KResearch projects that the market value of snack business will reach THB37.5 billion in 2021, representing a contraction of 4.0%YoY, against the 2.6% growth reported for 2020, due to the prolonged COVID-19 pandemic has caused consumers to be thrift and spend cautiously. As snacks are generally perceived as non-essential products, their consumption rate is set to grow at a meager pace. Meanwhile, the cost of raw materials is likely to remain at a high level in the second half of 2021, in particular cereals, vegetable oils and sugar, which amount to approximately 20-30% of the total processing costs. 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 and focus on cost management.
Amid intense competition and limited consumer purchasing power, marketing strategies, particularly pricing tactics, are still necessary. A consumer 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 using more nutritious ingredients and reducing ingredients that are detrimental to health.
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