Table of contents

1 1.1 1.2 1.3 1.4 2 2.1 2.2 2.3 2.4 2.5 Page Matching Profile 2 The Trade Environment 2 The Seafood Sector 3 Consumer Trends 4 UK Share and Export Opportunities 5 Doing Business Profile The Supply Structure The Retail Channel The Foodservice Channel Key Regulations and Tariffs Tips and Useful Links 7 7 8 11 12 13

Seafood Export Proles

THAILAND

SECTION 1 MATCHING PROFILE

1.1 THE TRADE ENVIRONMENT

Fast facts Population Land area sq. km Inhabitants per km No. of households Capital Other main cities Languages Religion Currency Exchange rate (2006 average) Total GDP (2006) Real GDP growth rate (2006) GDP per capita (2006) Inflation (2006) Unemployment (2006) International status

Source: Euromonitor International 65.2 million 513,120 126 19.6 million Bangkok Chiang Mai, Nakorn Ratchasima Thai Buddhism Thai Baht (THB) THB: = 70 1.12 billion 5% 1,718 4.7 % 1.5% Member of Asia-Pacific Economic Cooperation (APEC) and the Association of South-East Asian Nations (ASEAN) Democracy 1.5% 2,719.21 million 8,302.15 million Indonesia,Taiwan, Japan

Thailand is South East Asias second largest economy and has experienced strong annual economic growth in recent years. Approximately 6.5 million people are registered in the Bangkok region. Most medium- and high-income people live in the major cities, including Bangkok, Phuket, Chiang Mai, Prachuapkhirikhan, Chonburi, Hat Yai, Nong Khai, Nakorn Ratchasima, Samui Island, Surat Thani, Ubon Ratchatahni and Udon Thani. The number of expatriates registered in Thailand stands at 250,000. British expatriates comprise around 10% of this figure. However 40,000 expatriates, including British, are resident in Thailand for just six months per year. The Thai economy grew 4.2 % in the last quarter of 2006. Overall, 2006 registered a 5% growth, compared to 4.5% in 2005.The economy is forecast to grow at 4-5%. GDP per capita is forecast at around 3,638 ($US per year) for 2007.

Supportive factors for growth in 2007 include the fact that average oil prices are to stabilise in 2007 and the rate of inflation is also forecast to remain stable. As a result, purchasing power and consumer confidence will improve. Interest rates have declined and will continue to decrease over 2007. The government budget and investment from state enterprises are set to support economic growth. Tourism is growing continuously in Thailand.TheTourism Authority of Thailand (TAT) www.tourismthailand.org has set a target of around 8% growth for the number of tourists visiting Thailand, based on 13.78 million international tourists in 2006. Income from exports and tourism will increase and help support economic growth despite both showing a slower growth rate than in 2006. During 2006, the average unemployment rate was 1.5 % compared to 1.9 % in 2005.

Government type Unemployment (2006) Total food and drink imports (2006) Total food and drink exports (2006) Top 3 import countries

Seafood Export Proles

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1.2 THE SEAFOOD SECTOR

The market for high quality imported seafood has been expanding over the past few years in Thailand. However, seafood, especially imported product, is a luxury for average income families. Thailand is a large exporter of seafood both in terms of fresh and processed food such as canned tuna and snacks. Most imports are frozen fish and are mainly for re-export.

Table 1: Top 10 landed and farmed species in Thailand, 2004

Rank Species Total Sub-total fish 1 2 3 4 5 6 7 8 9 10 Indo-Pacific mackerel Threadfin breams Scads Longtail tuna King mackerel Trevallies Sardinellas Crocker Eastern little tuna Indian mackerel 2004 million 1,609.43 594.70 64.00 42.85 36.37 32.49 31.53 19.74 18.71 18.19 17.36 13.01

Table 2: Key ports in Thailand

Rank

Name

Type of commoditis handled All

Storage/ square metres 49,000

Maximum size of vessel 172m/12,000 DWT* 450m/70,000 DWT*

Any specialised facilities Central Port

Bangkok

Laem Chabang

Industrial

10.1 million TEUS*

Eastern Port

Ranong

Fisheries

27,000

150m/12,000 DWT*

Andaman Sea

Value by species for whole marine fishery sector in Thailand (including coastal aquaculture) 2004 Source:The Department of Fisheries

Source: Port Authority of Thailand *TEU = Twenty feet equivalent unit *DWT = Deadweight tonnage

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1.3 CONSUMER TRENDS

Convenience is becoming increasingly important as the packaged grocery market grows.Thais living in urban areas have become rather brand conscious and their shopping styles have moved away from the traditional open-air wet markets to modern supermarkets and shopping centres which offer convenience and a wide selection of products. There are also an increasing number of health-conscious consumers.This has led to an increased demand for healthy and functional foods. Due to growing concern over health and wellness, and food quality, with recent outbreaks of the avian flu, consumption of chicken in Thailand is declining and being replaced largely by fish and seafood, which are thought to be healthier. Thai consumers are showing a growing preference for higher quality products.

Thai eating habits are changing to incorporate more imported food items. Due to the increasing number of women and young adult labour in the work force, the introduction of ready meals and prepared food is expected to trigger major growth in the convenience food market in Thailand. Moreover, this younger population is very open to trying new products that fit their lifestyles. Promotions are becoming more frequent in retail outlets.Value mentality is strong but manufacturers must balance value and brand quality. Winning customer loyalty is key to retailer success. Existing brand loyalties are most likely to be broken by new products that are of good quality, well packaged, distributed, promoted and competitively priced, rather than cheap products. Increasing Thai exports of food products is driving demand for food ingredients as well as the growing demand for using imported ingredients for innovative products.

There are a growing number of companies who are paying more attention to quality over cost for food ingredients. The international foodservice industry is expanding rapidly, both in numbers of companies entering the market and in numbers of outlets.There has been an increase in the number of younger Thais, as well as working professionals, eating out as it is more convenient and efficient than cooking at home. However there is still a general tendency among Thais to cook at home rather than dine out, particularly among residents living in rural areas. There is also the preference towards traditional cooking methods and authentic styles of cuisine. Thai consumers prefer fresh/chilled seafood to frozen products. Nevertheless frozen products are slowly being introduced to retail chains and supermarkets.The concept of frozen fish is still very new to the Thais and Bangkok is being targeted as the first point of retail.

Due to the price points, imported fish and seafood from the UK is mostly consumed in high-end five star hotels and restaurants. Items such as smoked haddock and kippers are now being introduced to bars and pubs throughout Bangkok and tourist spots. The high end restaurant sector is mostly driven by fresh products as the Thai Food and Drug Administration (FDA) regulations are stricter on frozen products. Companies are often asked to provide a certificate for products regulated by the FDA containing information about a product's regulatory or marketing status.

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1.4 UK SHARE AND EXPORT OPPORTUNITIES

UK food and drink imports to Thailand accounted for a total of 72.34 million in 2006. Although seafood imports from the UK to Thailand have decreased over the past year,Thai food processors import large quantities of food ingredients for the food processing industry, which are not available locally. Approximately 67% of Thai exports are processed seafood products.Therefore there may be an opportunity for UK seafood imports which are not available in Thailand. The stability and escalation of the Baht in 2006 led to an increase in imported consumer oriented food products from the UK. Market penetration for imported products is concentrated in Bangkok and major tourist destinations.

Despite a strong currency, there is a high demand for food and drink from the UK. Cereals, rice, pasta, cooking oils, biscuits, tea, snacks, drinks and other healthy organic products are in demand. For example,The Central Group is doing very well with its partners Waitrose and Marks & Spencer. Carrefour is also interested in offering British products. The Thai Governments policy supports the development of valueadded production.This will boost the demand for food ingredients. In order to take advantage of the opportunities available for fresh/smoked seafood from the UK, a high level of promotional work and marketing would be needed.

Table 3: Imports of fish, fresh or chilled, excluding fish fillets and other fish meat:
Rank 1 2 3 4 5 6 7 8 9 Country Myanmar (Burma) Norway Japan Australia India Chile Cambodia France Other countries UK Total 2005 () 23,401,190 1,715,779 219,905 43,683 6,379 460,561 285,866 48,173 5,225,550 2,327 32,135,771 2006 () 20,518,525 2,060,917 812,108 436,758 328,971 308,580 260,198 127,587 4,210,484 12,140 30,507,415 % Chg 05/06 -12% 20% 269% 890% 5057% -33% -9% 165% -19% 422% -5%

Table 4: Imports of frozen fish excluding fillets and other fish meat
Country Imported from the UK Total frozen 2005 () 1,677,243 631,743,733 2006 () 463,754 657,144,940 % Chg 05/06 -72% 4%

Source:The Custom Department of Thailand

Seafood Export Proles

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1.4 UK SHARE AND EXPORT OPPORTUNITIES

Table 5: Quantity of imports by country and commodity, 2004

Rank 1 2 3 4 5 6 7 8 9 10 11 Country Indonesia Taiwan Japan South Korea China Malaysia USA Philippines India Australia UK 2004 (tonnes) 336,393 136,095 56,195 45,034 34,823 33,059 28,223 14,438 9,753 9,021 3,302

Table 6: Opportunity matrix by species

Species Salmon Mackerel Sole Cod Fresh or chilled trout Greenland halibut Haddock Yellowfin tuna

Potential in Retail channel M M M M M M M M

Potential in Foodservice channel M M M M M M M M

(Aquatic products live and fresh, chilled or frozen fish, shrimp, crab, squid) Source:The Department of Fisheries

Seafood Export Proles

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SECTION 2 DOING BUSINESS PROFILE

2.1 THE SUPPLY STRUCTURE
In Thailand importers are generally also distributors.They are all located in Bangkok as the airport and port are close by. In addition 99% of the customers for imported seafood can be found in Bangkok.

Thailand: import supply structure, logistics and distribution

EXPORTER

LICENSED IMPORTER

WHOLESALER

IMPORTERS

PROCESSOR

SECONDARY DISTRIBUTOR

HRI FOODSERVICE/RETAILERS

CONSUMER

EXPORTERS FOR RE-EXPORTATION

Seafood Export Proles

THAILAND

2.2 THE RETAIL CHANNEL

There are 276 shopping malls throughout Thailand. 140 shopping malls are currently situated in Bangkok and another 26 are under construction. Modern retailing accounts for approximately 63% of total retail sales. A large proportion of consumer expenditure is spent on grocery food in retail compared to the foodservice sector.The retail market share of consumer expenditure accounts for more than 70% of total food spending, while consumers are allocating a lower proportion of their expenditures to foodservice (30%). Wet markets are still popular due to their convenience, freshness, price competitiveness and availability of credit. However, the flow of local shoppers has been diverted from department stores, wet markets and grocery stores to hypermarkets and supermarkets. Hypermarkets are gaining popularity, particularly for weekend entertainment. Many are promoting their food safety and hygiene standards. Retailing in Thailand comprises of several different formats. Modern retail formats, such as hypermarkets, supermarkets and variety stores, are becoming increasingly popular for their convenience and wide product range, especially in urban areas where about 90% of Thai shoppers visit hypermarkets at least once a month. Major retail developments are being headed by international players from the UK, France and the Netherlands. In general all sales of imported food and drink products are carried out in the greater Bangkok area, but there is also a level of demand in major tourist locations such Pattaya and Phuket. Target groups include: - expatriates; - middle- to upper-class families; - Thais who travel for business and pleasure; - students from overseas; - students in international schools in Thailand and their parents; and - tourists.

Table 7: Retailing formats and number of outlets in Thailand

Hypermarkets Supermarkets 130 166 Tesco Lotus, Carrefour, Big C. Central Food Retails,The Mall Group, Foodland,Villa,Tesco Lotus Supermarket and Tesco Lotus Value Stores 7 Eleven, Family Mart others 7 Eleven,Tiger Mart,Tesco Express, Lemon Green, Jiffy, Star Mart, Shell Select Makro Central Group,The Mall Group, Robinson Group, Imperial, Merry King and another two Japanese department stores, Isetan and Tokyu

Convenience stores Convenience at gas stations Cash and carry Department stores

3,500 1,327 31 51

Central Retail Corporation is a US$ 2 billion enterprise that has developed Thailand's most successful store formats and brands including Tops Supermarket which was the first Thai supermarket to have set up centralised distribution centres for fresh foods and dry grocery products.

Seafood Export Proles

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SECTION 1 MATCHING PROFILE

2.2 THE RETAIL CHANNEL

Top 5 retailers in Thailand

Central Retail Group

Tesco Lotus

Big C (Casino) Intermarch

Carrefour

Makro

Market share and turnover Store type

29%, N/A

Market share and turnover Store type

24%, N/A

Market share and turnover Store type

21%, N/A

Market share and turnover Store type

10%, N/A

Market share and turnover Store type

10%, N/A

Central Retail Corporation Premium

Joint venture

Combination of discount store and food outlet Value

Hypermarket

Hypermarket

Product range

Product range

Value

Product range

Product range

Combination of high and value French influence

Product range

Value

Best practices

Imported frozen food

Best practices

Everyday roll back, express Lower- to middle-income

Best practices

Everyday low price

Best practices

Best practices

Retail and wholesale

Consumer demographics

Medium- to high-end

Consumer demographics

Consumer demographics

Middle-income

Consumer demographics

Middle-income plus

Consumer demographics

Low- to middle-income

Requirements Margins of 20% - 30% (shelf life, margins) Buying practices Self imported and from other importers/ suppliers www.centralretail.com www.tops.co.th/

Requirements Margins of 10% - 15% (shelf life, margins) Buying practices Local suppliers

Requirements Margins of 15% - 20% (shelf life, margins) Buying practices Local suppliers

Requirements Margins of 10% - 20% (shelf life, margins) Buying practices Self imported and local suppliers

Requirements Margins of 10% - 15% (shelf life, margins) Buying practices Self imported and local suppliers

Web

Web

www.tescolotus.net/

Web

www.bigc.co.th

Web

www.carrefour.com

Web

www.makro.com

Seafood Export Proles

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SECTION 1 MATCHING PROFILE

2.2 THE RETAIL CHANNEL

The convenience sector, led by 7 Eleven is now offering more services to their customers such as counter service as pay points to business associates, cable TV, telephone bills and mobile phone bills. Convenience stores are also trying to offer a more exclusive range of products especially ready meals and frozen food.

Tesco Lotus is becoming more aggressive in expanding more of their smaller outlets as convenience stores next to residential areas and at petrol stations. At the moment they have 245 outlets at petrol stations in Bangkok. Due to heavy traffic in Bangkok, onestop shopping is the solution for many people in Bangkok.

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2.3 THE FOODSERVICE CHANNEL

The major players in the catering business are hotels and restaurants. There are also smaller caterers. Seafood, particularly shellfish, is considered as fine dining and is therefore more expensive. It is not an everyday meal. Imports of seafood are only supplied to five star hotels and top restaurants. There are fast food vendors in department store food halls that specialise in fish, for example fish and chips. Pubs and restaurants also serve fish dishes.

There is a significant market for food and drink sales in both international and local franchises. Franchising is still dominated by western fast food outlets followed by cafes and bakeries. There is a current increasing trend in Asian food such as Japanese and Korean.Thai teenagers are influenced by Japanese and Korean lifestyles, music and movies. Quick serve restaurants are not only found in every shopping mall, but also as stand alone outlets and street vendors.

The increase in tourists will also support the growth of the hotel and restaurant sectors throughout 2007. There are approximately 40 to 50 English/Irish style pubs and restaurants which serve British food and beers.

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2.4 KEY REGULATIONS AND TARIFFS

Thailand is a signatory to the Association of South East Asian Nations (ASEAN) Free Trade Area (AFTA) and it grants preferential treatment to the ASEAN member countries through the Common Effective Preferential Tariff (CEPT) scheme for the AFTA.The products in the CEPT Inclusion List (IL) are subject to the stipulated preferential tariff rates. As an APEC and ASEAN member, Thailand relies heavily on its association partners as import sources, making the country a much more challenging market for UK firms and exporters to penetrate. Thailand has also signed four free trade agreements with Australia, New Zealand, India and Japan and is currently in negotiations with Bahrain and the United States pursuing similar agreements. However, with the implementation of many policies designed to support export and import growth and newly signed bilateral trade agreements,Thailand is increasingly making its presence known on the international trade stage.

Thailand is already in agreement with four countries within the Free Trade Area which include: - Australia Free Trade Agreement: TAFTA was first signed 1 January 2005, import quota set in 2007. - New Zealand Closer Economic Partnership first signed on 1st July 2005, quota in 2007. - ASEAN China Free Trade Agreement: ACFTA first signed on 1st January 2004. - India Free Trade Agreement first signed on 1st September 2004. Source: Department of Foreign Trade, Ministry of Commerce. Thailands principal agrifood import sources, the United States (18.3%), Brazil (12.1%), Australia (10.1%), China (8.7%) and Singapore (7.5%), represent top competition for the UK in the Thai export market.

With the recent political situation and the governments push for buying locally, UK exporters may find it more challenging to enter the Thai market. Nevertheless,Thailand remains an excellent location for exporters looking to enter the South East Asian market. Thailand is part of Free Trade Area agreements with Australia and New Zealand and both of these countries have brands similar to those in the UK. Thailands high tariff structure remains a major market entry barrier. Duties on many high-value fresh and processed food products are especially high compared to other countries in South East Asia.The import duties have risen to 25% or 30% per kilogram for food and 60% - 428% for alcohol beverages. Please see above. Imports from non-ASEAN countries are subject to customs, tariffs and a value added tax (VAT) of 7%. Import duty - Duty Rate Ad Valorem is up to 60% per kilogramme.

Labelling
Labelling and registration procedures are strict in Thailand. Products must be registered and approved by the Thai Food and Drug Administration which is similar to the US system.The process is quite complicated and requires extensive documentation.Timing for approval ranges from 3 18 months. The importation of processed and/or preserved foods from the UK must clearly state their recipes/ingredients. The regulations for imported organic products depend on the origin of the products. Labels must be approved by the Thai Food and Drug Administration and affixed to imported food products. Specific information is required to be placed on the label and must be printed in the Thai language. In practice the importer is the one who does the registration and get FDA approval. Many multinational retailers in Thailand charge listing fees.

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2.5 TIPS AND USEFUL LINKS

The best method for UK exporters is to contact importers and distributors in order to sell to supermarkets, hypermarkets or to the cash and carry channel. Usually all local retailers source from distributors within Thailand. Companies looking to access the market should appoint a local distributor who will assist in the complicated process of registering products and ensuring labelling requirements are met. British attendance at exhibitions, trade support and PR material will all assist in driving British seafood in Thailand. Key regulations and potential barriers to imports of seafood can be found at the following sites: - Department of Fisheries: Web: www.fisheries.go.th - Customs Department: Web: www.customs.go.th Labelling/packaging regulations: - Food and Drug Administration: Web: www.fda.moph.go.th

For further market information, contact: Emma Walters Development Markets Manager Food from Britain 4th Floor, Manning House 22 Carlisle Place London SW1P 1JA Tel: 0207 233 5111 Fax: 0207 233 9515 Email: ewalters@foodfrombritain.com Web: www.foodfrombritain.com

For further business advice on entering the export market, contact: Marketing Seafish 18 Logie Mill Logie Green Road Edinburgh EH7 4HS Tel: 0131 558 3331 Fax: 0131 558 1442 Email: marketinsight@seafish.co.uk Web: www.seafish.org

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