How the epidemic is impacting Thailand’s FMCG
Latest data from Kantar reveals the impact of the current epidemic for Thailand’s FMCG industry. One of the key issues for Thailand is the impact on tourism and trade which are two key engines of growth for the economy. As a result of the crisis, 66% of consumers are thinking more proactively about financial planning and the future*.
There’s no doubt Thai consumers feel the threat from Covid-19, but the response has been measured, thoughtful and not overwhelmingly negative or panic induced. The health risk is most pronounced for urban consumers, in particular, greater Bangkok households. They have cut back on going out and avoided crowded areas, as evidenced by the 4% decline in shopping trips for groceries (January 2020 vs. December 2019), and the 43% increase in online grocery shopping transactions (January 2020 vs. January 2019). The concern is also evident for upcountry urban consumers, but it is not as pronounced. These shoppers have reduced their month on month shopping trips by -2% and online transactions surged +70% vs. the year before.
Impact on business
The biggest challenge for businesses is that this behavioural change has led to a sales decline of -3.5% in January 2020 compared to the previous year which is the weakest January performance in the last decade. Slowing global trade and severe drought affecting key agricultural outputs had already made 2020 a challenging year, but the current crisis is making things more acute.
Support preventative action
Consumers are not over-reacting and hoarding all products - the average number of categories bought is stable vs. December 2019. But they are stocking and focusing on the essentials and the products which they trust will allow themselves to create a “safe” environment.
As with most countries affected, Thai consumers have focused on “self-sterilisation” products. These include products such as mouthwash, soap (particularly those with strong hygiene and anti-bacterial credentials) and household cleaners.
Prevention through strong health as well as cleanliness is a clear theme. Beverages brands which show a clear added value are growing exceptionally strongly – Bird’s Nest, Essence of Chicken, functional drinks and sterilised milk to name a few.
Be a trustworthy brand when consumers feel vulnerable
Providing products that are safe to consume and therefore trustworthy is the top expectation consumers have of food and beverage brands*. It’s therefore important that brand reflect this in their communications – brands need to be thoughtful, trustworthy and supportive towards consumers during a time when they are feeling quite vulnerable.
The decision to stay at home more has naturally led to more transactions for home cooking foods such as seasoning sauces, meal preparation ingredients and canned foods.
There are indications of panic buying in some particular areas. Toilet tissue, feminine protection and toothpaste have all seen higher transaction growth than usual – this reflects just how vulnerable consumers feel right now and the sensitivity of the situation.
However, there is a more thoughtful and light-hearted theme as certain categories are bought more to reflect more time spent at home – for example prawn crackers, ice cream, ready-to-drink coffee and carbonated soft drinks have all seen double-digit transaction growth in the last month in certain regions.
There is no doubt it’s been an exceptionally difficult start to the year for many businesses and it will only get harder as the crisis prolongs and the uncertainty remains. But there are clear actions which businesses can take to navigate the uncertainty, provide leadership and support to consumers, and ultimately earn their trust. As long as we act responsibly, ethically and with integrity, consumers have proven they look to brands which they trust.
The uncertainty brought by COVID-19 has highlighted how important it is to make decisions quickly. The situation is changing people's lives and its effects on the economy are already being felt across different sectors. In Thailand the situation has slowly escalated through January – February and is now beginning to see a surge in transmissions in March similar to countries around the world. For marketers this poses a number of challenges and our February update looks in to a number of these key questions:
- What is the new business as usual?
- With changing consumer behaviour, what will stick long term and how can brands adapt?
- How can you promote your brand without being seen to take advantage of the situation?
Download the documents through the button at the right of this page and get in touch with our experts if you would like to have more information.
Notes to editors
*Kantar, Insight Division, Online survey 3,000 respondents 18-60 years old (Singapore, Indonesia, Philippines, Korea, Japan and Thailand).
Shopping behaviour information derived from Kantar, Worldpanel Division’s nationally representative sample of 4,000 households continually tracking Take Home grocery purchases.
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Managing director Thailand and Malaysia
- Send a messageHoward Chang