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New Thai Tuna Export Strategy: Target Expanding U.S. Jails

Thai Exporters are adopting new strategies focusing on wholesale orders and even jails to compensate declining exports to the US.
Pramook Jirdpongsatorn, president of California-based PK Food, one of the largest importers in the US, said despite Thai exports to the US falling during the economic downturn, his company had not suffered from the crisis, because it had turned to supplying wholesalers and jails rather than department and chain stores.

"Americans have less purchasing power now and are more careful about how they spend their money during these tough economic times. They've adjusted their behaviour to purchase low-priced goods from warehouses rather than department stores. My firm, therefore, has adjust its sales and marketing policies to focus on the wholesale market and niche markets like jails," he said.

Pramook pointed out sales in US chain and department stores had been dropping gradually since last year. In contrast, sales to wholesalers have not yet decreased, because consumers had turned to buying their goods from them at lower prices instead.

PK Food exports to mainstream US retail outlets like Wal-Mart, Sam's Club, 99 Cents and Family Dollar. The company sources products around Asia, including Thailand, for supply to these stores. It now imports more than 51 items to the US, mainly canned fruits, seafood and processed food.

Pramook, who is also an honorary trade adviser to the Thai Commerce Ministry, said American consumers were also consuming more ready-to-eat foods as an alternative to dining out. This has created greater demand for exports of processed foods and canned fruits, due to their cheaper price and longer shelf life.

Products with high potential growth in the US include canned tuna, frozen shrimp and ready-to-eat and ready-to-cook foods.

Moreover, PK Food also sees an opportunity to increase sales to jails in the US. The company is a major supplier of canned tuna and processed foods to more than 2,500 jails and prisons in that country.

The number of prisoners has increased considerably during these tough economic times. Prisoners cannot hold cash, but they are allowed canned food and other essential goods. Canned tuna is an especially popular item among prisoners for use in bartering.

Pramook said his firm was also planning to cooperate with Thai rice exporters in producing instant rice for supply to North American jails and prisons, as ready-to-eat foods see high demand in such institutions.

The US Justice Department's Bureau of Justice Statistics said the number of prisoners increased almost 1 per cent between 2007 and 2008, to 2.3 million. That number is expected to rise further as the economic meltdown leads to more criminal activity.

Somjin Plengkhum, deputy director-general of Thailand's Department of Export Promotion (DEP), said although exports to the US had dropped, there was still plenty of opportunity for Thai exporters to penetrate this market.

The DEP plans to promote exports of Thai products to particular destinations in North America, with a focus on government agencies, including jails, prisons and hospitals. Thai food products, which have innovative packaging and a healthful reputation, should be able to increase its sales in this market, she said.

Thai products now enjoy only a small market share in the US, 1.22 per cent in terms of import value. The major suppliers to that country are China, Mexico, South Korea and Taiwan.

To promote the growth of Thai products in that market, the main Thai Trade Office in the US is seeking ways to negotiate with local governments there to sign contracts for Thai products, Somjin said. The DEP has already conducted many Thai trade fairs in the US.

DEP figures show Thai exports to the US declined 27.4 per cent year on year in the first four months, to US$4.7 billion (Bt161 billion).