Thailand Summerfruit Market Overview OCTOBER 2009 Author: Marissa Bailey Value Chain Development Officer Agribusiness Group Editor: Cynthia Mahoney Value Chain Development Leader Agribusiness Group Published by: Department of Primary Industries Farm Services Victoria Agribusiness Group Melbourne, Victoria, Australia December, 2009 © The State of Victoria, Department of Primary Industries, 2009 This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Authorised by: The Victorian Government, GPO Box 4440, Melbourne, Victoria, 3000, Australia ISBN: 978-1-74217-906-3 (online) For more information about DPI visit the website at www.dpi.vic.gov.au or call the Customer Service Centre on 136 186. Also published on www.dpi.vic.gov.au/agribusiness Front Cover Image: Australian Summerfruit (DPI, 2009a) Acknowledgements: Data has been compiled by Strategic Market Analysis Team (DPI Agribusiness Group) Disclaimer This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. i Executive Summary Key Thailand Market Facts Population 67.1 million Gross Domestic Product (GDP) AU$419.5 m Consumer expenditure AU$226,612 m Consumer expenditure on food AU$86,308 m Consumer expenditure on fruit US$3,288 m (2008) Source: Planet Retail (2009) Thailand is a rapidly developing economy. Thailand’s GDP is predicted to grow by seven percent per annum, on average, between 2002 and 2013. This is leading to improvements in the standard of living and growth in the levels of discretionary spending. The consistent growth of seven percent per annum in gross domestic product (GDP) over the past 20 years has led to the emergence of an affluent middle class who have an increasing appetite for imported food. Thai people living in urban areas have become relatively brand conscious. Their shopping styles have moved away from the traditional open-air wet markets to modern supermarkets and shopping centres which offer convenience and a wide selection of products. There has been ongoing expansion of retail businesses, particularly hypermarkets, supermarkets, modern shopping malls, convenient stores and department stores. Due to the increasing number of women and young adults in the work force, the introduction of ready-to-eat and prepared food items is expected to trigger major growth in the convenience food market in Thailand. Furthermore, the younger population is very receptive to new food tastes that fit their lifestyles. The key target markets in Thailand for the Australian agri-food sector are the ten million affluent Thai consumers and expatriates, international tourists and the Thai food processing sector which depend on imported processed food and raw ingredients for re-processing into products for domestic consumption and for re-exporting (DPI, 2008). These products are typically considered better quality than local products. The Thai consumer being targeted by Australian agri-food exporters has a requirement for foods that meet international standards of food safety and quality. Recent food scares have significantly increased the demand for products that are safe and traceable. Australia is well placed to meet these demands. Thailand’s demand for, and preparedness to pay for, high value perishable products differentiates it from many other markets in South East Asia. In 2007 Thailand was the largest export market for Australian table grapes, summerfruit1, cherries and avocadoes. Thailand is a significant tourist destination and attracted 13 million tourists in 2007. These tourists demand a range of western-style products and high-value goods, of which a significant proportion is imported. The country also has a large expatriate population and these two sectors provide opportunities for a wide range of imported food products. Thailand’s trade with its neighbours in the region doubled over the period 1995 to 2005 and there is evidence that this growth will continue. Thailand therefore is a significant hub and trading port for the region and this increases its strategic importance to Australian exporters. The Thailand-Australia Free Trade Agreement (TAFTA), signed in 2005 liberalised trade in many sectors, including food, and this has led to a range of new opportunities emerging. Each year tariffs are reduced on a wide range of food products and now Australia has a significant advantage over its major competitors. Although Thailand was Australia’s seventh-most valuable summerfruit export destination in 2008/09 it is not currently a large summerfruit market, accounting for two percent of export value and volume. Hong Kong was Australia’s largest summerfruit market with exports worth AU$13 million (43% of Australia’s total summerfruit export value and 47% of volume). The United Arab Emirates (UAE) was second and Singapore third. Together the top three markets accounted for around three-quarters of Australia’s summerfruit export volume and value. 1 Summerfruit is defined as one commodity group representing fresh apricot, nectarine, peach and plum producers (Summerfruit Australia, 2009). ii Australian summerfruit exports to Thailand have fluctuated since 2004/05 but have increased overall in value and volume. Thailand’s summerfruit imports have increased over the past five years, albeit from a low base, growing 145% in volume and 763% in value. As the largest exporter of Summerfruit to Thailand, most of this growth has come from Australian imports. In 2008/09 Australian summerfruit products represented 65% of the market share by value and 45% of market share by volume. Smaller fruit sizes (eg. plums 48-52mm) seem to be more acceptable in Thailand than other South East Asian markets. Exporting smaller size ranges to Thailand, while ensuring that the appearance and the internal quality of the fruit is maintained, may be a way of keeping prices and quality at an acceptable level. This will also provide an opportunity for the industry to market these smaller size ranges. Thailand provides Australian summerfruit exporters with an opportunity to market to the developing modern retail outlets and food service operations, which offer competition in summerfruit on factors other than price including taste, freshness, healthiness, new varieties and food safety. Another opportunity of marketing more directly into selected supermarket chains therefore reducing costs and charges while at the same time promoting Australian products. Exporting a mix of compatible products by sea freight containers may also offer further opportunities in this area. iii Table of Contents Executive Summary .................................................................................................................................................... ii Table of Contents ........................................................................................................................................................ 4 List of Tables and Figures .......................................................................................................................................... 5 1. Thailand Market.................................................................................................................................................... 6 1.1. Victorian and Australian Food Trade with Thailand.......................... 9 1.2. Food Retailing in Thailand.............................................................. 10 1.3. Modern Retail Sector...................................................................... 12 1.4. Food Service in Thailand................................................................ 14 1.5. Trade Agreements.......................................................................... 14 1.6. Tariffs ............................................................................................. 15 2. Australian Summerfruit Exports to Thailand ...................................................................................................... 16 3. Thailand Summerfruit Market............................................................................................................................... 18 3.1. Peaches and Nectarines ................................................................ 20 3.2. Plums ............................................................................................. 21 3.3. Apricots .......................................................................................... 22 4. Market Opportunities for Australian Summerfruit Exports to Thailand............................................................ 24 Appendix 1. Modern Retail Format Definitions....................................................................................................... 25 Appendix 2. Major Supermarket Chains in Thailand .............................................................................................. 28 Appendix 3. Australian Summerfruit Exports to the World ................................................................................... 31 Appendix 4. Top 30 Australian Plum Export Destinations..................................................................................... 32 Appendix 5. Top 30 Australian Nectarine (Excluding Peaches) Export Destinations