Haad Thip Shifts Strategy: Embracing Glass Bottles Amidst Rising Plastic Costs
Haad Thip Plc, the exclusive Coca-Cola bottler and distributor for 14 southern provinces in Thailand, is strategically pivoting its product portfolio to mitigate the escalating costs associated with plastic pellets. The ongoing geopolitical tensions in the Middle East have significantly impacted the price of these essential raw materials, prompting the company to accelerate its distribution and sales of glass-bottled products. This move is designed to better leverage existing production capacities and offset the financial pressures stemming from the surge in plastic resin prices.
Currently, the revenue generated from products packaged in glass bottles represents a minimal portion of Haad Thip’s overall income. In the 2025 financial year, the company’s packaging revenue breakdown was as follows:
- PET: 79%
- Cans: 16%
- Returnable Glass Bottles (RGB) and Non-RGB: 3%
- Other Sources: 2%
Strategic Shift Towards Returnable Glass Bottles
Maj Gen Patchara Rattakul, Chief Executive of Haad Thip, has outlined an ambitious target to increase the revenue contribution from returnable glass bottles (RGB) to between 6% and 7% of total revenue within the current year. He acknowledged that this transition will require a phased approach, as the entire supply chain needs to adapt and reconfigure to effectively support the RGB system. Despite the inherent complexities, the company has confirmed that it possesses adequate stock of returnable glass bottles to facilitate this planned expansion.
Navigating the Operational Realities of Glass Bottling
The operational shift towards returnable glass bottles introduces new logistical considerations. Amrit Kumar Shrestha, Chief Financial Officer, highlighted that the reintroduction of an RGB system necessitates the collection of empty bottles post-consumption. This process may lead to increased logistics costs. Furthermore, these returned bottles must undergo rigorous cleaning and inspection procedures to ensure they meet quality and safety standards before they can be reused.
Impact of Global Conflicts and Cost Management
The volatility in the price of plastic pellets, a direct consequence of the ongoing conflicts in the Middle East, is a primary driver behind Haad Thip’s strategic adjustment. Coupled with rising energy costs, these external factors place considerable pressure on the company’s operational expenses. Maj Gen Patchara stressed the company’s commitment to maintaining current product prices for as long as feasible, emphasizing cost management as a top priority.
“If the company raises product prices at this time, it will impact sales volume,” Maj Gen Patchara stated, underscoring the delicate balance between cost control and market competitiveness.
In a worst-case scenario, the combined impact of escalating logistics and packaging costs could potentially affect the company’s bottom line by approximately 100 million baht.
Optimism Amidst Economic Headwinds
Despite these challenges, Haad Thip remains optimistic about its sales outlook. The company has set a target for sales volume growth of 2% to 4% for the current year. While acknowledging the potential for inflation within the country, Maj Gen Patchara expressed confidence in the resilience of the southern Thai market.
Tourism Recovery and Consumer Behavior
Prior to the recent global conflicts, Haad Thip observed a discernible recovery in the Thai tourism industry. However, it was noted that some travellers continue to exercise caution with their spending. This recovery is further bolstered by the strategic expansion of sales points across various retail channels, including convenience stores and traditional outlets.
Maj Gen Patchara anticipates that the upcoming Songkran holiday will continue to be a vibrant period, with travellers expected to flock to southern Thailand. The Thai tourism industry, he predicted, will maintain its competitive edge, contributing positively to the company’s performance.
