With fierce competition and continued slow growth in the instant noodle market, Thai Preserved Food Factory Co, the maker of Wai Wai instant noodles, is broadening into seasoning products.
The company is in the process of making seasoning sauce at its instant noodle factory in Om Yai, Sam Phran district, Nakhon Pathom province and is scheduled to launch the product in the second or third quarter of next year, said Yossarun Thamkongka, the company's marketing director.
The expansion is to reduce business risk from relying solely on income from Wai Wai instant noodle sales, he said.
"We are interested in seasoning business because the market size is as big as 40 billion baht a year, compared with only 17 billion baht in Thailand's instant noodle market," Mr Yossarun said.
Instant noodles have experienced relatively slow growth over the past 4-5 years. The competition in instant noodles is fierce, while profit margins are low.
More importantly, noodles are one of the consumer products under price controls enforced by the Commerce Ministry.
As a result it's hard to increase prices, even when raw material costs rise, Mr Yossarun said.
"Wai Wai has controlled a market share of 23-24% in Thailand's instant noodles for several years, and it's quite difficult to increase our market share because of fierce competition and the company's big base," Mr Yossarun said.
The company introduced its first seasoning product in the market under the Rosdet brand during the past decade via modern trade channels.
The product did not fare as well as expected after the first eight years, Mr Yossarun acknowledged.
"We later changed our strategy by shifting our focus to sell Rosdet seasoning powder via traditional trade in the past two years," he said. "It has worked and we think it is the time to seriously extend our seasoning portfolio starting next year."
Thai Preserved Food expects to gain about a 10% share for Rosdet powder seasoning over the next five years, some 100 million baht.
The company is also scheduled to launch new seasoning products for both the mass and premium markets. The objective is to cash in on the continuous growth of Thailand's food business, which is worth more than 300 billion baht a year.
For the instant noodle business, sales from all the company's brands in the first nine months of the year still managed growth of 5%, which was well ahead of industry growth, Mr Yossarun said.
The executive did not disclose raw figures. He said the growth of Wai Wai was driven by the Quick brand of instant noodles and rice vermicelli instant noodles.
"The popularity of Korean instant noodles among Thais goes on, and people have more food choices available at convenience store chains," he said. "But it won't affect Wai Wai's market share this year."
To maintain market share, the company is spending 50 million baht to launch music marketing and build brand awareness among young customers.
Wai Wai is also available in a bowl package for the mass market for the first time. Previously, Wai Wai bowls were available only at 7-Eleven stores.
Thai Preserved Food plans to add more premium instant noodle products next year.
The sales portion of premium instant noodles contributes 2-3% of total instant noodle sales. The company aims to raise premium's contribution to 10% of the total market within the next 2-3 years.
The market size for instant noodles in Thailand was 16.5 billion baht last year, with the figures estimated to increase to 17 billion baht this year.
In the first half of this year, the Mama brand had a 48% market share, followed by Wai Wai (24%), Yum Yum (21%) and other brands.
