadean.

Growth is largely down to cola - but Canadean suggests that the carbonates category is perhaps over-reliant on this product and could come a cropper in the future as a result, despite the significant volumes. However, the proliferation of quick service restaurants throughout Thailand could prove a vital lifeline, offering new consumption opportunities for both cola and other carbonates - in particular the so-called 'healthy' variants.

Looking forward, the modernisation of Thailand's retail industry and the increased number of on-premise outlets should provide the opportunity for further steady growth, Canadean predicts, forecasting further - if slower - growth for 2004 as a whole.

Related topics: Markets, Soft Drinks & Water

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