- THE MAGAZINE
- VERTICAL MARKETS
Thailand is undergoing a rapid process of urbanization. The rural population, which mainly works in the low paying agricultural sector, is moving to towns and cities in search of better paying manufacturing jobs. 7.8% of the population is forecast to have migrated from rural to urban areas between 2000 and 2020. These newly urban consumers will have to stick to a very tight shopping budget and, as such will need smaller packs in order to keep products affordable and attainable.
The proportion of older consumers in Thailand is also growing. Those aged 65 years and older will make up 13% of the total population by 2020. This age group will become an important consumer segment, resulting in a rise in demand for packaging that is light and easy to open and handle. Moreover, older consumers prefer packaging with easy-to-read labelling such as large fonts and contrasting colors.
The demand for smaller packs will manifest in the market with packs at a maximum size of 250 milliliter, growing at an annual rate of 5.2% between 2013 and 2016 in the food and non-alcoholic drinks sectors. Sachets are the most common pack type for packs of this size as they are inexpensive to produce and convenient for consumers.
Kirsty Nolan, analyst at Canadean (canadean.com), says: “The substantial newly arrived urban consumer group, paired with falling household sizes, are driving the demand for small affordable packaging, pushing manufacturers to produce reduced-size plastic packs.”
Investment will lead to increased innovation
Thailand presents a favorable business environment with high urbanization, low unemployment and rising consumer confidence. The continuing migration from rural to urban areas will create a larger, low-income urban population in need of small, value products. This will attract foreign investment and increased competition will promote innovation into smaller, lightweight and cheap packaging.