Wine to Thailand
(Last updated: 05 Aug 2013)
Trends and opportunities
The market
Consumer awareness of Australian wines in Thailand is growing
In 2011 there was large growth in the number of wine drinkers in Thailand, leading to a new dynamism in the wine market. Wine is now regularly served at most social functions and being a wine drinker is perceived as a sign of social status. In 2010-2012 a significant number of pubs, bars and restaurants serving wine were established. Wine has achieved a high level of acceptance among Thai consumers, typically aged between 25-55 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 10-15 per cent since 2000 and has taken some market share from other alcoholic beverages. Drinkers of alcohol in Thailand number approximately seven million. A new 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 March 2013)
Thailand is a renowned market for Scotch whisky and was the second biggest market in the world for Johnny Walker Black Label whisky prior to the economic crisis in 1997. Imported wines and spirits represent 2 per cent of the total alcoholic beverages market. As with other countries, red wine dominates in Thailand and holds over 70 per cent of the wine retail market share.
The export of Australian wine to Thailand has shown consistent growth
In 2012, Thailand imported approximately 3 million litres of Australian wine worth A$16 million in Free on Board (FOB) value. This amount represented approximately 25 per cent of the total import volume and 28 per cent of the total Cost, Insurance and Freight (CIF) import value of A$46 million for wine Thailand in 2012.
(Source: Wine Australia, Australian win export market snapshot - Thailand - year ended March 2013)
Since 2009, Australia has been the second largest exporter by value to Thailand
France is the major competitor in this market.
In general, Thais prefer strong, bold, punchy and heavier wines. The best-selling varieties are Shiraz and Shiraz blends. New world wines are easily accepted and are understood well. Over 50 per cent of Australian wine imports are from South East Australia or are South Eastern Australian blends. The most popular varietals for red wines are Shiraz and Shiraz blends, Cabernet Sauvignon, Merlot, and Pinot Noir. Chardonnay and Sauvignon Blanc are well known in the white wine category.
(Source: Wine Australia, Australian win export market snapshot - Thailand - year ended March 2013)
Thai importers usually source wine between A$22-44 FOB/case, however, there are also opportunities to export higher quality wine (boutique / premium wine) to Thailand with price points over A$100/case.
Of the total wine consumed in Thailand, the biggest volume of sales is in the category market with a retail price of A$17-$40 for a 750ml bottle.
Australian wine has a good reputation in Thailand and is regarded as representing value-for-money. Opportunities are available for Australian exporters of both red and white wine.
Thai consumers favour red wine; however, both red and white wine are popular amongst foreign tourists and expatriates. There is an increasing demand for wine to cater for the steady increase in tourist numbers.
Opportunities exist for low-cost wines for 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 A$15-$30, medium range at A$30-$50, high/premium wines at A$50-$250, and super-premium wines retail from A$250.
Price and promotional support are the major determining factors in the purchasing decision. Importers are sourcing new products to replace wines no longer expected to sell due to prohibitive prices. Sometimes premium wines range (A$50-250) when supported by an established exporter through their local importer in various marketing programs, can bring the price down to medium range (A$30-$50).
These wines are distributed through specialised wine outlets, online shopping, mail-order/catalogue, upper-tier hotels and restaurants.
When the Thailand-Australia Free Trade Agreement entered into force on 1 January 2005, Thai tariffs on Australian wine were gradually reduced from 54 per cent in 2005, to 8 per cent in 2013, and will continue to be phased down by 4 per cent each year to reach 0 per cent by 2015. This will give Australian wine producers an immediate competitive advantage over wine from other producing countries that pay a tariff of 51 per cent.
In addition to import tariffs, imported wines are subject to four different tax systems:
- Excise tax – value-based rate at 60 per cent
- Municipal tax – 10 per cent of excise tax
- Value added tax (VAT) – 7 per cent
- Health support project – 2 per cent
Excise tax can be calculated on the CIF value, or volume basis (per litre). The higher excise tax calculation is used as a base for applying the municipal tax and VAT.
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. Therefore you must appoint a local importer/distributor to handle the importing and government formalities.
Once your wines are in the Thai market, an effective marketing strategy is to, in conjunction with local importers/distributors, conduct food and wine promotions aimed at your target audience at leading hotels.
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.
Price is a key determinant in the Thai market and your product must be competitive with other imported wines.
There is no industry news for wine available in English. Industry statistics are available from the Royal Thai Customs Department.
Distribution channels
Wine importers also act as distributors through four major channels:
- Wholesalers
- 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 30–40 per cent of wines are sold on-premise, but the trend is shifting towards retail trade.
In Thailand, the import of alcohol products must be handled by a sole importer. In most cases, it is a distributor importing the product.
Transport
Air freight is used to ship product samples in small quantities. This takes one day from Australia to Thailand. Qantas freight and British Airways air cargo transport goods between major ports in Australia and Thailand.
Large volumes of products are transported by sea freight. Sea freight takes two weeks from Australia to Thailand. It is advisable to consider your options carefully to avoid adding significant costs to your exports.
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 product to Thailand. It is advisable to investigate a variety of service providers.
Links and industry contacts
Wine-related resources
Wine Australia – www.wineaustralia.com/australia
Government, business and trade resources for Thailand
Royal Thai Customs Department – http://internet1.customs.go.th/wps/wcm/connect/CustEn/Home/HomeWelCome | www.customs.go.th
The Excise Department – www.excise.go.th
DFAT (TAFTA) – www.dfat.gov.au/fta/tafta/index.html
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.