Proposed tax hike threatens success of alcohol-free beer in Thailand

Several no-alcohol beer brands, including Heineken 0.0, Hite Zero 0.0, Krombacher Weizen, and Bavaria Original have been introduced in Thailand in recent years, according to London-based GlobalData.

The analytics company reported that Thailand is planning a tax hike on beers with an alcohol by volume (ABV) between 0% and 0.5%, in order to “prevent them from attracting novice drinkers”.

Thailand currently levies a 22% excise tax on the retail sales of alcoholic beer, while no- and low-alcohol beers are subject to a 14% excise tax, equal to other non-alcoholic and soft drinks.

However, according to GlobalData, the Thai Public Health Ministry has posited that due to the lower tax rate, no-alcohol beers are technically cheaper than regular beers, thereby being perceived as an alternative to other non-alcoholic refreshments like soft drinks. As such, the country’s Excise Department has proposed to elevate the tariff on no-alcohol beers to a midway point between that of “carbonates” and regular beer, GlobalData said.

The Royal Thai Excise Department first proposed to raise the tax on no-alcohol beers in late 2019, according to Tim Hill, key account director at GlobalData Singapore. However, the tax hike was postponed due to Covid-19.

Authorities in Thailand have raised concerns about the risk of brewers leveraging non-alcoholic beers to promote their alcoholic parent brands.

The proposed tax rise would dampen the recovery of a category which saw pandemic-induced volume decline of 16.3% compound annual growth rate (CAGR) during 2017–22, according to GlobalData, harming an already wounded sector.

The Drinks Business