Khao Shong unfazed by Afta, sees new opportunities ahead

Besides, it believes it can take advantage of the trade pact and expand to other markets in the region.

Under the agreement, Asean countries will cut the import duty on coffee grains from 90 per cent to 5 per cent, while the import tax for instant and 3-in-1 coffee will be cut to zero.

Khao Shong managing director Chana Chiralerspong said yesterday that despite the import tariff being cut down to zero and foreign brands being given the opportunity to enter the local market, he is confident that the taste of Thai consumers, high standards and production know-how would protect the industry.

However, he said, he was concerned about the impact the pact would have on Thai coffee farmers, because import tax on coffee grains would be cut to just 5 per cent. He hoped the Commerce Ministry as well as the Agriculture and Cooperatives Ministry would protect these farmers.

Chana said he saw Afta as an opportunity to increase export volume in Asean. Khao Shong plans to export its instant and 3-in-coffee to Indonesia and the Philippines next year, adding to its buyers in countries such as Iraq, Burma, Nepal, Iran, Jordan, China and Sri Lanka, which already contribute 5 per cent to the export market.

Khao Shong has invested Bt120 million this year to increase its production capacity for 3-in-1 coffee by six times, and though he did not disclose any figures, he said the segment showed the highest growth in the industry.

Chana said the 3-in-1 coffee segment had grown in the total coffee market over the past four to five years at 15 to 20 per cent. The current coffee market is valued at Bt12 billion, of which Bt8.4 billion is in the 3-in-1 segment, making it in an interesting segment for Khao Shong to build a stake in.

Khao Shong, which was the first brand to introduce 3-in-1 coffee in 1995, will be aggressively marketing this segment from year-end. It aims to become a market leader with a share of more than 50 per cent within three years, up from being ranked fourth with a less than 10-per-cent share. Nescafe is currently the market leader with a roughly 50-per-cent share.

The company has allocated Bt150 million for the marketing of its 3-in-1 coffee this year, and yesterday introduced pop star Bie Sukrit Wisetkaew as a presenter for the product.

Besides the 3-in-1 coffee segment, Chana said Khao Shong would be launching other formulas early next year aimed at tapping health-conscious consumers.

He added Khao Shong's revenue had so far grown by 5 per cent from last year and expects the company's aggressive moves to boost this year's revenue to 15 per cent.