STC Group plans to capture more of the retail segment in foreign markets by offering rice in smaller packs to suit frugal consumers.

The group is aiming to maintain its market share this year to stay Thailand's leading rice exporter, while the country's rice exports shrink to about 8.5 million tonnes.

Through its flagship company Capital Rice Co, the group plans to export about 1.5 million tonnes of rice, or about 18% of Thailand's total exports. This is the same market share it controlled last year, when it earned about 40 billion baht from exporting 1.8 million tonnes of rice.

"The shrinking economy has changed consumers' purchasing behaviour. They opt to buy products in smaller volumes just as needed, like one or two kilogrammes of rice," said Wanlop Pichpongsa, deputy managing director of Capital Rice Co.

The market change can be seen in many countries - even in Africa, where broken and parboiled rice is about 50% of STC's total exports, he said.

Putting rice in small packages for foreign markets is not a general practice for the company, which exports rice mainly in bulk, ranging from a tonne to 100-kg and 50-kg bags. This rice is then sold to big traders for resale.

"We actually have offered small packages, but only for some markets such as in Europe and domestic markets. To develop this segment, we plan to adapt more production lines for rice in small containers," he said.

Distribution will also be improved to strengthen brands in global markets, set to grow significantly in the near future.

Mr Wanlop said STC has shipped rice under several brands including Caprice and Better, as well as some brands also available in the domestic market, such as Thai Thai and Great Harvest, for organic fragrant rice.

Despite Thailand being the world's largest rice exporter, its exporters have tended to pay little attention to promoting brands. Instead, they export the grain as a commodity, which generates less income.

"I totally agree with the efforts by some companies to build brands for rice. It's a great strategy to increase product value," said Mr Wanlop.

Among over 100 rice exporters, only a few companies such as CP Intertrade, Chia Meng, Patum Rice Mill and Granary have pushed hard to create product brands for rice. They have successfully established brands such as CP's Royal Umbrella, Chia Meng's Golden Phoenix and Patum's Mah Boonkrong in both local and foreign markets.

Higher value and quality could keep Thai rice competitive amid falling export markets, expected to drop this year in volume by 15% to 8.5 million tonnes.

But Mr Wanlop predicts Thailand's rice export income this year may not decline much from 223 billion baht last year.

Prices have been strong since the start of 2009, averaging $500 per tonne for premium grade white rice compared with around $300 early last year.

Source: Bangkok Post