European expansion boosts Thai pet food manufacturer’s earnings

Samut Sakhon-based Asian Alliance International reported steep earnings growth in 2024 thanks in part to pet food sales in North America and Europe.

AAI, which sells both pet and human food, posted a 63.9% year-on-year (YoY) gross profit growth of THB 357 million ($10.6M/€10M) in the first three quarters of the financial year. This is up from THB 218 million ($6.4M/€6.1M) during the same period in 2023.

According to the company’s latest earnings report, much of this growth was due to higher sales volumes. Pet food sales volumes increased by 49.1% YoY to 9,419 tons, compared to 6,317 tons in the same quarter last year.

The firm owns Pro Dog, Pro Cat, Hajiko and Monchou, which offer dry and wet food products. AAI says the brands are targeted at high-end, mainstream and low-end consumers. However, most of the company’s food products are sold under client brands. AAI began developing its pet food portfolio in 2019.

Expansion abroad

Only a relatively small portion (8%) of AAI’s pet food revenue in the third quarter (Q3) came from domestic sales. Instead, the company has seen growth abroad bring in more profits.

European markets are a growing source of the company’s pet revenue. In Q3 2024, European sales made up 27% of the company’s pet food revenue, up from 23% the previous year. 64% of the company’s pet sector revenue came from the US and Canada, roughly unchanged from the same period in 2023 when 65% of its revenue came from North America.

Sales elsewhere in Asia accounted for just 1% of pet food revenue.

Exchange rates between the US dollar and Thai Baht (THB) caused problems for the company. Despite growing revenue, gross profit was 18.9% lower than in Q2 2024, which AAI blamed on the dollar in its earnings report.

Thai officials forecast that the country’s pet food exports will represent $2.5 billion (€2.4B) this year, an annual increase of 3%.

Future outlook

As a relative newcomer to the pet food market, AAI has clear room for growth. However, they will face steep competition from more established brands in Europe and North America, as well as other newcomers.

The company launched many new products this quarter, expanding its selection, particularly across healthy-branded pet foods. Time will tell whether AAI’s 34 new cat food products and 18 new dog food products will prove profitable.

In 2025, the company plans to expand its facilities, potentially driving even further growth in pet food production. Thanks to factory renovations, production capacity is expected to hit 59,000 tons per year in the first quarter of 2025.

AAI aims for this year’s financial year growth to be 31%, with a sales target of THB 5.7 billion ($170M/€160M).