F&N Dairies (Thailand) Ltd, a dairy company under Thai Beverage Group, hopes to build its own factory in Ayutthaya province in the next few years to support its growth.
Marketing director Kiranat Kittibunlu said ThaiBev was in talks to use Thailand and Malaysia as the regional production hubs for dairy products.
The group expects to build its first factory at Rojana Industrial Park in the next three years at a cost of more 1 billion baht. It would support growth of its product lines in Thailand, Cambodia, Laos and Myanmar.
F&N dairy products are currently produced at Oishi Group Plc's beverage factory in Pathum Thani province. They include Bear sterilised milk, Carnation condensed milk, Magnolia pasteurised milk and Magnolia UHT milk.
"The production capacity at Oishi's beverage plant is nearly full. That's why we want to have our own factory and this will support our dairy business expansion in both Thailand and abroad," Mr Kiranat said.
This plan is part of ThaiBev's 2020 Vision, which aims to boost sales of non-alcoholic products to reach 150 billion baht by 2020.
F&N also plans to penetrate the UHT milk segment for children.
"We see huge potential in this market, which grows by 8% on average per year. This segment has a small number of big dairy brands," Mr Kiranat said.
Thailand's drinking milk market is worth about 16 billion baht and grows at a double-digit rate every year. About 6 billion baht comes from children's UHT milk, where Foremost is the market leader with a 36% share, followed by Hi-Q (25%), Enfagrow (16%) and small brands.
With this huge market potential, the company will allocate 200 million baht to develop and promote its new Magnolia UHT product this year.
The company has hired Vanda Sahawong, the wife of recently deceased actor Tridsadee "Por" Sahawong, and their daughter Phakhwan "Mali" as brand ambassadors for Magnolia UHT milk to attract children and families.
The company aims to gain 100 million baht in sales from Magnolia UHT milk in the first year of operation.
The expansion into UHT milk comes after a move by ThaiBev, led by billionaire Charoen Sirivadhanabhakdi, to boost its non-alcohol business to about 50% of the group's sales or 150 billion baht by 2020.
Sales of all dairy products under F&N Dairies (Thailand) were 12 billion baht in 2015 and will grow by 10% to 13.2 billion baht this year.