MATTRESSES
Darling warns of padded prices
The hike in the daily minimum wage to 300 baht next April will pressure mattress producers to increase their prices by at least 10-15%, says local manufacturer Darling Mattress.
The minimum wage will increase on April 1 in Bangkok, Nakhon Pathom, Nonthaburi, Samut Prakan, Samut Sakhon, Phuket and Pathum Thani.
It was a highly touted Pheu Thai campaign promise.
The higher wage will push up labour expenses at Darling Mattress by 15%, so it plans to shift its capacity from a major factory in Bangkok to another in Khon Kaen, said Pensri Champreedam, sales and marketing director.
The Bangkok factory produces 7,000 mattresses per month and Khon Kaen 3,000 mattresses.
After the shift, the monthly capacity in Bangkok will reduce to 5,000 units.
"We have to do everything to reduce costs. Our average wage is 200 baht a day in Bangkok and 167 baht in Khon Kaen. We strongly believe key mattress manufacturers will increase product prices, as most of their factories are in Bangkok and the surrounding provinces," said Ms Pensri.
Material prices have already risen by 10%, prompting Darling to raise prices for five of its mattress series by 20%. Material prices may rise again next year.
Darling will increase its marketing budget to 5% of total sales. It projects revenue growth of 10% this year to 400 million baht, increasing to 440 million next year.
Retail accounts for 40% of total sales, while project sales to hotels, apartments and furniture shops take another 40% and exports the remainder. The main overseas markets are Asean and the Middle East.
"We will see fiercer competition in the mid-priced market because Chinese mattresses are 30-40% cheaper. But their quality is another story," she added.
The mattress market in Thailand is estimated at 7 billion baht this year, typically growing 5% per year. Premium mattresses have a 20% market share (priced 70,000 baht and up), medium-level mattresses 40% (10,000 baht and up), and low-priced products 40% (3,000-9,000 baht).
Chinese products could have an impact on the high-end market because its gross margin has some gaps to play with in pricing. For the low-end market, many producers turn to recycled fibres to save cost, but this is not durable and can cause consumers health problems.
Darling will not lower its prices next year, instead focusing on research and development to meet consumer demand, especially for those with sleeping problems.
Bangkok Post
