Yoghurt and Sour Milk Products in Thailand

2021 DEVELOPMENTS

Sluggish recovery predicted for yoghurt during 2021

Demand for the dominant drinking yoghurt was significantly impacted by the pandemic, in terms of lack of on-the-go consumption occasions due to the home seclusion trend, and a switch towards shelf stable variants which suited consumers’ stockpiling tendencies in early 2020 as they looked to reduce their frequency of visits to store-based retailers. While 2021 is predicted to see some form of recovery in the second half of the year, depending on the threat level of the virus and a relaxation of government-enforced restrictions, overall retail volume sales are likely to remain below pre-pandemic levels due to a weak economy, low consumer confidence which continues to impact their purchasing decisions and prioritise expenditure in addition to sluggish tourism which is also set to continue to impact foodservice demand.

Drinking milk product players eye potential offered by yoghurt

The longer school break over the first half of 2021 as part of measures announced by the government to restrict the impact of the third wave of the pandemic aggravated the oversupply of raw milk in a continuation of a trend from 2020. The government has implemented a number of strategies in an effort to address this issue to help support both farmers and the business segment by reallocating the raw milk quota and encouraging companies to transform their raw milk supply into cream or cheese production to lengthen its shelf-life or by developing shelf stable variants of yoghurt.

Direct selling remains leading distribution channel for yoghurt

With the pandemic reducing on-the-go consumption opportunities for drinking yoghurt, and e-commerce continuing to gain in popularity as an alternative distribution channel for yoghurt due to the convenience and perceived safety of home delivery, companies have identified growth opportunities by expanding their direct selling base. Leading drinking yoghurt players such as Dutch Mill Co Ltd, Yakult Sales (Bangkok) Co Ltd and Betagen have been focusing more on direct selling, the single largest distribution channel within the category.

PROSPECTS AND OPPORTUNITIES

Yoghurt likely to become increasingly fragmented through entry of new players and interesting innovations

Drinking milk product companies are seeking the opportunity to expand their consumer reach by entering yoghurt which is likely to result in increasing competition and further innovation to add excitement to the category while considering consumers’ changing demands. As noted with the trend for bubble milk tea and brown sugar amongst younger consumers, dominant plain yoghurt player CP Meiji Co Ltd, which nonetheless, held low value share within drinking yoghurt at the end of the review period, has identified a stronger opportunity to strengthen its presence within the category through the launch of its Caramel Brown Sugar Yoghurt with konjac boba by targeting millennials and Generation Z, consumer groups which are more likely to be attracted to innovations or follow current trends.

Health trends offer expansion opportunities for yoghurt players

While overall demand for yogurt through retail is predicted to fully recover to pre-pandemic levels by 2024, volume growth will start to slow over the second half of the forecast period. The health trend has the potential to contribute to weakening the category’s rate of growth with flavoured and drinking yoghurt associated with high sugar content among some health-conscious consumers.

Thai brands continue to benefit from understanding local preferences

Local brands dominate drinking yoghurt as they are able to address local preferences compared to international players. In addition to interesting product launches, local companies such as Dutch Mill and CP Meiji continue to explore new strategies in terms of marketing through the use of approaching brand ambassadors including celebrities and K-pop boy bands which are popular with younger generations.