BANGKOK -- Saha Group, Thailand's instant noodle heavyweight, is spending 400 million baht ($12 million) to modernize its food business in a bid to boost sales and beat back encroachment from foreign competitors.
On Monday, Saha consolidated Thai President Foods, the subsidiary behind the internationally recognized Mama brand of instant noodles, with President Rice Products, the rice soup and rice noodles unit. The new entity, capitalized at 329.7 million baht, retains the name Thai President Foods.
Saha Pathana Inter-Holding, the group's holding company, is the top shareholder at 25%. Japan's Nissin Foods Holdings has 16%, the second-biggest stake.
Not only did the new Thai President inherit the Mama brand, which controls about half of Thailand's instant noodle market, it also absorbed the group's meal packaging, baked goods, confection and fruit juice operations.
Pipat Paniangvait, vice chairman of Thai President Foods, said the company is investing 200 million baht to triple capacity to produce Mama-brand instant rice soup at a factory in Ratchaburi Province. Thai President Foods is also spending another 200 million baht at multiple instant noodle plants to install factory robots that will automate production and cut labor costs, said Pipat.
The capital investments are expected to help lift Thai President Foods' revenue to 30 billion baht in five years, a 36% jump from fiscal 2016.
Saha is preparing for tougher competition in the noodle market. One pack of Mama noodles is priced at around 6 baht, affordable enough for per-capita annual purchases to reach 49 units domestically. Mama, which has become synonymous with instant noodles in Thailand, is also exported to other Asian markets. But South Korean rivals, particularly Samyang Foods, have started to flex their muscle, which is prompting Saha to shore up its business.
For rice soup, Pipat is expanding production capacity to capture the growing number of health-conscious consumers. President Rice Products manufactures instant rice soup under the Mama Jok label, which Thais normally eat as a breakfast item.