Sep 5, 2013

Thai alcohol excise tax update with details - PART TWO

Today we have a table of the breakdown in alcohol excise taxes, provided by the Excise Tax Department.

It seems to me that wholesalers affect the taxes more now as their prices will determine the taxes paid by the brewers. While this has caused business operators much grief, Mr. Somchai from the Excise Department believes the new rates will increase the competitiveness of local producers against importers.

As a consumer, it must be pretty confusing to see all the complex levels of taxes and new changes, and it would be simpler to just feel annoyed and then wait to see the new price labels at the store.

As my last post focused more on beer, I shall take a look at the impact on white spirits here, which also happens to be part of the strongest business segment in Thai Bev.

At a glance, it seems the alcohol taxes are not evenly imposed, whereby some beverages are taxed more than the other. For one, imported wines are probably going to become much more expensive.
On the other hand, white spirits as compared to the others, such as beer, is only taxed 4% of wholesale price as the Value-based Tax, and is also pretty close in the bracket for Content-based Tax.

To begin with, all of the brown, white and other types of spirits in Thai Bev's lineup, have only 40% or less of alcohol content by volume, which will avoid the Extra Charge. Also note that the 4% Value-Based Tax on white spirits used to be 50% earlier! The Content-Based Tax is set at 145 baht/litre/100% alcohol for now, with the ceiling at 400 b/l/a.

Lets take for example a 660ml bottle of Chao Phraya white spirits, with 40% abv. The content-based tax works out to about 36.25 baht, with the only other unknown, last wholesale price to be taxed at 4%.

I do not intend to speculate but my opinion is that after all the noise has died down, Thai Bev will benefit from this via its white spirits/spirits brands.

Related post;


  1. Should i buy ThaiBev @ below 50cents?

  2. I'm not an expert at timing entries and PLEASE don't make any decisions based on what I say! Personally I aim for pullbacks and +/-50c is still somewhat OK price for me as based on PE against regional peers, it is still slightly undervalued, compared to brewers of F&B players.

    If you are more cautious, there are better supports around 40-45c. If I'm not wrong, the owner's last transactions were done in 30c+ range.

    The notable catalysts/news events for Thai Bev going forward are;

    1. F&N decision on beverages w.r.t. Thai bev
    2. Thai Bev 3Q '13 results
    3. F&N result of ownership tussle for Myanmar brewery.
    4. Thai Bev has its own brewery license in Myanmar(besides F&N) for Chang beer, but has yet to develop. This will be a possible future catalyst.

    note that for comparison purposes, there is no exact company with similar business to compare due to the diversity of Thai Bev's businesses. Thus, it may be wise to analyse its fortunes based on the Spirits business, as it is the main profit generator. Beer or Food may spring a pleasant surprise in profitability in next quarters but the impact is minimal. Contribution from F&N will affect the performance as much as the spirits business.


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