KResearch is of the view that the prolonged COVID-19 pandemic, which recently prompted the government to reimpose lockdowns and curfews in high-risk zones, has caused consumers to embrace frugality or thrift. As snacks are generally perceived as non-essential products, their consumption rate is set to grow at a meager pace. In 2021, growth in the snack business will likely be pressured by the projected increases in raw material costs during 2H21, which amount to a sizable share of the total processing costs, especially cereals, vegetable oils, and sugar. We, therefore, expect that turnover in the snack market will reach only THB37.5 billion in 2021, representing a contraction of 4.0 percent YoY, against the 2.6 percent growth reported for 2020, because snack consumption in key target segments is projected to decline due to their weak purchasing power. Moreover, snack processors may find it more difficult to pass on the rising costs to consumers as it will directly affect their competitiveness. This means that they must shoulder the costs or focus on cost reductions.
Amid intense competition and limited consumer purchasing power, marketing strategies, particularly pricing tactics, are still necessary in helping stimulate sales. A shift towards health and wellness food trends, as well as volatile raw material prices will present key challenges for snack processors in terms of cost management, for example how to maximize the use of raw materials. To cope with such challenges, they may need to focus on snack products that are still marketable during the COVID-19 crisis, reduce package sizes in order to maintain product prices or cut profit margins to sustain their competitiveness. Snack processors may also need to invent new products that are in line with health-conscious trends, for instance snacks that contain more nutritious ingredients instead of those that are detrimental to health (such as sugar, sodium or carbohydrates/fats) for consumers who want to cut calories.