Instant Noodle producer to diversify into Seasonings

Due to stiff competition and slow growth in the instant noodle market, Thai Preserved Food Factory Co, the producer of Wai Wai instant noodles, is diversifying into seasoning products.
The company is in the midst of producing its own seasoning sauce at its instant noodle factory in Samphran district, Nakhon Pathom province and is scheduled to launch the product latest by the 3rd quarter of 2019, said Yossarun Thamkongka, the company's Marketing Director.
The diversification is part of the company’s plan to reduce its business risk and over reliance on sales from Wai Wai instant noodles. Mr Yossarun said, “We are interested in the seasoning business as the market size is as big as Bt 40 billion (US$1.21 billion) a year, compared to only Bt17 billion (US$514.4 million) for instant noodles in Thailand.”
In Thailand, instant noodles segment has experienced relatively slow growth over the past 5 years. Competition is fierce while profit margins are low. Moreover, noodles are one of the consumer products under price controls enforced by the Thai Commerce Ministry. Yossaran added, “As a result, it is hard to increase prices, even when raw material costs rise.”
Despite the competition, Wai Wai has maintained its 24% share of Thailand's instant noodles market for years.
The company’s venture into seasoning is not new as it first introduced its seasoning product in the market under the Rosdet brand during the past decade via modern trade channels. The product however did not do well in the first 8 years, said Yossarun. “We later changed our strategy by shifting our focus to selling Rosdet seasoning powder via traditional trade in the past 2 years,” he added. This strategy worked and the company feels that is the best time to seriously extend its seasoning portfolio starting 2019.
Thai Preserved Food expects to gain about 10% share of the powder seasoning market through its Rosdet brand in the next 5 years. The company is also planning to launch new seasoning products for both the mass and premium markets.
The company reported that its instant noodle business still managed to grow 5% in terms of sales in the first 9 months of 2018. The growth of Wai Wai was driven by the Quick brand of instant noodles and rice vermicelli instant noodles. The company plans to invest Bt 50 million (US$1.52 million) on marketing and promotion to maintain Wai Wai market share. In addition, the company plans to launch more premium instant noodle products in 2019, with the goal of increasing sales contribution from premium instant noodles to 10% in the next 2 years from 2% currently.
Thailand instant noodles market is worth Bt 16.5 billion (US$499 million) last year and is expected to reach Bt 17 billion (US$514 million) in 2018. Market leader is the Mama brand (48%) followed by Wai Wai (24%), Yum Yum (21%) and other brands.