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22 Sep 2017

Industry

Thai Beverage Businesses Take a Cautious Path Amid Various Pressures and New Excise Tax (Current Issue No. 2867 Full Ed.)

 Because of a large consumer base, Thailand's beverage market has an extensive variety of products on offer, leading to a situation where most beverages can be substituted by those of competitors. Therefore, competition is intense as producers must work hard to capture market share, and continuously launching new products to maintain their competitiveness.

Contrary to the high market value of the overall beverage industry, its growth prospects are not very encouraging. The main reasons for this are that the public's spending behavior is changing along with their spending power, changes in consumer trends and regulations to control the consumption of some products. Most recently, new tax rates were put in place by the Excise Department on September 16, and by coming into effect, could place some limitations on the growth of this industry.

From our study on the new tax base, KResearch has found that the selling prices of wine and instant tea will be those most affected, increasing 21.1 percent and 7.5 percent, respectively, over previous pricing.

However, KResearch views that the passing-on of these new tax levies to retail consumers may not be the best choice for producers, as the household sector is still facing much pressure to their purchasing power. Beverage businesses will likely opt for various adjustments to retain their existing customers and market share, thus to prevent change to consumption patterns because of the tax hike and other factors. Eventually, businesses are expected to retain their market share despite the new tax regime.

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