European Food witnesses slow sales growth
European Food managing director Somchai Wachakorn expects the company to record its lowest growth rate in eight years but hopes its performance will be back on track next year.
|
|
|
European Food, a children's snack and green-tea manufacturer, expects to record its lowest sales growth in eight years, at round at 10 per cent to total Bt2 billion, due to negative factors in the domestic and international markets.
Major factors in the local market have been a deterioration of consumer confidence because of the political turmoil during the first nine months, and decreasing purchasing power because of interest-rate and oil-price increases. Sugar-price increases caused the company to face an increase in manufacturing costs, managing director Somchai Wachakorn said yesterday.In the international market, the strong baht, which hit an eight-year high late last week, has shaken the confidence of business partners, particularly those in the Indochina region. He said their currencies are also getting stronger but the baht against the dollar is 5 per cent stronger than the partners. He said the company has grown 15 per cent annually during the past eight years and has also adjusted its logistics system for more efficiency. For the business to survive, it has increased prices of some products such as its custard cake by 5 per cent. He said the increase is small compared to the added operating costs. The company has also reduced the package size of its layer cakes so they can be reduced in price from Bt3 to Bt2 in country areas. Of total sales, 40 per cent is expected to come from custard cakes, butter cakes and layer cakes; 20 per cent from wafers; and the remaining 40 per cent from jelly and marshmallows, toffees and gums and beverages. To drive sales next year, the company plans to adjust its marketing strategy by spending on events and activities. Somchai said 35 per cent of its marketing budget will be allocated to those activities and the rest for advertising through media channels. Arranging activities now accounts for 20 per cent of its budget. He said target consumers already know many of the company's brands through advertising in media channels and they are ranked among the top three in their markets. Among the well-known brands are Gussen crispy wafers, Ojo, Pipo jelly, Euro custard cake, Mildy marshmallows, Ellse and Peking. Brands that haven't gained high awareness yet include Hitto toffees and chewy candy and Tozen green tea. Somchai said arranging activities more often will enhance the firm's ability to reach its specific target groups. The company doesn't have big investment plans next year except to launch more new products in almost every category, compared to few product launches this year. It also searching for a new presenter for Tozen, which is expected to be finalised by mid next year. The current presenter is actress Phatcharapha (Am) Chaichue and her contract is going to end soon, said Somchai. Tozen is ranked among the third to fifth market leaders, he said. Somchai predicted that the estimated Bt5-billion green-tea market will experience no growth this year because there have been no big promotions like last year arranged by major players, mainly Oishi. The market will have an opportunity to experience growth again next year at 10-15 per cent, which is a proper growth rate for this market. The company expects its sales growth to get back on track at 15 per cent again to about Bt2.4 billion. - Nitida Asawanipont The Nation
|
