Wine to Thailand

Trends and opportunities

The market

Thailand’s wine culture is growing and creating a new dynamism in the imported wine market. Once a relatively little known beverage in Thailand, wine is now regularly served at social functions and is perceived as a sign of higher social status amongst Thais. With an already significant but growing number of pubs, bars and restaurants serving wine, there has also been a large growth in the number of wine drinkers among Thai consumers, who are typically aged between 25 to 55 years. Consumer awareness of Australian wines in Thailand is also growing.

In 2015 Thailand imported approximately 13 million litres of wines, worth about Bht 1.7 billion. Australia now ranked 2nd after France with 2.4 million litres of import valued almost Bht400 million (Source: Thailand Trading Report, Ministry of Commerce, accessed on 12 September 2016).

Wine preferences and prices

Australian wine has a good reputation in Thailand and is regarded as a good value-for-money product. In recent years, Australia has been the second largest exporter by value to Thailand, after France. However, Australia is the market leader for non-sparkling table wines.

In general, Thais prefer strong, bold, punchy and heavier wines. The best-selling varieties are Shiraz and Shiraz blends. New world wines are well understood and accepted by locals. Over 50 per cent of Australian wine imports into Thaildan are from South Eastern Australia or blends from the region. Other popular varietals for red wines include Cabernet Sauvignon, Merlot, and Pinot Noir. Chardonnay and Sauvignon Blanc are well-known white varieties.

Importers often source new products to replace wines that are expensive but perceived to be lower quality. This means premium wines (high quality, high price) are sometimes sold in the medium price bracket through extensive marketing programs. Premium wine is a niche market so the volume of sales is not large compared to table or entry wine.

According to some local importers, of all wine consumed in Thailand, the biggest volume of sales is for 750ml bottles with a retail price of A$17 - $40. Thai importers therefore usually select wines with a retail price between A$22 - $44 FOB/case (12 bottles), but there are also opportunities to export smaller volumes of higher quality wines with price points over A$100/case.

Opportunites

When the Thailand-Australia Free Trade Agreement entered into force, tariffs on Australian wine were gradually reduced from 54 per cent in 2005 to zero as of 1 January 2015. This provides Australian wine producers an immediate competitive advantage over wine from most other wine producing countries (excluding Chile, which also has a free trade agreement) that incur a tariff of 54 per cent (Source: DFAT, Key Outcomes of the Thailand-Australia Free Trade Agreement, March 2015).

However, heavy locally imposed excise duties (after the point of importation) mean retail wine prices in Thailand are still inflated compared with some markets.

Opportunities exist for low-cost private-label bottling for the major hypermarkets or wholesalers such as Tesco or Makro, as well as for five-star hotels. Table wine is sold at a local retail price range of:

  • low-cost: A$15 to A$30
  • medium: A$30 to A$50
  • high/premium: A$50 to A$250
  • super premium: from A$250

Tariffs, regulations and customs

In addition to import tariffs, imported wines are subject to four different tax systems:

  • excise tax: value-based rate at 60 per cent of FOB/CIF declared value
  • value added tax (VAT): seven per cent, based on CIF/FOB value
  • municipal tax: 10 per cent of excise tax
  • health support project: two per cent, based on CIF/FOB value

(Source: Excise Department, information in Thai language only, accessed 14 September 2016)

Marketing your products and services

Market entry

Before any wines can be imported into Thailand, each individual wine label must be registered with the Excise Department of the Ministry of Finance in Thailand. Once the registration is complete, an import permit will be issued allowing that particular company to import the wine.

Only a Thai company can register a wine and apply for an import permit, so appointing a local importer/distributor to manage the importing and government formalities is a must.

Price and promotional support are the major determining factors in the purchasing decision. Thai law prohibits promotion of all alcohol, however, importers may arrange wine tasting events or a price discount with retailers.

Once the wines are in the Thai market, an effective marketing strategy (given restrictions on open advertising of alcohol) is to conduct food and wine promotions aimed at the target audience at leading hotels and restaurants, in conjunction with local importers/distributors. This kind of promotion is not against the law as it is conducted at a specific time and venue.

Austrade can assist with the search for potential wine importers or by organising wine tasting functions for Australian wine exporters in order to reach target groups and potential importers/distributors.

Distribution channels

Wine importers also act as distributors through four major channels:

  1. wholesalers
  2. retail trade – hypermarket, supermarket, and convenience stores
  3. hotels and entertainment venues
  4. specialty wine shops

Although wholesalers may on-sell to the other three channels, there is an agreement that there should be no overlap. Traditionally, between 30 to 40 per cent of wines are sold on premise, but the trend is shifting towards the retail trade.

Premium wines are distributed through specialised wine outlets, online shopping, mail-order/catalogue, upper-tier hotels and restaurants.

Transport

Air freight is used to ship product samples in small quantities. Qantas freight and Thai Airways International air cargo transport goods between major ports in Australia and Thailand.

Large volumes of products are transported by sea freight, which takes two weeks from Australia to Thailand, but it is more cost-effective than air freight. Lower shipping costs will enable your wine to be more competitive in the market. Timing shipments to arrive at the start of the working week will also enable faster processing and less storage charges than shipments arriving just before the weekend.

Once imported products arrive in Thailand and duties have been paid, they can be transported freely within the country. You should consider a good freight forwarder, insurance company and customs broker for shipping your products to Thailand.

Links and industry contacts

DFAT (TAFTA)
The Excise Department
Royal Thai Customs Department
Wine Australia

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