Fruit wine now appearing on Thai shelves
Wine n' Business
Fruit wine now appearing on Thai shelves

[Article by David Swartzentruber]

Within the last years, a new type of wine has appeared on Thai shelves. The labels identifying the wines carry snap phrases such as: “Rich & Red” or “Crisp and Fruity”.

However, what these wines are composed of is usually placed on back labels in extremely small print stating “Fruit Wine”.

These wines are produced using up to 20% of juice or wine that is not from grapes. The fruit in this wine could come from pears, apples, pineapples. There is apparently a loophole in the tax code that allows these wines to be taxed at a lower rate than traditional wines made from wine grapes.

The blending of these wines is carried on in various places such as the country where the wines are produced such as South Africa, Spain or Italy, stopover countries such as Vietnam or at wineries in Thailand such as Siam Winery.

The main attraction for consumers is a lower price. The wines are usually priced in the 249-299 THB per bottle price range.

The fact that these wines are allowed to be sold on shelves adjacent to traditional grape wines raises a number of issues such as consumer deception, labeling standards and health and safety standards.

For many years the Thai government has been trying to erase its image as a marketplace for fraudulent goods. Now this crusade has taken a setback in the Thai wine market and this has happened with the approval of the Thai Excise Department. The fruit wines also prey on the Thai public, most of whom know little about wine.

What concerns me the most is the font size and placement of the words, “Fruit Wine”. The phrase should be placed on the front label of the wine in the same size as the snap phrases listed above. Underneath the “Fruit Wine” in parenthesis in smaller type there should be a statement such as: (This wine contains 20% pear juice). In only this way can consumers know what they are ingesting.

Additionally, where are these wines blended? I am not concerned when these fruit wines are blended in a licensed and bonded winery open to regular health and safety inspections but what about fruit wines concocted in Vietnam, a country that is not a major wine producer. As one colleague stated, “This could be a disaster waiting to happen”.

The cause behind all of this alchemistry is the over-taxation of grape wines by the Thai Excise Department. It seems that the Thai general public has been fed over the years a large amount of anti-wine propaganda: wine is expensive and wine is a luxury. The fact is that the only reason wine is expensive is the high tax imposed on wine by the Thai government.

And the anti-wine propaganda fails to mention the many health benefits of moderate wine consumption.

There will be no changes in excise tax policies in Thailand unless all sectors of the wine industry: Thai wineries, importers, distributors, retailers and consumers unite to deal with the excise gurus. Until now, this has not happened.

The Wines

Berri Estate back labelThe blending of wines in Thailand started a few years ago when two wineries, the Knight Black Horse Winery in Pathum Thani and Siam Winery, owned by the Yoovidhya family of Red Bull fame, began the process.

Knight Black Horse began marketing its wines in local shopping malls with labels reading: “Cabernet Sauvignon” and written below that the name of a local indigenous grape, “Black Opal.”

Later there apparently was an intervention and the winery was compelled to place a strip label on the back of the bottle reading: “WINE FROM FRANCE.” Perhaps a better placement should have been on the front of the bottle to aid consumers.

Peter VellaA few years back, Siam Winery began selling Montclair “Celebration White and Red” with a label declaring, “From the Breede River Valley in South Africa.” As in the other blended wines being sold, consumers have to turn to the back label to read that the wine in the bottle is “Fruit Wine” and “Produced and bottled by Siam Winery.”

There are now seven other fruit wine labels on the Thai market: Belleville, Berri Estates and Cask 88 (Aussie Red and White), from Australia; Corte Antica, from Italy; Finca De Malpica from Spain; Mar Sol, from Chile; and Peter Vella, a low-tier wine produced by the Gallo Winery, California. With the exception of Belleville and Corte Antica, all of these fruit wines appear to come out of Siam Winery.

mar solThe Corte Antica fruit wine is of special interest because it was bottled in Italy and on the back label near the “Fruit wine” designation the ingredients of the wine are listed: “wine, sugar, fruit juice, aroma, preservative E202.” At least consumers have some idea of what they are drinking.

Consumers deceived?

When I was researching this article standing in front of a wine display in a Tesco Lotus, four young Thai women began looking at the wines, especially the blended fruit wines because of their lower price. They all spoke very good English. When I explained to them what the orange tax stamp signified, they responded that they did not know this. Most Thais know little about wine, because they have not been able to afford it and will be easily deceived by wines placed on store shelves next to traditional grape wines.

Also, stating in small type on the back label “Fruit wine” is inadequate, it should be stated on the front label and the type of fruit or non-grape wine used should be clearly identified.

Thailand is not a wine-drinking country except for the upper classes. Will these fruit wines be a stepping stone, because of their low price, to attract new Thai customers to wine? Market response to these fruit wines will determine that.

Chaos and solutions

As one might expect the domestic and imported wine industry continues to be hit every year by strange tax policies thought up by the Thai Excise Department that do not come close to international standards. The excise tax increase on wine in 2013 hit the wine sector quite hard.

Now, although it has not been applied, the Thai Excise Department plans to tax the “retail price”. In their statement the department said this would be “internationally acceptable.” Industry executives say this amounts to a “double sales tax.”

I have news for the excise department, taxing the retail price is not internationally acceptable for alcoholic beverages. The international standard is taxing the alcohol in each alcohol product by the amount of alcohol in that product. This is known as Alcohol By Volume, “ABV.”

The high taxes on wine have virtually killed the market, especially in the hospitality sector. This is not the way to attract “high-quality tourists” as the Tourism Authority of Thailand hopes to achieve.The result is the production of these cheap fruit wines, which may also raise concerns about the health and safety of these products. The Public Health Ministry should clearly investigate the manner in which these fruit wines are blended.

Meanwhile, the illegal smuggled wine business is booming, industry executives tell this writer. Yet, there are never any busts or arrests. The last one I saw published in local news media was around 2005 describing confiscation of wines in the east near Cambodia. The answer to this stares one right in the face. Lower the excise tax on wine to an acceptable level, wine will sell more, the government will reap more excise tax income and the smuggled wine business will vanish. Smuggled wine has drained billions of baht in lost revenue from the Thai government over the years, expert observers maintain.

In this time of reform, a reform of the Thai Excise Department and its bizarre tax strategies on wine is clearly overdue and some part of the government, such as the Department of Special Investigation, needs to stop the wine smuggling racket.

  • M_expat

    Great article on one of the more bizarre and hyper expensive tricks by a government on the wine trade. And that’s saying a lot because so many countries, except Hong Kong, including the US and Canada punish the wine industry and consumers with taxes and fees passed down from Prohibition. But Thailand goes far beyond. Even China with an approximate 50% duty and taxes on imported wine seems downright reasonable compared to Thailand. And Thailand beyond making any wine ultra expensive compared to the markets of the world, goes one further as this article details – they are destroying the structure of wine appellations and meanings of wines with their non-sensical and unwelcome “fruit wine”, with a false and obfuscating labeling category whose only virtue is a wine based drink with a retail cost that is probably only double the cost with comparable level wines in the world made without the adulteration of fruit concentrate being added. Does anyone know the date when this article was written?

    • thaicookingchef

      So you also think that wine is soooo expensive in my country ?

      But can you eat a disk for 40 thb in your country ?

      • M_expat

        Do you know what the import taxes are on wine in your country of Thailand? 436% on top of the landed cost which includes the cost of shipping. Do you think that’s sooooo expensive? If you don’t, I feel sorry for you. The Thai government is insane to charge that much. Do you drink imported wine? Do you think it’s okay for your government to make Y0U pay 436% percent more?

        • thaicookingchef

          There is at least 158% tax on German cars, but I see BMW, Benz and others everywhere. Not everybody is a cheap charlie I guess ? Drink water if you cannot afford wine, anyway it’s better for your health !

          • M_expat

            Where does this mentality come from – cheap Charlie – because the Thai government is ripping off wine drinkers with exorbitant tax and duty? You think that’s okay and if you don’t then you’re a cheap charlie? What if they decided to make high tax for rice or anything else you use to make food in Thailand with? You think the people on my soi would just say, okay I’m a cheap charlie so I’ll just have water?
            Wine is a common drink around most of the world. In many countries it is considered part of a simple meal and good health for people of all financial levels. A Thai cooking chef might know something about food and wine and health for all people, or you think wine is only for rich people?
            There are inexpensive wines and there are expensive wines from wine producers around the world. Thailand makes sure every wine is expensive and very expensive with a draconian 436% of tax and duties. Almost 3 times the tax on high end imported cars.
            Really, you need to get real and adjust your attitude – there’s nothing to be proud of a country that keeps and tax and duty at that level. And there’s nothing wrong with people wanting the government to stop raping wine drinkers with a crazy high tax.

  • thaicookingchef

    This wine contains 20% pear juice ? And so, what is the problem ? I do not understand the purpose of this article ?

  • thaicookingchef

    I think that you are wrong:
    Lower the excise tax on wine to an acceptable level, wine will sell more, the government will reap more excise tax income and the smuggled wine business will vanish.

    Nobody think that a 300 thb wine is too expensive in Thailand. A beer is 60 thb ? But how many bottles do they drink ? 10 ? 20 ?

    So wine is not more expensive than beer if you want to get drunk and this is the only thing that Thai and foreigners want !

  • I’m just happy to get cheap plonk lol!

  • M_expat

    This article appears to of been updated since I first read it 5 months ago. The investigation into this phoney tax classification continues. Well done.
    As I’ve learned continuing to probe what is going on here with “Fruit Wine”, the current taxation on imported wines in Thailand was raised in 2016 to 436% of landed value (value of wine plus shipping costs). A tax rate beyond belief. The tax for bottles labeled as “Fruit Wine” are taxed 80 THB per bottle. This accounts for the lower price of “Fruit Wine” category. A price about equal with what you would find similar type wines in California supermarkets, for example.
    This category is a tax scam fraud. There is no fruit juice blended into these wines. These wines either enter the country as bulk wine from France, Australia, Spain, Chile, Califoriia, etcetera and are bottled here in Thailand without any blending of fruit juices. Or they are similar wines that are imported as bottled wine from that same range of countries but are allowed in at the low per bottle tax. They are good value, drinkable wines that are available in the international bulk or bottled wine market from countries that offer wines at low prices. The tax applied is a deal done in the dark with a government official. You can probably see which companies are allowed this arrangement by looking at the importer or bottler name on the back label.
    If there is good news here, it’s that everyday wines can be had in Bangkok at a reasonable price. The bad news is consumers lack confidence and information because of the phoney category and uncertainties about what’s in the bottle. And for Thai people who are new to drinking wine and interested in learning about wine at an affordable price they get bad information and the myth that good wine has to be expensive and only for the rich gets perpetuated.
    Eventually the truth may come out.
    And one other price benefit I’ve noticed is that wines in the 450 THB TO 900 THB have come down in price to meet the price competition that the 295 THB wines.
    Unfortunately these are all distortions created by the government and their insane taxes and duties. By comparison mainland China is 50+% duties and taxes on imported wine which I thought was quite high until coming to Thailand. Hong Kong with a thriving wine market has 0% taxes and duties on imported wine.
    Here’s hoping Wine n’ About will keep up the good investigation on wine in Thailand.

    • t4msync

      Thailand is a nation of peasants and those who refer to themselves as ‘the elite’, with not much in between. The peasants are left to die at an ever increasing rate through the imbibing of laokao (rice whisky) and their ‘betters’ couldn’t give a shit. Look who owns the cartel that are the breweries in Thailand and their ‘richest Thai list’. Silly greedy unsophisticated little country.

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