Thailand: Boon Rawd welcomes move to revamp Thai excise tax structure

Boon Rawd Brewery Co, the manufacture of Singha beer, has welcomed the Thai government's move to revise the alcohol tax structure from collections based on product prices to alcohol content, saying it would create fairer competition in the market, Bangkok Post communicated on June 02.

President Santi Bhirom Bhakdi said on June 1 that the initiative by Prime Minister Thaksin Shinawatra was in line with international standards in countries including France, Denmark, Finland and the United Kingdom.

The existing tax system tended to put Boon Rawd at a disadvantage to some competitors, said Mr Santi. For example, the tax payment on Heineken, a premium beer, is only slightly higher than that on Singha, a mid-market product.

However, the tax on Singha is seven baht more than on market-leading Chang, which is classified as a budget beer even though it competes directly with Singha. As a result, said Mr Santi, Boon rawd had to introduce a downmarket brand, Leo, in order to maintain its profile in the highly competitive beer market.

He said the government's initiative would not bring about a big change to the industry, but it could help strengthen local producers as the prices of their products would come down and make them even more competitive with foreign brands.

Boon Rawd, which began making Singha 72 years ago and was the runaway market leader for decades, last year controlled a 30 percent share in the domestic market, down dramatically from 90 percent or more at the start of the 1990s before liquor billionaire Charoen Sirivadhanabhakdi began his push with Chang.

Last year, the company announced a plan to seek a listing on the Stock Exchange of Thailand to raise funds for business expansion. Mr Santi said a listing was still on the cards, but the company would need approval from other shareholders.

As well, he said, Boon Rawd was monitoring the progress of Mr Charoen's plan to list Chang producer Beer Thai (1991) Co.

The Beer Thai proposal has drawn vigorous opposition from social activists who say market authorities should not permit alcoholic beverage firms to raise funds from the public.

Amid intensified competition, Boon Rawd has been restructuring its operations over the past four years through retirement programmes, increases in operating efficiency and production cost reduction.

The company says the reorganisation is 90 percent completed and the remaining challenge would be to strengthen logistics, marketing, and stock management. At the same time, Mr Santi said, the company would look for new export markets worldwide for Singha, beyond North America and Europe, the major markets currently.

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