October 2017

With the new tax increase on alcohol, is the party over?

The Thai government on the 16th of September 2017 announced a sharp increase in tax on alcohol, effective immediately.

With the new rates, which were published in the Royal Gazette, the tax levied on beer is 22 percent of retail price and THB430 per litre of alcohol content. For wine produced abroad, the new tax rate is THB1,500 per litre of alcoholic content per bottle, not exceeding THB1,000. For local wines, however, the tax will decrease THB25 per bottle.

Meanwhile, white spirits will be taxed at 2 percent of the retail price and THB155 per litre of alcoholic content, while for non-white spirits, the rate is 20 percent of the retail price and THB255 per litre of alcoholic content.

The tax hike, which is aimed at reducing the consumption of alcohol in Thailand, is not the first of its kind. Thailand’s alcohol laws and policies are already some of the most conservative in the region, and brands are obliged to follow rigid regulations when it comes to packaging and promoting alcoholic beverages.

“The new tax hike will have a significant impact on alcohol brands’ sponsorship activities,” predicts Paul Poole, Founder, Managing Director and Chairman of Paul Poole (South East Asia) Co., Ltd. “Alcohol brands are already required to adhere to strict regulations in the promotion of their products and the increase in tax will not only dampen demand for certain alcohol product categories, it will almost certainly also deter many brands from engaging in extensive sponsorship activities.”

Alcohol consumption has been on the rise in Asia, with a recent report by GlobalData, a global research company, showing that Asia has become the fastest growing alcohol market with more than 14 percent of global alcohol sales and an estimated 176 percent increase from 2000 to 2019. Sponsorship has been an effective marketing tool for alcohol brands in an environment where more traditional marketing strategies are highly regulated. Alcohol sponsorship thus make up a large part of sponsorship, especially in sports. According to data from Asia Sponsorship News, alcohol brands made up the 7th largest sponsorship category in 2016, contributing US$236 million to the Asian Index and growing 52 percent year-on-year in 2016. As recent as February this year, Thai Beverage, makers of Chang beer, signed a 10-year deal with The Football Association of Thailand (FAT) worth US$28.5 million, the FAT’s largest ever.

There are, however, still several ways in which alcohol brands can engage with their customers. Events such as the inaugural Phuket Food & Wine 2018 and the popular The Bar Awards 2018 offer ample opportunities to engage with audiences.

More details of the above opportunities can be found on http://www.paulpoole.co.th/opportunities.

Tax on cigarettes, cigars, sugary drinks, energy drinks and green tea also increased with the new announcement.

Paul Poole (South East Asia) Co., Ltd. is an independent marketing consultancy based in Bangkok, Thailand specialising in commercial sponsorship and partnership marketing, working with both rights holders and brands - acting as a catalyst by bringing them together and maximising the relationship.

We have packaged, sold and managed sponsorship and partnership opportunities for a wide range of rights holders and worked with many of the world’s leading brands to source and engage the right sponsorships and partnerships for them to maximise.

Please contact us for more information: Tel./Fax: +66 2622 0605 – 7 Email: info@paulpoole.co.th