Wine to Thailand
Trends and opportunities
Consumer awareness of Australian wines in Thailand is growing. There has been a large growth in the number of wine drinkers in Thailand, leading to a new dynamism in the imported wine market. In 2012, Thailand imported approximately 15 million litres of wines, worth about 1.5 billion Thai Baht. Of this, 3 million litres were from Australia. Although Thailand ranks only 16th as a destination market for Australian wine by sales value (A$15.6 million) and 17th by volume (3 million litres), there has been a growth in exports of 50 per cent over the last 5 years (Source: Euromonitor International, Statistics – Export by Country, April 2015).
Wine is now regularly served at most social functions and being a wine drinker is perceived as a sign of social status. Since 2010 a significant number of pubs, bars and restaurants serving wine have been established and this growth continues. As such, wine has achieved a high level of acceptance among Thai consumers, typically aged between 25 to 55 years.
The consumption of alcoholic beverages in Thailand continues to grow at a steady rate of about 11 per cent annually. Wine drinking has been growing by 10 to 15 per cent since 2000 and has taken some market share from other alcoholic beverages. Drinkers of alcohol in Thailand number approximately seven million. A study by the Centre for Alcohol Studies claims that the average Thai aged 15 and older consumes 7.1 litres of pure alcohol per year (Source: Bangkok Post, Alcohol consumption report released, 26 Mar 2013).
Wine preferences and prices
Australian wine has a good reputation in Thailand and is regarded as representing value-for-money. Since 2009, Australia has been the second largest exporter by value to Thailand, after France, but for non-sparkling table wines, Australia is the market leader.
In general, Thais prefer strong, bold, punchy and heavier wines. The best-selling varieties are Shiraz and Shiraz blends. New world wines are well accepted and are understood well. Over 50 per cent of Australian wine imports are from South Eastern Australia or blends from the region. The most popular varietals for red wines are Shiraz and Shiraz blends, Cabernet Sauvignon, Merlot, and Pinot Noir. Chardonnay and Sauvignon Blanc are the well-known white wines.
There is an increasing demand for wine to cater for the steady increase in tourist numbers which exceeded 24 million in 2014 (Source: Tourism Authority of Thailand, Summary of Tourist Data, December 2014).
Importers often source new products to replace wines that are expensive, but perceived to be lower quality. So premium quality wines are sometimes sold in the medium price bracket through extensive marketing programs. Premium wine (high quality, high price) 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 (24 bottles), but there are also opportunities to export smaller volumes of higher quality wines with price points over A$100/case.
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, Mar 2015). However, heavy locally imposed excise duties (after the point of importation) mean that 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, Feb 2015)
For further information, visit The Customs Department - Thailand.
Marketing your products and services
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, appointing a local importer/distributor to handle 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 a 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/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.
Wine importers also act as distributors through four major channels:
- Retail trade – hypermarket, supermarket, and convenience stores
- Hotels and entertainment venues
- 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.
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
Royal Thai Customs Department
The Excise Department
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