Processed food to Thailand
(Last updated: 12 Aug 2013)
Trends and opportunities
The market
The food consumption pattern of Thai consumers is changing. Quality and health benefits, rather than simply price, are becoming key purchasing factors. Imported food items are popular among middle class and overseas-educated Thais who have higher disposable incomes and a growing preference for imported food items.
The majority of consumers still prefer fresh food markets. However, many consumers now shop at supermarkets, and ready-to-eat food items are replacing traditional wet market shopping and home cooking. Consumers perceive foreign produce as being of better quality than local produce.
A typical Thai family spends about 35 per cent of their total income on food and beverages. The ratio of imported food to domestic food is 30:70.
With higher levels of education and a growing awareness of healthy and natural products, Thai consumers are paying more attention to a healthy diet. They perceive Australia as a reliable and reputable source of clean, hygienic and superior quality products.
The provisions of the Association of South East Asian Nations (ASEAN) Free Trade Area arrangements are creating trade opportunities by continuing the reduction of tariff and non-tariff barriers between member nations.
Opportunities
International cuisine has become increasingly popular among Thais in the last 10 years. Imported processed food items include:
- fruit and vegetables
- smoked salmon, Japanese delicacies and seafood
- grain and cereal products
- chocolate and confectionary
- 100 per cent fruit juice and drinks
- jams and spreads
- dairy products and milk powder
- spaghetti
- salted snacks
- ready-to-eat meals
- meats and meat by-products
The Thai government has developed a policy to present Thailand as the ‘kitchen of the world’. This gives Australia an advantage as a quality supplier for raw materials for the manufacture of food products. These will be exported to a world market, which means that international standards apply for any raw materials used.
Thailand is also a major manufacturer of halal certified food for export to the Muslim world, so there are opportunities for Australian suppliers of raw materials with are halal certification.
Competitive environment
The US holds 10-15 per cent of the overall imported food market but this is gradually declining with competition from Australia, Japan and Korea.
The demand for imported processed food and raw materials used for re-processing and re-exporting has increased. Tax incentives, transport costs and labour costs are key factors influencing foreign companies to relocate or switch to local production.
Tax incentives are effective in Thailand’s neighbouring countries such as Singapore, Indonesia, and Malaysia due to the ASEAN Free Trade Area agreement.
Tariffs, Regulations and Customs
Thai regulations prohibit processed food ingredients containing genetically modified organisms, such as the Cry9C DNA sequence, which potentially includes frozen or chilled corn, taco shells, corn chips, corn flakes, corn meal or corn flour.
Control of the importation, marketing, distribution and sales in the processed food industry is shared between a number of Thai government bodies including the Food and Drug Administration (FDA), the Ministry of Finance’s Customs Department and Revenue Department, the Ministry of Agriculture and Cooperatives and the Ministry of Commerce.
Most food products (fresh or processed) attract over 30 per cent tariff on the Cost, Insurance and Freight (CIF) value, plus seven per cent Value Added Tax (VAT). Products can be imported tariff-free if the final product is for re-exportation. However, the Free Trade Agreement between Thailand and Australia (TAFTA) which was signed on 1 January 2005, has resulted in free-from-tariff access for most Australian products, and will improve prospects for services and trade investment.
If you are considering importing product or produce yourself, you must register as a local company. The law requires that only locally registered companies can conduct importation. The Thailand Board of Investment provides information on establishing a company in Thailand.
Industry standards
When it comes to standards, quality and hygiene are the major focus areas in the processed food sector. Many international firms have established a presence in Thailand supplying services related to food safety and hygiene issues. The following food safety standards are required when exporting food items to Thailand:
- Good Manufacturing Practice – a general standard
- Hazard Analysis at Critical Control Points – an internationally accredited standard
- Food products must be approved and registered with the Thai FDA prior to importation
The Thai FDA only recognises documents issued by a government organisation, or a commercial organisation that is certified by the International Accreditation Forum, which for Australia is JAS-ANZ as the accredited body.
The commercial organisations (certifying bodies) that are recognised by JAS-ANZ to issue certificates are listed their website and are the only certifying bodies accepted by the Thai FDA for the purpose of product registration. Furthermore, the FDA requires all documentation to be certified as true copies by the relevant Embassy. Austrade can assist to certify documents for Australian companies after verifying with the issuing organisations that the certificates are true copies of genuine certificates.
When seeking registration, suppliers must provide:
- Two samples of each product
- Details of the exact composition by percentage of each ingredient
- A production flowchart
- Six labels
Food products must display the following information for consumers:
- Name and brand of the product (both generic and trade)
- Registration number
- Name and address of the manufacturer
- Name and address of the importer
- Manufacturing and expiry dates
- Net weight and volume
- Any additives used
- Health and nutritional claims (if any)
The information from this section was obtained from the Thai Food and Drug Administration website. It is subject to change and should be used as a guide only.
Marketing your products and services
Market entry
The following market entry strategies are suggested:
- Appoint a local importer/agent/distributor. A locally-registered company must handle importation procedures and documentation.
- Build relationships with players in the modern trade in Thailand.
- Establish and manage a cool chain for supply of fresh produce.
- Invest in local (or regionally based) food production facilities to take advantage of the ASEAN Free Trade Area program and more efficiently service the market.
- Participate in food exhibitions, which provide effective exposure for your company and products.
There is no English-language industry news for processed food available in Thailand, but the National Food Institute and Royal Thai Customs have statistics and further information on the processed food industry.
Distribution channels
Australian exporters can consider a number of distribution channels for processed food. By appointing a local importer/agent/distributor, suppliers can establish direct sales to supermarkets and retail chains. The leading supermarkets and hypermarkets include Tesco, Makro, Big C, Foodland, The Mall Group and Tops.
Establishing local production (or chain of supply facilities) by registering a company locally is a distribution option worth considering, especially with regard to products that attract higher tariffs.
Another option is to form business relationships with local operators who have existing distribution channels. Local operators better understand local customer’s needs and can improve or tailor products accordingly. Australian exporters should consider this as a longer-term business strategy when looking at trends for growth in Thailand’s processed food industry.
Australian companies have a reputation for making good business partners. Thai companies value long-term business relationships as much as commitment from suppliers or manufacturers.
Transport
Airfreight – the only option for perishable products – is used to ship product samples in small quantities. This takes one day from Australia to Thailand. A number of major airlines transport goods between major ports in Australia and Thailand.
Large volumes of products can be transported by sea freight. Sea freight takes about two weeks from Australia to Thailand. Once imported products arrive in Thailand and duties have been paid, they can be transported freely in the country.
You should consider a good freight forwarder, insurance company and customs broker for transporting your product.
It is advisable to investigate a variety of service providers.
Links and industry contacts
Food–related resources
Thai National Food Institute – www.nfi.or.th
The Food and Drug Administration (FDA) – www.fda.moph.go.th/eng/index.stm
Government, business and trade resources for Thailand
Ministry of Commerce – www.moc.go.th
Ministry of Foreign Affairs – www.mfa.go.th/main/en/home
Royal Thai Customs Department – www.customs.go.th/wps/wcm/connect/custen/home/homewelcome
Stock Exchange of Thailand – www.set.or.th/en/index.html
Thailand Board of Investment - www.boi.go.th/index.php?page=index&language=en
Tourism Authority of Thailand – www.tourismthailand.org
Thailand.com – www.thailand.com
Media
The Bangkok Post – www.bangkokpost.com
The Nation – www.nationmultimedia.com
Australian resources
Australian Embassy Bangkok – www.thailand.embassy.gov.au
Australian-Thai Chamber of Commerce – www.austchamthailand.com
Service providers
Qantas freight – www.qantas.com.au/freight/dyn/menu
Airports of Thailand PLC – www.airportthai.co.th
Thai Airways International – www.thaiairways.com
Thai International Freight Forwarders Association – www.tiffathai.org
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.