Decanter World Wine Awards'Corruption and smuggling' damaging Thai import prospects
- Tuesday 14 February 2012
Thailand domestic industry tiny but high quality
According to a senior staffer at a major hotel in Bangkok, many wine distributors illegally import large quantities of wine each year via neighbouring countries, Cambodia, Laos and Malaysia.
‘While no official figures can actually be put forward, many sources say there are more wines smuggled illegally than legally imported. Whatever the amount, it is huge by international standards’, he told Decanter.com.
He said smuggled wines are usually Old World in origin, including Bordeaux, since Australia, New Zealand and Chile benefit from a Free Trade Agreement with Thailand. ‘It makes more sense to take a risk with wines subjected to higher taxes.’
Thailand's import system is currently very restrictive. After import taxes, municipality tax, health tax and value added tax, the total effective duty and tax burden on a bottle of French wine is over 380%.
However, Berry Bros sales and marketing director Simon Staples said, despite perceived problems of high tariffs meaning ‘cheaper, less quality-driven local products taking over the market, nonetheless, we are looking at Thailand as one of our next five markets to enter within the next six to 12 months’.
Two wine importers based in Bangkok, who wished to remain anonymous, told Decanter.com smuggling was 'a common occurrence' and that 'the corruption survives because the bribes for officials are too lucrative and the tax levels are ridiculous.'
The Bangkok hotel employee added that the tax regime is, in particular, preventing the market for imported fine wine developing in Thailand.
‘It is an antiquated system which originated from the French model before the Revolution and it definitely lowers the overall quality of wines consumed in Thailand, as only cheap wines are within most peoples' budget.’
In terms of domestic production, Thailand's wine industry is tiny - according to the Thai Wine Association about 150ha are planted - but it produces high quality wines.
The Granmonte winery in southern-central Thailand won Silver medals for its Heritage Syrah and Asoke Cabernet Sauvignon at the Decanter World Wine Awards last year.
Have your say!
Visooth LOHITNAVY
March 13 22:09
Thanks Decanter for the article. What a shame for Thailand ! This smuggling practice is also undermining local Thai wine industry as we are taxed nearly 300%.
BTW, for your information, our GranMonte wines (one of them Asoke 2009) won 2 golds 4 silvers and 3 seals at AWC Vienna 2011 and been recognised as 'A Star Winery' from that wine compeetition. How about that from a small winery in small wine producing country ?
Visooth@GranMonte Vineyard and Winery, Khao Yai wine region-Thailand
Charles Winter
February 16 05:16
Your article about the Thai wine market is very correct. However the reason for the high duties is two fold. One is that a large local beer and spirits maker continues to be politically influencial to keep the duites and taxes on wine at almost 400% and hence his products are first choice of purchase. That in turn invites smugglers and officials to make a good cut on illegaly imported wines. I am afraid that this situation will never go away as too many people benefit from it.