Bottled Water in Thailand
Headlines
·
In 2008 bottled water registers
total volume growth of 9% to reach 2,292 million litres
·
Bottled water companies strive
to differentiate their offerings
·
Carbonated bottled water posts
the highest growth in 2008 with total volume sales up 12%
·
Unit prices increase only
marginally in 2008
·
Boon Rawd Brewery Co maintains
its leadership position during 2008
·
Bottled water is anticipated to
record a 7% total volume CAGR over the forecast period
Trends
·
Since bottled water manufacturers
have little room to distinguish their brands from others, image building is
gaining in importance. Major companies are increasingly using ‘emotional
marketing’ for creating brand awareness in consumers’ minds. Still bottled
water completely dominates sales in Thailand while carbonated bottled water
remains insignificant. People in Thailand are consuming more bottled water
since it is considered a viable substitute for other types of soft drinks,
again thanks to the emerging health-consciousness trend.
·
The 2008 growth rate for total
volume sales of bottled water at 9% was slightly faster than the review period
average. Aggressive marketing activities and greater visibility for bottled
water at both retail and foodservice outlets contributed to higher levels of
consumption among the Thai population. Bottled water packaged in plastic PET
bottles is gaining in popularity at the expense of glass bottles as these are
easier to carry and look more sophisticated.
·
Carbonated bottled water saw
the fastest growth within bottled water overall even though its sales base
remains exceptionally small. The product
is rather a niche category, purchased mainly by expatriates and visiting
foreigners since Thai consumers are actually not very familiar with carbonated bottled
water and tend not to consume it as part of their daily lives.
·
Both the on- and the off-trade
are important distribution channels for bottled water. Some large manufacturers
tend to focus on either one or the other in order to create a competitive advantage
in terms of distribution. Glass bottles are a popular packaging format via
foodservice although the penetration of PET bottles within this channel is
gathering pace. PET bottles are very prominent in the retail channel thanks to
their image of on-the-go lifestyles. As Thai consumers become more health
conscious they tend to buy increasing amounts of bottled water through
retailers for home consumption.
·
The rise in sales of bottled
water is evident via both the off-trade channel and the on-trade, with the
former showing a slightly higher increase during 2008. The number of local
brands of bottled water available via on-trade outlets such as restaurants,
hotels, pubs and bars is increasing. Additionally, water refill stations are
growing in popularity; these can now be found in many locations thanks to their
lower prices for drinking water as compared to branded varieties of bottled
water.
·
Average unit prices for bottled
water largely remained stagnant in 2008, showing only a marginal increase.
Bottled water is a very price-driven category, and manufacturers have to keep
their prices competitive. Most of the marginal upward movement in unit prices
was brought about by the increase in drinking bottled water on the go, which
led to an increase in the consumption of the smallest pack sizes, namely 500ml
and 600ml.
·
Still bottled water accounts
for almost 100% of total bottled water sales in Thailand, with carbonated
bottled water holding only a miniscule share. Manufacturers of still bottled
water position their products as being hygienic, convenient and portable.
Widespread availability nationwide also helps to generate increases in
consumption. Moreover, manufacturers tend to conduct aggressive promotional
activities and campaigns, with the majority using emotional marketing in order
to create brand loyalty.
·
Direct selling is another
method of distributing bottled water in Thailand, the only category where this
plays a role. Usually this takes the form of large-size, 20-litre plastic
containers, and is prominent in both urban and rural areas. The containers are
normally distributed by pick-up trucks for delivery to consumers’ homes
and are returnable for refilling,
usually in exchange for a full one. Direct selling has benefitted to some
extent from the growing popularity of PET bottles due to their perception as
offering higher quality and greater convenience.
·
Flavoured bottled water and
functional bottled water have yet to be introduced within Thailand. Although
soft drinks such as water with added minerals, amino acid drinks and soy
peptide drinks are available these are considered to be functional drinks for
the purposes of reinvigorating health and boosting energy.
Competitive Landscape
·
Boon Rawd Brewery Co Ltd with
its Singha brand maintained the leadership position within bottled water during
2008, accounting for 17% of retail value sales. The second biggest player was
Nestlé (Thailand) Ltd with 16% followed by Serm Suk PCL with the Crystal brand.
Generally speaking the choice of distribution channel significantly determines
the availability of bottled water products to the end-user whereas the product
itself has only limited potential for differentiation between competing brands.
The Singha brand from Boon Rawd Brewery Co has achieved the leading position
largely thanks to its widespread distribution via both the on- and the
off-trade channels.
·
Nestlé (Thailand) Ltd saw the
biggest increase in retail value sales during 2008. This was largely as a
result of the company’s bottled water products having very widespread
distribution via supermarkets/hypermarkets and convenience stores, both of
which are rapidly expanding across Thailand. Nestlé (Thailand) is increasingly
using emotional marketing to communicate effectively with its target customers.
Given its success within bottled water the company has plans to expand
production capacity so as to address anticipated increases in demand.
·
Domestic brands are able to
compete effectively against international brands particularly in still bottled
water, by far the largest category. International brands dominate sales of
carbonated bottled water since these products are mostly imported and sold at
considerably higher prices.
·
There were no significant new
product innovations within bottled water during 2008. However, there were
developments in terms of packaging design and the labelling of PET bottles to
make these more attractive and modern-looking.
·
A number of marketing campaigns
and activities were launched by key manufacturers of still bottled water in
2008, although carbonated bottled water continued to suffer from limited
awareness. Boon Rawd Brewery Co Ltd organised the Singha Hot Summer Party
campaign as well as mini-concerts to strengthen its brand recognition.
Advertising via mass media such as TVC and other publications was also used to
create greater awareness and visibility among consumers nationwide.
·
Bottled water continued to be
packaged in PET bottles, HDPE bottles and glass bottles during 2008. However,
consumers are increasingly favouring PET bottles over HDPE and glass
alternatives. There has been some development in terms of packaging design, for
example PET bottles used for the Nestlé Pure Life and Crystal brands are now
easier to handle and have a more modern, distinctive and eye-catching look.
·
Standard brands predominate in
bottled water within Thailand and are widely consumed throughout both retail
and foodservice outlets while premium products occupy a stronger position
through the on-trade, particularly hotels, restaurants and catering. Premium
brands remain a niche whereas economy varieties are growing in prominence.
·
Private label is gaining
significance within still bottled water thanks to its slightly lower retail
price position as well as growing
availability through supermarkets/hypermarkets and convenience stores
nationwide.
Prospects
·
The continuing trend towards
increased health and beauty consciousness among Thai consumers will lead to
better, more informed selection of food and drinks. Due to its
‘good-for-your-health’ image, still bottled water is likely to benefit from
this trend over the forecast period.
·
The growth in total volume
sales of bottled water is expected to slow down marginally between 2008-2013.
That said it will nevertheless remain quite impressive, at a CAGR of 7%.
Bottled water in Thailand is likely to become even more competitive given
intense activity on the part of the major players as well as the emergence of
smaller newcomers. Aggressive pricing strategies are likely to be seen as well
as significant efforts by manufacturers to create better prospects for bottled
water as a whole.
·
Few if any forecast threats to
potential growth can be identified. On the contrary positive factors in support
of further growth are likely since there will be an increase in demand over the
forecast period. The key challenge for manufacturers will rather be to maintain
volume share and compete successfully in a more aggressive environment where
consumers might not be able to differentiate among brands solely on the basis
of product content.
·
Carbonated bottled water is
anticipated to show a faster rate of growth in volume terms compared to still
bottled water, albeit from a much smaller sales base. Still bottled water is
likely to represent significant competition for carbonated varieties during the
forecast period since this is the category where aggressive marketing campaigns
will be concentrated; in contrast, manufacturer activity is expected to be
muted at best within carbonated bottled water.
·
Overall, bottled water is
expected to see intense activity over the forecast period, with low pricing
policies continuing to be a prominent feature alongside other core strategies
such as emotional marketing. Retail pricing for different brands of still
bottled water is likely to be very competitive, with manufacturers closely
watching each other. Discounting is unlikely to be used as a primary tactic but
may well be kept in reserve for use during specific periods of time and via
certain retail distribution channels. It is not likely to be seen within
foodservice since on-trade prices vary according to location.
·
There were no significant new
product launches in 2007-2008, although there were developments in terms of
more attractive and easier-to-handle packaging. Such developments have enabled
the Nestlé Pure Life and Crystal brands to achieve greater consumer acceptance.
·
Branding is likely to remain a
constant focus among the major manufacturers. Strong brand loyalty will enable
them to retain their customer bases and differentiate their products in the
consumer’s mind. Companies can be expected to engage in point-of-sale
promotional activities regarding the health benefits of drinking bottled water.
In addition, marketing partnerships with on-trade agencies are likely to be
established in order to boost foodservice volumes over the forecast period.
Also Read Report on In home Consumer Electronics Market. Contact Mahasagar Publications.