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

A proposed tax hike on alcohol-free beer in Thailand could “clip the wings” of this niche category “even before it takes off”, analytics and consulting firm GlobalData has said.

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.

Hill added: “A tax hike levy amid high inflation and the economic uncertainty, or the imposition of new marketing restrictions can clip the wings of the niche no-alcohol beer segment even before it takes off.”

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