Trends and opportunities: Wine to Thailand(1)

           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.