Foreign investments in Thailand’s superfood industry

The superfood kitchen of the world – taste the future

Superfood has specific health benefits because it contains nutrients that most people lack. It may also be eaten to counterbalance the acidifying effects of an unhealthy diet heavy on meat, dairy products, and refined sugar. It is promoted as the ultimate food for low-calorie health to provide high nutritional value, to slow down aging, to nourish the skin and to work the whole body, being good for the digestive system and body strength.

“Superfood powders are not just broccoli on steroids that you don’t have to cook.”

All-organic raw materials with significant importance as superfood are, above others,

  • Chia seeds, praised for its high omega-3 fatty acids
  • Spirulina algae bacteriae with its very high levels of chlorophyll
  • Seaweed as a source of iodine
  • Maca with its usefulness in combating fatigue
  • Leek, lentil, chickpea, and alfalfa sprouts which are rich in protein, essential fatty acids, and amino acids.
  • Turmeric, galangal, ginger, coriander, lemongrass, garlic, and chili are all immune system boosters
  • Riceberry rice,  well-known for its richness in nutrients and minerals and a high level of anthocyanin and lipid soluble antioxidants

There are other traditional superfood dishes in Thailand as chicken feet (teen gai), beef liver, bugs, insects, and snails which do not need particular processing and are not further discussed in this post.

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Seven legal requirements, hurdles, and solutions for superfood business

#1. Investment structure: To do business in Thailand typically requires a local legal entity and superfood businesses are no exception about this. The preferred form is the small Thai corporation, the Limited Company (Co., Ltd.). Foreign investors have to take into consideration Thailand’s foreigner legislation.

Under the Foreign Business Act, certain activities are not allowed for foreigners or need a Foreign Business License which in many cases is factually impossible to achieve. As a consequence, the foreigner needs to team-up with Thai partners as majority shareholders. There are smart solutions available which preserve foreign dominance, voting majority, and profit rights.

To work in Thailand requires for foreigners a work permit from Thailand’s Labor Ministry, which can be achieved in areas which are not reserves and precluded to Thais. Occupations and professions in the area of agriculture, animal husbandry, forestry, or fishery, except work requiring expertise, specialized work, or farm supervision work are prohibited for foreigners.

#2. BOI promotion: The Board of Investment or BOI, a government agency promoting small to large-scale investments of both Thai and foreigners, grants tax and non-tax incentives especially for farmers, in order to support their agricultural investment projects. It has the intention to add value to the harvests and processed agricultural products along with the upstream, midstream and downstream supply chain.

Section 1 of the list of eligible activities contains of 23 items with different scope and size of investment promotion from biological fertilizers (item 1.1) until systems and software (item 1.23).

#3. Commercial agreements: Depending on the type of superfood, the cultivation, storage and pre-processing might be outsourced to local farmers by long-term contractual arrangements. A form of toll-manufacturing (“contract farming”) might be considered as well as clear rules for ownership in the primary production equipment, secondary production equipment, infrastructure, land, buildings, installations, IT tools and platforms, IP rights, and all other objects, goods, or facilitators, required to get the deal done.

Other agreements are required for the local distribution of the finished products to eco-markets and pharmacies or for direct sales to stores, hotels, restaurants, supermarkets, etc. As the “kitchen of the world”, superfood producers will also look for export to foreign markets, on foreign financing opportunities and other cross-border contracts.

#4. FDA license: Thailand is a highly regulated business location. Specific license requirements by the Food and Drug Administration (FDA) as well as other permits and approvals have to be applied for. Local labeling requirements are another aspect of superfood distribution.

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#5. Factory license: Superfood has to be cultivated and harvested for further processing. The products are powders, capsules or pills and used as a food supplement. The cultivating of the superfood ingredients might require specific breeding tanks, bioreactor tanks, and other secondary production equipment.

The manufacturing of the ingredients into the end-products can be – depending on the specific type of superfood – high-tech processing steps or a low-tech mechanical work. It contains, for example, the dehydration of leaf, root, or biomass, the grinding of dried leaf, root, or biomass, the filling and pressing into pills, powders, capsules, paste, or flakes, and finally the packing of the finished product.

Under Thailand’s Factory Act, a factory is defined as any premise that uses machinery equivalent to five horsepower or more, or that employs seven or more people, with or without any machine, for manufacturing, producing, assembling, packing, processing, conveying, storing anything. It has to be clarified whether the superfood cultivation and/or processing is deemed to be a factory under the Thai legal framework and the specific consequences. In addition, a construction permit respectively building license might be required.

#6. IP rights: Allocation and protection of intellectual property (IP) rights in superfood is an underestimated legal battlefield. A process, a product, a formula or an indication can be subject as an IP right. In the algae and other superfood industry, patents and trade secrets are the best IP right to protect the invention.

The patent may cover the bioprocess, especially photobioreactors, illumination equipment, production technology, and downstream equipment. And it might cover the bioproducts, for example, recombinant proteins, pharmaceutical formulations, final products, and gene editing as well as genetic engineering strategies.

Superfood innovations by ongoing R&D should be immediately protected under Thailand’s patent laws. The use of brand names without having the trademark registered at the trademark register in Thailand – any, as the case may be, abroad, is essential.

The development of new microalgae as food protein source has clearly become a strong driver of innovation in the microalgae industry. Microalgal biomass patents are used especially for the production of Spirulina and Chlorella superfood. In 1998/2004, a patent discloses a method and an apparatus for cultivating and consuming fresh Spirulina at home.

Although, when outsourcing parts of the value-chain to local farmers or other third parties, IP clauses are of imminent importance to protect the (foreign) investment in Thailand. The producer will have to disclose and transfer (or license) certain knowledge of its technology, which is necessary to efficiently operate the cultivation processes. A comprehensive IP strategy assures flawless effectiveness and enforceability.

#7. Liability protection: Thailand’s consumer protection legislation and its product liability laws need to be taken into consideration for the whole corporate and commercial structure. Accusations of superfood as the “new food fraud” does not seem to have solid supporting evidence. A robust structure to fight litigation is nevertheless a sound consideration.


Contact Justinian Lawyers at justinian@pugnatorius.com to discuss your superfood venture with the Bangkok investment law firm.

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