Thailand: New alcohol excise rates expected to drive drinkers of spirits to beer

Thailand's overall alcohol consumption is expected to be flat this year thanks to low purchasing power and more morose consumers, as well as a recent hike of excise tax, the Bangkok Post reported on December 7.

According to Thanakorn Kuptajit, president of the Thai Alcohol Beverage Business Association (Tabba), the new excise tax rates for alcohol, which came into force on Sept 16, have driven drinkers of spirits to beer.

But he said higher beer consumption is yet to offset the drop in spirits.

The new excise tax is aimed at making state tax collection more transparent and fair by conforming to international standards as well as protecting public health.

The new tax rates for liquor is based on the volume of alcohol content, meaning higher alcohol concentrations will be subject to higher taxes.

"The spirits companies have been adjusting themselves with price strategies. We expect the spirits industry will fare better in 2018,'' said Mr Thanakorn, also the corporate relations director of Diageo Moet Hennessy Thailand, the distributor of Johnnie Walker spirits in Thailand.

The quantity of alcoholic drinks consumed in Thailand have increased annually in the past two years. In 2015, 2.86 billion litres of alcoholic beverage were consumed, a 0.6% growth year-on-year; while in 2016, alcoholic consumption reached 3.09 billion litres, a 7.8% growth over the previous year.

According to World Health Organization figures, Thailand ranks 72nd globally in alcohol consumption per capita of people aged over 15 years. This statistic contradicts the common belief that the nation is near the top when it comes to alcohol consumption, said Mr Thanakorn.

Furthermore, a survey by the Royal Thai Police suggests that the main cause of road accidents in the country is a lack of traffic discipline, not drink-driving, which is the seventh most common cause. Enforcement of the Alcoholic Beverage Control Act 2008 alone is not an adequate solution for overall road-safety issues, he said.

As Tabba's representative, Mr Thanakorn also expressed concerns about the Act's likelihood of getting rid of spirits companies, instead of increasing control over consumption.

Because of unclear laws, particularly regarding advertisements, the Act leaves companies uncertain about how to advertise, he said.

"The government sector has an obligation to listen to every stakeholder's opinion in order to internationalise the law, elucidate obscure and unclear legal interpretations, advocate for fair enforcement, as well as promote public awareness of the harm caused by alcohol abuse," he said.

"If there is to be a common understanding of the guidelines, some issues in the Alcoholic Beverage Control Act must be discussed by the government and the private sector. What can and cannot be done legally regarding the act has become an extended conversation in society,'' he said.

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