Hot Drinks in Thailand

COVID-19 impact on hot drinks

The impact of the COVID-19 pandemic on sales of hot drinks in Thailand during 2020 can be measured mainly in terms of the strong declines registered in on-trade sales and the substantial shift in consumption to the off-trade. The main reason for plummeting on-trade sales across the industry during the year was the government-mandated shutdown of Thailand’s entire hospitality industry as part of the nationwide quarantine lockdown that was implemented in response to the first wave of the COVID-19 pandemic in the country during March and April.

COVID-19 country impact

On 13 January 2020, Thailand became the first country outside of China to confirm a case of COVID-19. The first case involving local transmission of the virus was reported on 31 January.

Company response

The COVID-19 pandemic hit Thailand’s hot drinks industry at a rather inopportune moment as the entire market was still adjusting to the excise tax that has been imposed on beverages with high added sugar content and which had come into force on 1 October 2019. However, the fact that the sugar tax was telegraphed by the government well in advance meant that companies and brands present in various categories of hot drinks had already had a head start on new product development when the COVID-19 situation began to unfold.

Retailing shift

The governmental countermeasures that were enacted to inhibit the spread of the COVID-19 virus throughout Thailand during the early stages of the pandemic in 2020 included an executive order that all shopping centres and non-essential retail outlets throughout the country must close for a period of at least one month. While this had an adverse impact on many retail channels, stores that were exempt from the order to close included supermarkets, chemists/pharmacies, hospitals outlets offering food for takeaway and delivery and various other essential services.

Foodservice vs retail split

The shutdown of the Thai consumer foodservice industry mentioned above had a very negative impact on on-trade sales of hot drinks during the year. Restaurants were only allowed to fulfil takeaway and delivery orders, while hotel restaurants were only allowed to serve hotel guests.

What next for hot drinks?

As Thai society gradually begins to recover from the social impact of the COVID-19 pandemic and the population are able to socialise outside of the home and spend time outdoors, it can be expected that consumption patterns in hot drinks will move closer to what was seen in industry prior to the onset of the COVID-19 situation. However, the long shadow of economic recession is likely to remain a negative influence on sales across the industry for much of the forecast period.