AndreasHG

Below is the link to an interesting article, with the detailed description of the Thai tax schemes for alcoholic beverages, both the current ("new") and the superseded one ("previous"). The reasons which cause a bottle of wine sold for 10.00 euro in a European supermarket, to cost almost three times more to consumers in Thailand, are multiple. Assuring proper freight and storage conditions for wines is costly. Local supermarkets purchase imported goods from middlemen (the importers) and not directly from producers (as customary in many European countries). Retailers target margins on imported goods are higher than those applied to local staples (30-35% is the norm for "farang" goods). Taxes however are the single most impactful driver. My estimate is that the "new" tax scheme would allow for a price reduction of approximately 33% for a bottle now priced at around 1,200 THB. But let's try to answer your question: why have prices of wine not been reduced yet? The reasons are, in my opinion, two: 1. depreciating the current inventory by 33% is very costly. Supermarkets would immediately reflect the suppliers' reduced prices in their selling prices. But then they would revert back to the suppliers, demanding compensation. 2. And, as customary in Thailand, grand reform projects are often and purposedly executed poorly. This law is a textbook example of this malpractice. The devil is in the details: what the Thai government approved is a "temporary suspension of high import tariffs on wines, currently set at 54% and 60% of the declared value, for a duration of one year". No wonder market players are keeping their prices steady. Who in his/her right mind would depreciate by 33% the inventory in customers hands with the prospect of increasing the prices again after only few months? What has been presented to the Thai public as a grand move to support tourism and related small businesses, is actually a gift the government graciously granted to some well-connected, large, alcoholic beverages importer. https://mahanakornpartners.com/thailand-cuts-alcohol-taxes-to-spur-tourism-recovery/