The overall market for breakfast cereal now exceeds 2 billion baht, and Thai granola brand Diamond Grains is confident it can compete with international brands after getting a strong response from local consumers.
The brand was founded by the chief executives of Brunchtime Co, Chanisara "Oun" and Wuthikarn "Pax" Wongdeeprasith. The newlywed team make 19 flavours of granola products, including instant congee, overnight cereal and malt flake.
"Diamond Grains is Thailand's first clean granola product with no preservatives," said Mrs Chanisara, 25, adding that other Brunchtime products give wheat, sugar and monosodium glutamate a pass.
"We have positioned our offerings as healthy lifestyle products for consumers," she said. "Diamond Grains can solve a number of health problems, for example, constipation."
According to Euromonitor International, the market research provider, breakfast cereals include ready-to-eat and hot cereal varieties.
Muesli and granola are a subcategory, with related products involving a mixture of rolled oats, nuts and dried fruits, usually eaten with milk or yoghurt.
Crispy muesli is also included in the category, as well as mixtures of oats and cereal cluster products.
Leading global brands include Mueslix (Kellogg), Alpen (Weetabix), Quaker 100% Natural (PepsiCo), Vitalis (Oetker-Gruppe) and Jordans (W Jordan Cereals Ltd).
Euromonitor reported that Thailand's breakfast cereal market in 2017 was worth 2.048 billion baht, while the subcategory of muesli and granola contributed 274.4 million baht.
Over the past five years, breakfast cereal sales grew 17.4%, with a compound annual growth rate (CAGR) of 4.1%. Muesli and granola sales expanded by 20.2% with a CAGR of 4.7%.
Euromonitor predicts that the breakfast cereal market will grow to 2.104 billion baht in 2018, with muesli and granola accounting for 285.3 million.
The researcher also forecasts that the market until 2022 will surge by 11.8% for all breakfast cereals with a 2.8% CAGR. But muesli and granola are projected to see higher growth of 19.3% during 2018-22, with a 4.5% CAGR.
False starts
Mrs Chanisara said she first became interested in developing grain-related products when she was a 19-year-old student studying communication management at Chulalongkorn University.
Brunchtime's granola offerings come in 19 flavours, including congee.
"During my university life, I always came up with new, tasty cookies, bars and crackers, which were tested by my friends," she said.
Mr Wuthikarn, 27, said he and his wife had been looking for an opportunity to start their own business.
He said Mrs Chanisara had long worked on a variety of grain products, when they discovered there were some gaps in the breakfast cereal market.
"The Thai lifestyle when it comes to breakfast often involves skipping meals or eating unhealthy dishes like deep-fried dough or grilled pork with sticky rice," Mr Wuthikarn said. "So granola products can fill the gap in the breakfast market."
Mrs Chanisara said that before 2013, granola was less well-known among Thai buyers and most products were imported.
Sourcing the grains locally, she worked to come up with her own recipes, as well as googling others.
"I just used an ordinary oven to make the granola and got the grains at the general market," Mrs Chanisara said. "I lost a lot of ovens and many kilogrammes of oats until I got the right recipes, with nutty and chocolate flavours.
"Making granola is easy. But making it with no preservatives while keeping it fresh is kind of hard."
Full-time bosses
Mr Wuthikarn said their parents gave them a 2-million-baht budget to establish Brunchtime, although the young founders first had to propose a business plan.
"Establishing the company, we had to make everything right," he said. "We aimed to register our products with the Food and Drug Administration and [have the granola] certified."
The couple then set up a 400-square-metre manufacturing plant on Phetkasem Road and invested in a bakery oven.
Mr Wuthikarn said larger ovens for granola must maintain a constant temperature throughout, so they have to be tailor-made.
"We have to control every aspect of production quality," he said. "Our plant had to meet all related standards -- good manufacturing practices, hazard analysis and critical control points. If we did not make everything right from the start, we would not be able to handle any business risks or catch up with rivals when the market became more aggressive."
He said the plant has been relocated to Samut Sakhon province, thanks to massive sales volume locally. The new site is 20 times larger than the previous one, spanning 8,000 sq m, including production lines and a warehouse.
Mr Wuthikarn said the company now has 20 large granola ovens, running together with one conveyor belt.
"We also invested in our vehicle fleet with five pickups and one light truck," he said. "Chanisara is in charge of all granola recipes and production, while I handle management and logistics."
Their business employs 100 people, while the factory makes roughly 100,000 bowls of granola a day.
Strong competitor
Two different preparation styles for the morning breakfast bowl.
According to Euromonitor, the breakfast cereal market in Thailand is being driven by busier lifestyles and increasing health awareness, which will contribute to continued growth.
This is more prominent in urban areas, where young households and working adults have to rush to work or school in the morning, in addition to Thai consumers who view breakfast as important for their health and are looking for healthier options to start the day.
Besides flavour and variety, consumers are looking for high-fibre, whole-grain, low-sugar and low-sodium options. This has led to a rise in popularity for muesli and granola products, as they are viewed as healthier meal and snack options.
Euromonitor said Thailand's declining birth rate and rising health and wellness trend will drive sales in the segment, particularly among women.
"Manufacturers will need to offer more varieties of products that are healthier without compromising on taste," the researcher said.
Mr Wuthikarn said Brunchtime has also witnessed this changing trend among Thai buyers, with competition in the granola market heating up.
At most department stores, there are three or four local brands, including Diamond Grains, while the rest are imported, he said.
Mrs Chanisara said the most important thing for Diamond Grains is to continue meeting consumer needs.
"Each granola flavour has come on the back of customer feedback, which is valuable data for market research," she said. "One customer used to comment that our granola package was hard to open, because we had to keep it fresh. But now the packages can be opened more easily."
She said that because the quality of the granola is so important, the company will not compromise on that even to increase profits by reducing margins, as it will not be a sustainable strategy in the long run.
"There are many local suppliers who, for example, provide almonds, but we choose those which are export-quality, as they maintain their good taste when baked," Mrs Chanisara said. "Our mindset is that each person has three times a day to eat. If they eat tasteless or low-quality stuff, it can ruin their day. All three meals should entail good food, and that is true for granola."
She said good-quality products that can serve all customers can compete with anyone, be it international or local brands.
Overseas distribution
Diamond Grains registered sales of 200 million baht in 2017, spread across e-commerce transactions, supermarkets and convenience stores nationwide.
Brunchtime also has its own pop-up stores to sell granola with plain yoghurt at point-of-purchase locations.
"We set up the small store for customers to experience our products, which they can later buy in the supermarket," Mr Wuthikarn said.
The company has five pop-up stores in Bangkok and is looking to expand further.
The Facebook page for Diamond Grains has 804,600 followers.
Mrs Chanisara aims for Brunchtime to be a sustainable SME, and her goals extend beyond simply generating high profits.
"I just want my company to be a good one to work at," she said. "Even though it is a small company, our staff is very important to mobilising the organisation, just as important as our customers."
Mrs Chanisara said this will be the first year that Diamond Grains goes abroad.
"Earlier, we weren't ready to expand abroad because we weren't yet strong enough in the local market, but now we have a strong team and are ready," she said. "Brunchtime is in talks with distributors in Singapore, where we expect that our granola products will soon be available. We are also looking to take part in food trade fairs."
