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(Last updated: 9 Sept 2008)
Trends and opportunities
The market
Wine has penetrated the Thai market in recent years and has achieved a high level of acceptance among Thai consumers. Wine consumption has increased at the expense of other alcoholic beverages and is being served at almost every social function.
Some factors driving this change include:
- The lower percentage of alcohol content (compared to spirits)
- The reported health benefits of moderate wine consumption
- Changed generational preferences
- Increased tourism
Thailand is a renowned market for scotch whisky. In fact, Thailand was the second biggest market in the world for Johnny Walker Black Label whisky prior to the economic crisis in 1997.
Wine has an over 20 per cent share of the total alcoholic beverages imported into Thailand, and of this, 80 per cent is red wine.
Opportunities
Australian wine has a good reputation with Thai consumers, and is regarded as providing value-for-money. Opportunities are available for Australian exporters in both red and white wine.
Thai consumers favour red wine; however, both red and white wine are popular among foreign tourists and expatriates. There is an increasing demand for wine to cater for the steady increase in tourists, which was in excess of 13 million in 2007 – around half-a-million were from Australia.
Opportunities exist for low-cost wines from suppliers for private-label bottling for the major hypermarkets or wholesalers such as Tesco or Makro house brands, along with
any of the five-star hotels.
Competitive environment
Table wine sold is sold at a local retail price that ranges from A$15-$30, local retail price for premium wine ranges from A$50-$100 and super-premium wines has a local retail price ranging from A$260-$400 or higher.
Price has now become a major determining factor in purchase decisions. Importers are sourcing new products to replace wines no longer expected to sell due to prohibitive prices.
As of 2007, Australia has the biggest share of the wine market with approximately 35 per cent market share. France ranks second with approximately 33 per cent share followed by Italy, Chile and USA. Wines from Spain and New Zealand also have a share in the Thai market..
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Tariffs, regulations and customs
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 to the current 28 per cent, giving Australian wine an immediate competitive advantage over wine producers from other countries which attract a tariff of 51 per cent. The import duty will phase down by four per cent each year to reach zero per cent by 2015.
There are relatively high tariffs on imported wines. 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 by on the cost, insurance and freight (CIF) value or by volume basis (per litre). The higher excise tax calculation is used as a base for applying the municipal tax and VAT.
Industry standards
Control of the importing, marketing, distribution and sale of alcoholic beverages in Thailand is shared between various government bodies. The Excise Department (EXD) is the main authority, but the Ministry of Finance, the Customs Department and the Revenue Department also hold responsibilities.
The EXD’s responsibilities include labelling, licensing, product quality control and environmental issues. The Food and Drug Administration (FDA), in coordination with the EXD, ensures that companies adhere to regulations concerning alcohol advertising and, alcohol in the media generally.
All labels must contain the following information in Thai or English:
- Name and brand of the product
- Details of sole importer/distributor including name, company address and telephone number
- Details of the manufacturer including company name and source of product
- Net weight/volume of product
- Percentage of alcohol content
There must also be a health warning on the label/sticker printed in Thai. The size of the letters must be larger than two millimetres and stand out from the background.
There are no specific requirements for packaging or containers except that seals or container lids must be suitable for the placement of the excise stamp.
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Marketing your products and services
Market entry
Before any wines can be imported into Thailand, each individual label of the wine must be registered with the Excise Department of the Ministry of Finance in Thailand. Once the registration is completed, 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 would be to conduct food and wine promotions at leading hotels, in conjunction with local importers/distributors, aimed at your target audience.
Austrade can assist with the search for potential wine importers or organise wine tasting functions for wine exporters that have yet to establish contact in Thailand with the aim of reaching target groups and potential importers/distributors.
A key determinant in the Thai market is the pricing, which 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 changing towards the retail trade.
A sole importer must handle imported alcohol products in Thailand. In most cases, it is a distributor importing the product.
Transport
Airfreight 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 cost 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.
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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