Energy drink market in Thailand
As the fourth largest global market for energy drinks, Thailand’s energy drinks market has witnessed steady growth rates for a number of years in the past decade. Growth rates in this sub-segment of beverages have come down by a few percentage points, but the country remains one of the most important energy drinks markets in Asia.
Energy drinks can be defined as beverages that primarily contain caffeine in combination with other performance-enhancing ingredients such as taurine and herbal extracts. It is such core ingredients which provide a longer energy boost, in contrast to other performance enhancement drinks, such as sports and other functional drinks. Energy drinks today are among the fastest growing global beverage segments and are primarily consumed by adult consumers to provide an additional boost in energy.
Thailand is one of the pioneering and most established energy drinks market globally. More than 2,300 million units of energy drinks were sold in the country in 2018, which is the highest in South East Asia and fourth highest globally after the USA, China, and the UK. The Thai energy drinks industry grew at a CAGR of 1.7 percent between 2013 and 2018, from THB 21.9 billion to THB 23.7 billion in terms of sales value.
Domestic brands dominate those of international players within energy drinks in Thailand. The Thai mass market demand is virtually non-carbonated and major domestic brands including M-150, Carabao Dang, and Krating Daeng command strong market positions with a combined market share of more than 65 percent.
In recent years, key international brands within energy drinks such as Lipovitan-D, which is distributed in Thailand through the partnership of Taisho Pharmaceuticals from Japan and Osotspa, have been successfull in penetrating the Thai market.
History of energy drink market in Thailand
Energy drinks in Thailand started to gain market prominence in the 1990s. Companies such as Osotspa and T.C. Pharmaceutical Industries increased focus on marketing and branding to create strong brand awareness and product preference amongst the blue-collar worker consumer base. The rapid growth of the Thai economy in the 1990s led to greater labor demand from its workforce.
Osotspa with its flagship brands, such as M-150, Lipovitan-D and White Shark (Chalarm), has a lion’s share of Thai energy drinks market in terms of retail sales volume and value. Primarily driven by solitary flagship brands of Carabao Dang, Carabao Group (CBG) is the second largest producer in Thailand’s energy drinks market.
Continuous economic growth has also subsequently extended the working hours of the workforce in Thailand. This has driven the propensity for consumption of energy drinks with the intended purpose to provide sustained energy and reduce mental and physical fatigue.
Red Bull, which has become synonymous with energy drinks globally, was originally developed by Bangkok’s T.C. Pharmaceutical firm in 1962, and spread globally through an Austrian investor, Red Bull has helped make the company’s founder Thailand’s second-richest man. In the first decade of the century, Red Bull controlled half of Thailand’s energy drinks market.
But M-150 has challenged Red Bull by aggressively courting the male working class (M-150’s slogan: Devotion! Courage! Sacrifice!). Winning over this key demographic is crucial in a country where laborers rely on energy drinks to push through long shifts.
Demand drivers for energy drinks in Thailand
Household income in Thailand has grown rapidly over the past decade in line with growing urbanization. Since July 2011, the World Bank has categorized Thailand as an upper middle-income economy. Stable economic growth continued to expand the country’s middle-income population with the white collar employment sector growing from 5.9 million in 2012 to 7.1 million at the end of 2018. These factors will act as catalyst for the demand of energy drinks in the country.
In the last few years, Thailand’s government has made huge investment in infrastructure projects. Growing momentum in the construction industry is expected to increase the demand and work duration of blue-collar construction workers, who form the major consumer group for energy drinks. The proportion of blue-collar workers is expected to continue growing as Thailand undergoes many infrastructures projects that act as a catalyst to create jobs for blue-collar segment.
Increased competition in Thailand’s energy drinks industry in the last few years has resulted in an intensive price war. All three top-selling energy drinks brands in Thailand, comprising M-150, Carabao Dang and Krating Daeng, which collectively accounted for nearly 65 percent of the sales value in 2018, are competitively priced at approximately THB 11 in 150 ml amber glass bottlings. As a result, several Thai energy drinks brands have been improvizing to gain market share within the existing blue-collar segment or broaden their target towards non-traditional whit -collar, urban dwellers, and young consumer bases.
The majority of sales for energy drinks in Thailand is derived from traditional retailers such as independent stores. Traditional retailers constituted about 72 percent of energy drinks sales in the year 2018. Due to higher sales margin, the traditional distribution channel is typically the preferred mode of distribution by most of the energy drinks manufacturers, compared to the modern trade channel.
|Year||Sales volume (in million units)||Sales revenue (in THB million)|
Sales volume and value of energy drinks in Thailand over the years
The modern retailers such as supermarkets and chain stores are typically the preferred channel for energy drinks players, who want to position their energy drinks that are targeted for new urban market segments. This is due to the higher concentration of modern retailers in the urban areas typically patronized by urban dwellers and white-collar consumers. However, the sales margin is usually lower in this distribution segment, as modern retailers often purchase in bulk volumes, and negotiate for a lower price.
Consumed in almost every corner of the globe, Red Bull has become a staple in many people’s daily lives. Since Red Bull is an Austrian energy drink, most people think that it originated from Austria. However, before it became the energy drink that we all know today, it was originally formulated in Thailand by Chaleo Yoovidhya, a Thai national. He called it “Krating Daeng,” meaning “red bull” in Thai. Unlike its western counterpart Red Bull, Krating Daeng is a non-carbonated energy drink.
At first glance, it’s difficult to distinguish between the two brands. Both bear the same logo and name. The only difference is that the packaging for Krating Daeng is slightly different than that of Red Bull. Regular Red Bull comes in a tall, skinny can, whereas Krating Daeng comes in a short, stubby can, or a small glass bottle. Krating Daeng is produced and distributed by TCP Group in Thailand.
According to Supachai Junkeiat, TCP Group’s Global Marketing Division Director, “Krating Daeng or Red Bull is a globally well-known brand. It is also the only energy drink brand from Thailand to be No. 1 leader in Southeast Asia with a market share of around 40 % while being a top 3 energy drink brand in every country it has a presence. It is also the pioneering brand for energy drinks that has been successful for over 40 years.”
You will learn more about beverage trends and new energy drinks at drinktec, which will be held from October 4 – 8, 2021, in Munich. Would you also like to showcase your innovations in this area? Join us at the next drinktec.
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