STREET WISE
Some harsh home truths
Whenever the economy slows down, there is a perception that people resort to the cheapest kind of food - instant noodles. And what would that be but "Mama", the best-selling brand.
In 1997 when the economy crashed, Mama sold at Bt4 a pack and reported brisk sales when an army of hapless salary-men was laid off following the closure of 56 finance companies and many big and small companies. Now that a "mini crisis" has struck Thailand, people at Thai President Foods Plc - the manufacturer of "Mama" instant noodles - believe they would enjoy a similar boom. But a recent revelation by Boonchai Chokwatana, president of Saha Patanapibul Plc - the parent company of Thai President Foods - exposed something completely different. He said at a Krungthep Turakij seminar that in the past two months, Mama sales have dropped. His surprise looked so genuine that reporters in the room looked at one another with a single question: "If people get poorer and if they don't eat instant noodles, what does that mean?" Boonchai tried to come up with an explanation. At a time of high oil prices and interest rates, he said, people on fixed incomes might have cut costs across the board - including the price of a Mama packet. "Now that oil prices have jumped 100 per cent, they are probably eating rice with salt," he said with a shrug. If my opinion is welcomed, I advance three scenarios. First, the economy might not be as bad as we fear. Though many economic agencies have revised the growth rate downward, this does not mean that all consumers will suffer from decreasing income. As far as I know, Gourmet Market - the luxury fast food corner at Siam Paragon - continues to report brisk sales from diners still fascinated with the exotic tastes and lavish decoration. Second, economic conditions might be worse than expected. While in 1997, people could buy a pack for one person, now they have slashed spending - one pack for two or three persons. They are cooking one pack with lots of water and turning the cooked instant noodles into soup for three bowls of rice. Third, the economy could be as bad as we fear but demand for "Mama" has dropped because there are so many brands on the market now. Which one is right, I don't know. But I do know that Thai President Foods would not like any of these three scenarios, especially the last one.
achara_d@nationgroup.com
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