Overseas Brands Keen to Target Thai Tea and Coffee Niche Markets#gerardpocquet

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Can Thailand's traditional teas and coffees ward off interlopers from across Southeast Asia?

2 Feb 2018

http://economists-pick-research.hktdc.com/business-news

Overseas Brands Keen to Target Thai Tea and Coffee Niche Markets

Although ostensibly over-blessed with many domestic brews and western-style coffee shops, many Southeast Asian suppliers are keen to tempt the voracious thirst of Thai consumers with bespoke brands and proprietary products.

While western-style coffee shops and tea brands pretty much dominate Thailand, there are still a number of niche opportunities to be had at the more bespoke end of the market, at least according to exhibitors at the recent Bangkok Coffee & Tea Culture expo. In particular, there is a growing appetite for organic / healthy brews, as well as novelty flavours and the kind of unusual combinations likely to appeal to a younger market demographic.
One company already happily carving out its own niche at the higher end of the market is Italasia, a Bangkok-based importer of Italian goods, including a variety of food and drink products, as well as a range of catering / hospitality equipment. It was primarily attending the expo to promote the Illy range of coffees and espresso machines in its capacity as the exclusive Thai distributor for the Trieste-based company's products. At present, Illy's range of coffees and its espresso machines are already a feature of many of Thailand's more upmarket hotels and restaurants.
Outlining Italasia's strategy and positioning for the brand, Siriwan Prayoonpong, the company's Senior Barista Trainer, said: "The majority of the young people in Thailand don't really know how a perfect espresso should taste or how it should be produced. Most of them just like their coffee chilled, maybe with ice or added flavourings.
"We see our role as showing them how coffee should be made. We specialise in premium coffees, rather than the novelty coffees on offer in many of the chains."
Hedging its bets somewhat, though, the company has now introduced the Illycrema – a blend of espresso coffee and micro-ice shards. Rebutting the suggestion that the company is diluting its brand, Prayoonpong said: "The Illycrema is a natural product, free from hydrogenated fats, dyes or preservatives. It's our way of appealing to Thai customers who like great coffee, but who also like a little ice with their drink."
Taking a rather different approach was Doi Chaang Coffee, the Bangkok-headquartered producer and distributor of high-quality Arabica coffee from Thailand's northern Chiang Rai region. In addition to its production / distribution activities, the company also operates 50 franchised coffees shops across the country.
Explaining the company's straightforward approach to the sector, Operations Manager, Nont Sumate said: "All of the Doi Chang Coffee shops only offer black coffee. It's not blended and we don't do anything too fancy. We just super-serve people who want black coffee served in a traditional style."
With coffee-drinking such an engrained tradition in Thailand, it's not necessarily easy for overseas businesses – even those based elsewhere in Asia – to make in-roads into the domestic market. This, however, has not deterred Icha Ca Tea & Coffee, a well-established Taiwanese brand, from giving it a good go.
Although the company has been producing traditional teas and coffees for more than 60 years, it didn't open its first branded tea shop until 2012. With this outlet – based in the northwest Taiwanese city of Taoyuan – offering coffee and milk teas at affordable prices, the company has had to learn to keep abreast of the changing tastes of many of its younger customers.
Reflecting on the lessons it has learnt, particularly with regard to tea preferences, Lia Abao, the company's Market Development Manager, said: "Teenagers still like to drink tea, but now they want it blended with fruit or milk. We see our role as giving them exactly what they want. So now we offer a variety of youth-oriented teas, as well as our more traditional range of products.
Among the teas Icha Ca was particularly keen to promote this year were its jasmine green, floral Oolong, Taiwan red Oolong and honey black ranges. The company was also looking to go into partnership with any keen, young individuals seeking to launch their own coffee / tea shops.

Dong Feng: Teen-friendly Taiwan tea.

Grand Berryl's durian-infused coffee range.

Targeting younger consumers was also high on the agenda for Dong Feng Black Tea, another Taiwan-based tea producer. With this in mind, it has recently completed a youth-friendly revamp of all of its packaging, with its new look also emphasising its organic / environmentally-friendly credentials.
Explaining the thinking behind this new look, Amy Li, the company's Chief Executive, said: "We wanted the packaging to reflect the quality of our tea. It is, after all, that quality that has made our teas among the most popular in Taiwan. We also thought it was important, though, to emphasise our commitment to producing specialty teas in as healthy and organic a fashion as we possibly can."
As well as several Taiwanese tea makers, the event also attracted a number of Malaysian manufactures of premium coffee blends, including Penang-based Grand Berryl. The 13-year-old business primarily produces white coffee under the Warehouse Coffee brand and is currently trialing the Thailand market prior to actively expanding into the country. In addition to its regular coffee blend, it also has high hopes that its white coffee / durian [a large spiky fruit native to Southeast Asia] blend may prove a hit with Thai consumers.
Outlining the company's Thai strategy, Managing Director Anthony Khow said: "We hope our white coffee / durian blend will appeal to the country's teenagers, as well as to anyone who enjoys a combination of coffee and fruit. We also hope to sign deals with hotels, supermarkets and other outlets. We are happy to work on an own-label basis, as well as to supply both small and large quantities."
The overseas contingent was rounded off by exhibitors from two other Asian countries – South Korea's Cafe Murisys and Japan's Maruzen Foods. In the case of the latter, the business is a joint venture between Shizuoka-based Maruzen Tea Japan and Singha Park Chiang Rai, a domestic tea plantation.
Keen to explain the joint venture's USP, Sales Executive Tannapat Jiratthanachot said: "We are now the only tea-processing facility in Thailand still using the traditional steaming process that complies with both the HACCP Halal and ISO2200 standards. Overall, we aim to produce high-quality green tea by combining fine ingredients from Thailand with Japanese tea-processing technology.
"Although we have built our reputation on traditional green teas, we are now also developing a range of products targeted at younger tea drinkers. In Thailand, young people like to drink ice tea, while older people want hot tea. With our expanded product range, we are hoping to cater to both demographics."
For its part, Café Murisys is happy to focus solely on the cooler end of the market as part of its mission to bring cold-brew bottled coffee to Thailand. While traditional iced coffees are made by adding ice to pre-boiled coffee, the company's cold brew variant sees the coffee brewed at room temperature or below over a 12-14 hour period.
Clearly evangelical about his company's product, Chief Executive Jack Kang said: "Our cold-brew coffee contains a comparatively low level of caffeine and is UV sterilised to ensure all food-safety standards are met. It's something quite new here, but – as it's both healthy and delicious – we are confident that it will be quirky accepted."

Traditional tea ingredients on show at the Bangkok Coffee & Tea Culture expo.

Coffee & Tea Culture 2017 was held from 5-8 September 2017 at the Bangkok International Trade and Exhibition Center.

Geoff de Freitas, Special Correspondent, Bangkok

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