Thailand shoppers cut back amidst FMCG market strain

Thai FMCG consumers become more selective, driving brands to adapt through affordability and innovation.

The fast-moving consumer goods (FMCG) sector in Thailand is experiencing a transformation as consumers face increased financial pressures and a shifting economic landscape. 

Howard Chang, Managing Director of the Worldpanel Division at Kantar Thailand and Malaysia, said that the Thai consumer market had seen a notable peak in 2021 with a 4% increase in consumption, an eight-year high, largely fueled by a substantial government subsidy of 500b baht aimed at helping consumers during the Covid-19 crisis.

"That's sort of helping consumers to cope with Covid, but post-Covid, such subsidies did not repeat," Chang explained. This absence of continued financial support led to a slight decline in FMCG sales in 2022 and 2023, as consumers adjusted to the rising cost of living and a stagnant economy.

Chang observed significant shifts in consumer behaviour, noting, "What we saw how consumers cope with a rising cost of living and sort of a stagnant economy, is either by cutting back on some of the non-necessity items, or they change the place where they shop, or they change to cheaper brands." 

Amid these challenges, there is a potential positive development on the horizon, with discussions within the Thai government about introducing a new subsidy through a digital wallet initiative, which aims to inject another 500 billion baht into the economy to stimulate spending and economic recovery.

Chang also highlighted changes in consumption patterns, particularly in Out-of-Home (OOH) consumption. "The staying home economy is not there anymore. People resume the outer form activity," he stated. The resurgence of activities outside the home has led to increased consumption during specific times of the day, with the morning occasions seeing the largest rise in 2023. Products like energy drinks, ready-to-drink coffee, and liquid dairy are leading this trend, suggesting a recovery in OOH consumption as routines normalise post-pandemic.

For FMCG brands looking to navigate this complex environment, Chang emphasised the importance of being meaningful and different in the consumers' minds and ensuring availability to increase market penetration. "Brands that are meaningfully different to more people also have a higher chance to command a higher price," he noted.