International visitors to Thailand are often surprised by the high cost of wine in restaurants and hotels across the country, particularly in popular holiday destinations like Phuket and Koh Samui. But the signing of an Asean Free Trade Agreement may soon ease the pain.
Although a good selection of both new and old world wines is readily available in Thailand, high import taxes have thus far meant wine is one of the few commodities that fails to compete on price with western countries. The reasons behind this are complicated. Some international importers believe the existence of a burgeoning Thai wine industry is one factor, as high import taxes allow local producers to compete on price with more established labels from places like Italy and Australia. Indeed, the local Thai wine industry has expanded at a rapid rate, seeing around 28% growth in the last year and accounting for 5-7 percent of the 10 million litres sold. Sophisticated wine production techniques, foreign trained winemakers and good marketing to the tourist sector certainly helped boost the industry, and many believe the fact that wine is sold as a luxury product also encourages visitors to try local labels without spending more.
But Thai wine producers are now concerned that the Asean Free Trade Agreement will damage their sales. Before January 1 this year, imported wines were subject to a combined import duty and excise tax of 360 per cent, but under the new AFTA, taxes on wine will fall to stay in line with other Asean states. A previous trade agreement between Thailand, Australia and New Zealand saw import duties on wine reduced by as much as 40%. This year, experts say that the new legislation could see some imported wines hitting the shelves for as little as 200 THB (5USD).
Another contributing factor has been the government's campaign to reduce smoking and drinking amongst Thai citizens. A voluntary ban was placed on the direct advertising of alcohol back in 2006 and the current administration is considering raising the drinking age to 20 years old, plus adding graphic warnings similar to those already used on cigarette packets. What's more, as wine is still only enjoyed by the Thai middle class, it is priced accordingly, and not marketed to a wider domestic consumer base.
But all this is good news for wine lovers either living or visiting Thailand, especially with well-established suppliers such as Wine Connection and Central Wine Cellar continually raising the bar when it comes to the range of quality wines available. These companies stock around 500 labels each, with everything from value wine boxes to fine European vintage and outlets in all the major tourist locations. Thai wine is not to be written off either. Quality labels like Chateaux De Loei, PB Valley Khao Yai and GranMonte have received worldwide acclaim, while the Thai Wine Association monitors production and labelling standards, enhancing the reputation of Thai wineries internationally.
A diverse and appealing wine list is increasingly important for hospitality providers in Thailand, especially with so many luxury travellers now choosing resorts and private villas in destinations like Phuket and Koh Samui. As wine prices fall, visitors can look forward to ever more diverse and enticing taste adventures in the Land of Smiles.
By Jules Kay