Foodservice profile – Thailand

Consumer behaviour

Consumer trends

In 2017, the final consumption expenditure per capita in Thailand was 111,292 Thai baht (US$3,584.7^{Footnote 1}) up from TBH 107,494 in 2016 (US$3,462.3) (Office of the National Economic and Social Development Board, 2018).

In 2018, food and non-alcoholic beverages represented the largest share (22.6%) of individual consumption expenditure of households in Thailand, followed by restaurants and hotels (17.7%) and transport (14.1%). Alcoholic beverages, tobacco and narcotics accounted for 3.1% of individual consumption expenditure of households in 2018.

Food and non-alcoholic final consumption expenditure increased by 1.4% compared to 2017, while restaurants and hotels' share increased by 6.0% between 2017 and 2018. Individual consumption expenditure of households increased by 0.7% for alcoholic beverages, tobacco and narcotics.

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• Individual consumption expenditure of households: 4.8%
• Food and non-alcoholic: 1.4%
• Alcoholic beverages, tobacco and narcotic: 0.7%
• Clothing and footwear: 2.9%
• Housing, water, electricity, gas and other fuels: 4.3%
• Furnishings, households equipment and routine maintenance of the house: 5.0%
• Health: 5.3%
• Transport: 8.9%
• Communication: 5.0%
• Recreation and culture: 5.6%
• Education: 6.2%
• Restaurants and hotels: 6.0%

Source: Office of the National Economic and Social Development Board - National Accounts of Thailand, 2018

The Thai government is trying to regulate the food sector and improve the image of the latter in order to bolster the country's spot as one of the 'culinary melting pot' of Asia. Although consumers tend to spend less due to the rising cost of living, the foodservice sector is expected to continue its growth thanks to a rapid urbanization, a strong tourism industry and an ageing population, which will create opportunities in the institutional foodservice sector.

Thailand's coffee and tea shops category is the fastest growing segment within the restaurant subsector with a CAGR of 4.3% over the 2016-2019 period. Customers in-work with busier lifestyles are looking for vibrant spots with a casual atmosphere to socialize. Interested exporters could tap into this potential category, which is expected to grow by a CAGR of 3.7% over the 2017-2023 period.

Consumer segments

In 2017, GlobalData conducted a foodservice survey interviewing a thousand Thai consumers and included a range of questions to establish consumers' attitudes and preferences when eating and drinking out. The survey identified the following consumer segments, which may help Canadian agri-food and seafood exporters to learn how to better position themselves in the Thai foodservice market.

Consumer segments in Thailand's foodservice market^{Footnote 2}

Frugal convenience-seekers:

• Consist of 34% of Thai foodservice transactions
• 49% of the respondents were male and 51% female, a total of 40% were between 25 and 44 years old.
• 22% have an annual household income of between THB300,000 (US$9,663) and THB449,999 (US$14,495).
• This group has the highest transaction values. Frugal convenience-seekers are middle-aged, busy, and in work. They generally seek out budget friendly and convenient options.
• They like to indulge and are experimental enough when eating out but perceive themselves as 'health-conscious'. This draws them to operators who successfully brand themselves as 'healthy' while still offering indulgent food options.

Time-poor experimenters:

• Consist of 12% of Thai foodservice transactions
• 52% of the respondents were male and 48% female, a total of 46% were between 35 and 54 years old.
• 17% have an annual household income of THB1,000,000 (US$32,210) and above
• Time-poor experimenters are mature, busy and in work and are also more likely than average to be higher-earners. For them eating out is an indulgent part of their routine.
• They want to get their food in the quickest and most convenient way possible. They also try out a variety of meals in order to break up the monotony of eating out so frequently
• Offering originality, indulgence and frequently changing menus will attract this segment

Sporadic pludgers:

• Represents 20% of Thai foodservice transactions
• 52% were female and 48% were male, a total of 28% were between 55 and 64 years old
• 32% have an annual household income between THB300,000 (US$9,663) to THB599,999 (US$19,326)
• Sporadic splurgers are older consumers and are most likely to be retired than in any other segment
• They do not have any desire to eat out often, and are generally unwilling to try anything new. They also aim to find the healthiest food and drink options
• Operators who are providing quality food, and offer consistency in their menus are more likely to attract this segment

Regimented routiners:

• Consist of 8% of Thai foodservice transactions
• 61% of the respondents were female and 39% were male, a total of 38% were over 55 years old
• 16% have an annual household income of between THB200,000 (US$6,442) to THB299,999 (US$9,663)
• Regimented routiners include older, often retired or are working part time. They are health conscious and don't eat out often, don't like to indulge, and are unwilling to try anything new
• Operators providing high quality food, service at a reasonable price and consistency in their menus will win with the routiners

Inbetweeners:

• Represents 26% of Thai foodservice transactions
• 51% were male, with 49% of female, a total of 44% between 35 and 54 years old
• 20% have an annual household income between THB600,000 (US$13,986) to THB799,999 (US$25,768)
• Inbetweeners are mature and in work, who have children living with them at home
• Eating out for them is a treat, as well, are often more adventurous and always willing to try out new things
• Quality is an important factor in choosing where to eat or drink. Price, service and variety also tend to influence their decision

The inbetweeners represent the largest consumer group in Thailand with 28% share of the country's population. However, the frugal convenience seekers lead the way in all other three major foodservice channels, followed by the inbetweeners and the sporadic slurgers. The channel that is most sought by this consumer segment is the full service restaurant (FSR) channel. Time-poor experimenters share's across the various channels are consistent, but FSR (14%) is the preferred channel for this segment. Sporadic splurgers indicate a preference for coffee and tea shops (23%). The consumer segment with the lowest share in all four major channels is the regimented routiners who represent 10% of the Thai population, and have 8% share in both the quick service restaurant (QSR) and coffee and tea shop channels.

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	Frugal Convenience Seekers	Time-Poor Experimenters	Sporadic Splurgers	Regimented Routiners	Inbetweeners
Thai Population	27	11	23	10	28
Quick service restaurant	33	13	21	8	25
Full service restaurant	34	14	21	7	25
Coffee and tea shop	30	12	23	8	27

Source: Global Data, Thailand - The Future of Foodservice to 2022, 2018

Foodservice market

The foodservice sector is dominated by QSR, FSR and mobile operators. Thailand is well know for its street food culture and various types of culinary specialities. The robust tourism industry and spending by foreign tourists is a pillar of the foodservice industry, generating US$17.3 billion in 2017 (USDA, 2018). The Thai economy is recovering after the growth rate slumped in 2012 and it is forecast that the growth value of the foodservice sector will slow down by 2022. However, with a low level of unemployment, and the government announcement of an increase in public expenditure to also foster private investments, the Thai foodservice industry is adapting to the rise of consumer segments who enjoy eating and drinking out and having a variety of meal options, especially within the rise of the urbanite middle class families.

Recent trends and events that will contribute to the expected foodservice expansion include:

1. Rapid urbanization in Bangkok and other cities is expected to increase imports within a large diversity of agri-food and seafood products
2. The dynamic tourism industry, one of the most important in Asia, is growing with the presence of a large number of hotels and restaurants
3. Increasing international traveling, studies abroad and social media are influencing consumer eating habits
4. An increasing preference for coffee and tea shop channels among busier and younger age segment
5. Ageing population. which will create opportunities in healthcare and the institutional food service sector
6. Increasing interest in healthy, fresh and natural food products
7. Thais are eating out more often, about 56 times per month, inciting operators to diversify their options and offering more indulgent food

The tourism industry is expected to play an instrumental role in expanding the Thai foodservice industry. The government aims at increasing the number of foreign tourists and both local hotels and restaurants are catering their offerings to meet customers' desire for quality food. Revenues from food and beverages are believed to account for 40% of these venues (USDA, 2018). Imported food products are essential for the foodservice operators to meet the increasing demand in diverse food types, especially from hotels and restaurants. Strong competition in the sector force operators to offer options ranging from casual to gastronomic food options, to meet all age segment groups of the population. This also encourages operators to use technologies to diversify food delivery methods through mobile applications and online bookings.

Thailand has the second largest foodservice sector among the Association of Southeast Asian Nations (ASEAN) after that of Indonesia. In 2019, the country's foodservice sector sales were valued at US$31.6 billion at a CAGR of 3% over the 2016-2019 period. The sector is expected to grow at a slower rate over the 2020-2023 period with a CAGR of 2.3% and forecast to reach US$34.5 billion by 2023. Thailand's foodservice sector, however, is expected to grow less than those of Malaysia (4.3% CAGR), Indonesia (3.2%), the Philippines (5.5%), and than Singapore (4.7%).

The restaurant subsector is the largest foodservice subsector in Thailand. In 2019, sales in this subsector were valued at US$6.3 billion, with a CAGR of 3.5% over the 2016-2019 period. For the 2020 −2023 period, the growth rate is expected to be 3.1%, with sales estimated to reach US$7.0 billion by 2023. The Mobile operators (US$2.3 billion) were the second largest subsector in 2019, followed by the accommodation subsector (US$ 2 billion). The pub, club and bars subsector was the fastest growing during the 2016-2019 period with a CAGR of 4.5%. The growth rate of this subsector is expected to be at a CAGR of 1.3% between 2020-2023, which is a decline compared to the historical period. The mobile operator is expected to have the highest CAGR between 2020-2023 with a growth of 4.0%.

Quick service and fast food restaurant recorded the largest sales in 2019, at a value of US$2.9 billion and registered a CAGR of 2.7% from 2016 to 2019. Full service restaurant had the second highest sales at US$2.7 billion and registered the highest growth among the top three outlets, with a CAGR of 4.3% during the 2016-2019 period. Other mobile operators (US$2.0 billion), pubs, clubs and bars (US$1.4 billion) and hotels and motels ($US1.1 billion) were also among the largest outlets in 2019.

All outlets in the accommodation channel showed great growth from 2016 to 2019 and are expected to perform well during the 2020-2023 period. Bed and breakfast and holiday parks have the highest CAGRs, both at 5.7%. Sales from hotels and motels were, however, the most important venues in this subsector in 2019. Hotels and motels are expected to remain the most important outlets, with sales expected to reach US$1.4 billion in 2023. Bed and breakfast are forecast to experience the highest growth, at a CAGR of 6.5% to 2023.

Within the leisure subsector, entertainment had the highest sales in 2019 with sales estimated at US$67.0 million at a CAGR of 3.2% from 2016 to 2019. This outlet is expected to register a CAGR of 2.6% to 2023 and record sales valued at US$74.2 million. Venues have the highest CAGR from 2016 to 2019 with 3.6% and will remain so during the 2020-2023 period with a CAGR forecast at 3.0%.

Outlets within other mobile operators also experienced growth. The two outlets, other mobile operators and vans, grew by a CAGR of 3.7% and 3.5%, respectively from 2016 to 2019 and are expected to grow at higher rates until 2023.

Outlets within pubs, clubs and bars all grew well during the 2016-2019 period, although the growth rate is expected to decrease from 2020 to 2023. Pub and bar venues were the most important outlet in this subsector, with sales valued at US$ 1.6 billion in 2019 and accounting for 71.3% of all sales. The nightclub segment had the highest growth with a CAGR of 4.6% from 2016 to 2019 and is forecast to grow by 1.4% over 2020-2023. The other segment, private member and social clubs and pubs and bars are expected to grow by a CAGR of 1.4% and 1.3%, respectively.

The restaurant sector had two outlets with the highest sales in 2019, namely quick service and fast food restaurants and full restaurant service at US$2.9 billion and US$2.7 billion, respectively; representing 81.3% of the restaurant subsector. Quick service and fast food restaurants are expected to continue to record the highest sales to 2023, whereby ice cream parlour should experience the highest growth with a CAGR of 3.8%.

Foodservice: chain franchises versus independent operators

The foodservice sector in Thailand is comprised of more than 150 000 outlets, ranging from street food carts to fine-dining restaurants and five-star hotels. According to USDA (2018), small to medium sized entreprises represent 80% of all restaurants in Thailand. International food brands such as Yum! Brands, Inc. and McDonald's Corporation are among the largest companies in the Thai foodservice landscape. Independent operators are the main drivers of the thai foodservice sector, having the largest shares in all subsectors, except for retail. This trend is expected to continue to 2023. From 2016 to 2019, chain franchises sales grew by a CAGR of 3.6% compared to 2.9% for independent operators, and the growth rate for the 2020-2023 period is expected to be 2.7% and 2.3%, respectively.

Independent restaurants represented 31.5% of all sales in 2019, whereas chain restaurants accounted for 23.5%. The chains in the retail subsector experienced the highest CAGR at 4.6%, and is expected to register the highest CAGR to 2023 at 4.4%. The popularity of the retail subsector, for both independent and chain operators, mark a transition from open-air food outlets to indoor outlets. This trend is expected to support the growth in the foodservice sector and offer more options to consumers.

The highest value per transaction in 2019 in the Thai foodservice sector occurred in independent nightclubs (US$20.2) followed by chain full service restaurants (US$15.2) and independent private member and social clubs (US$14).

Entertainement from chain and independent operators, chain quick service and fast food restaurants had the highest CAGR in 2019 at 4.2%. For the 2020-2023 period, the growth rate is forecast to decrease across all outlets compared to the 2016-2019 period. Chain convenience and department stores are expected to experience the highest CAGR over this period with 1.6% each.

Top 10 foodservice companies in Thailand

In 2018, Yum! Brands, Inc., and McDonald's Corporation, which are foreign-based international foodbrands, were the two biggest foodservice companies in Thailand. The two companies registered sales valued at US$802.6 million at a market share of 2.6% and US$512 million (1.7%) respectively. In 2018, five of the top ten companies were Thai-based foodservice operators.

Trade overview

Thailand is a net exporter of agrifood and seafood products, with US$16.8 billion in global imports and US$36.3 billion in exports in 2019. Imports from Canada were valued at US$179.7 million in 2019, representing 1.2% of Thailand's import of agri-food and seafood products. The top imported products were soybeans (US$1.3 billion), oilcake (US$1.3 billion) and non-durum wheat and meslin (US$767.1 million).

In 2019, Thailand imported US$179.7 million agri-food and seafood products from Canada. Conversely, Canada's imports of agri-food and seafood products from Thailand were valued at US$615.7 million, making Thailand a net exporter of agrifood and seafood products vis-à-vis to Canada. In 2019, the top imported products from Canada were wheat and meslin (US$72.1 million), raw furskins (US$31.6 million) and soybeans (US$21.1 million).

Association of Southeast Asian Nations

The Association of Southeast Asian Nations, taken together, represent Canada's sixth trading partner. In 2019, trade between the two economies was valued at Can$25.1 billion. In 2019, Canada's imports and export of agri-food and seafood products with ASEAN countires were each valued at US$1.6 billion. From 2015 to 2019, Canada's exports in agri-food and seafood products grew at a CAGR of 1.6% while imports grew by 2.2%. Although Canada is a net importer of agri-food and seafood products from ASEAN countries, by slightly increasing exports within these markets, Canada could become one of the most important partner of this bloc of countries.

Opportunities for Canada

In 2018, Thailand was the fifth largest importer of Canadian agri-food and seafood products within the ASEAN market. Imports of agri-food and seafood products from Canada grew by a CAGR of 3.3% from 2014 to 2018. Thailand also has the second largest foodservice sector among ASEAN countries.

The country tourism industry and the changing consumption behaviour of Thais, especially within the younger generation, present opportunities for Canadian exporters of agri-food and seafood products to supply the foodservice sector in Thailand. Products that represent good opportunities for export include soybeans, wheat, pork, fish and food preparations.

Tariffs on agricultural products are high in Thailand. The average applied MFN tariff on agricultural products is 25.1%. Tariffs on meat products are one of the highest and could reach up to 50% ad valorem.

Exploratory discussions for a possible Canada-ASEAN free trade agreement (FTA) indicate that ASEAN countries, representing Canada's sixth trading partner when taken together, could be a potential market for Canada's exporters.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

• Overview of Trade Commissioner Services in Thailand
• Find a Trade Commissioner

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be accessed through the International agri-food market intelligence page.

Foodservice profile – Thailand
Global Analysis Report

Prepared by: Saidouba Camara

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