Wine to Thailand

Trends and opportunities

The market

Thailand’s wine culture is growing, creating a new dynamism in the imported wine market. Driven by a very large and buoyant tourism market and increased awareness and consumption of wines as a social lubricant by Thais, there is continuing opportunity for Australian producers in this market, from lower value through to premium wines.

Consumption of alcoholic beverages across Thailand is around 3.1 billion litres per year. Around 75 per cent of volume consumed is beer followed by locally produced white spirits. Imported wines account for around 1.5 per cent of alcohol consumption – but between 10 per cent to 15 per cent value.

Although Thailand is broadly characterised as a price sensitive market, specialist retailers report their strongest recent growth is within their mid to high premium priced brands. Growth in sales of premium wines is supported by a large and growing tourism sector with the highest total spend on food and beverage in ASEAN, an expanding fine-dining sector in Bangkok, and promotions by specialist retailers to sommeliers and the targeting of high spending consumers.

In 2016 Thailand imported approximately 12.6 million litres of wines, worth about 1.771 billion Baht (US$ 50.1 million).

Australia was the second highest by volume and value supplier of wine to Thailand accounting for 2.535 million litres valued at 465 million Baht (26.3 per cent) of imports. South Africa was the largest supplier by volume 2.955 million litres, valued at 71 million Baht (4.02 per cent or 6^th highest by value).

France imported the third highest volume of 2.120 million litres but is the highest value supplier at 702 million Baht (39.65 per cent of total imports value). This demonstrates the recognition of France not only as a supplier of premium wines, but strong brand recognition of its growing regions within Thailand.

2016 Thailand imports of Sparkling, Still, Fortified Wines (HS 2204+)

(Source: Trade Map 2016)

Wine preferences and prices

Australian wine has a good reputation in Thailand and is regarded as a good value-for-money product.

In general, Thais prefer strong, bold, punchy and heavier wines. The best-selling varieties are Shiraz and Shiraz blends. New world wines are becoming understood and accepted by locals, however knowledge of Australia’s growing regions remains low.

Over 50 per cent of Australian wine imports into Thailand 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 have become well-schooled in selecting wines, and often source new products to replace more expensive brands considered lower quality than new offerings. Premium wine although remaining a niche market is growing, driven largely by the promotion of French wine regions, which in part accounts for that country’s dominance in premium sales and as a go-to choice for premium consumers.

According to local importers, of all wine consumed in Thailand the biggest volume of sales is of 750ml bottles with a retail price range of A$17 to $40. Thai importers therefore usually select wines with a retail price between A$22 to $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.

Opportunities

Australian wines receive preferential treatment from the Thailand-Australia Free Trade Agreement, providing considerable advantage over most other wine producing countries.

Major retailers are establishing specialist wine cellars and most now carry a large number of recognisable Australian brands.

Opportunities exist for lower-cost private-label bottling for the major hypermarkets or wholesalers such as Tesco or Makro, as well as for five-star hotels. The opportunity to promote and sell to the burgeoning, high quality HORECA trade should not be disregarded.

Table wine is typically sold at a local equivalent 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

The Thailand-Australia Free Trade Agreement provides Australian wine producers with preferential treatment (with a zero tariff) over other wine exporting counties (with the exception of Chile which has an FTA and New Zealand which has 0 per cent through its Closer Economic Partnership with Thailand). Wine from almost all other countries are subject to a 54 per cent import duty (Source: DFAT, Key Outcomes of the Thailand-Australia Free Trade Agreement, March 2015) .

This benefit to Australian wine exporters multiplies after the application of Thailand’s heavy and complex alcohol excise and VAT tax regime – to where Australian wines (over 1,000 baht) can be around 65 per cent cheaper than wines from other countries (the exception Chile and New Zealand) when the same mark-up is applied. (Source: Austrade calculations)

In addition to import tariffs, imported wines are subject to other duties, fees and taxes:

• Surcharge / Special duty (US$ 10 per import lot)
• Customs Fee US$ 50
• Alcohol Excise tax: the rate is  Baht 1,500 per litre of alcoholic content for a wine bottle not exceeding  Baht 1,000 (retail). Wine priced higher than  Baht 1,000 (at retail) will be taxed at 10 per cent of its price and  Baht 1,500 per liter of alcoholic content.
• Municipal / interior tax: 10 per cent
• Health support project: 2 per cent, based on CIF/FOB value
• Public broadcasting subsidy: 2 per cent
• from January 2018 – Elderly foundation tax: 1.5 per cent
• Value added tax (VAT): 7 per cent, based on retail price

It is important for exporters to note that these complex duties, fees and taxes are managed by importers and distributors, and despite these taxes Australia maintains a price advantage over most other country suppliers.

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. This is undertaken by the importer/distributor.

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. While Thai law prohibits promotion of all alcohol, combined wine/food tasting events by invitation are common in the market.

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. Small sample lots can be received by Austrade at the Australian Embassy in Bangkok, by special prior arrangement to minimise duty on samples. Exporters should make direct contact with Austrade Bangkok for further information on this.

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

Wine-related resources

FTA Portal
DFAT (TAFTA)
Royal Thai Customs Department
Thailand Excise Department
Wine Australia

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

• develop international markets
• win productive foreign direct investment
• promote international education
• strengthen Australia's tourism industry
• seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.