Beer sales likely to go flat after Govt okays hike in excise

"We may have to raise prices, even though it could affect consumers' decisions and lead to flat growth in the beer market," Chatchai said, adding that the Bt100-billion beer market had showed negative growth in the first quarter.

He also feared that white spirit would grow in popularity as a result of the excise hike, as beers will retail at a price close to that of the liquor - regardless of the different percentages of alcohol in the two products.

What worries him more is the likelihood that the government will also raise ex-factory taxes without first informing the public.

The ex-factory rate on Singha beer could be raised from Bt36.95 per bottle to Bt42.93, while Leo's price could rise to Bt31.60 from Bt27.20, he said.

Combined with the excise hike, this would raise the cost of the products by Bt8-Bt10 per bottle and beer would be sold at a price close to that of white spirits.

"It's illogical. It has never happened before that the government raises ex-factory prices without consulting private operators. While the government gains higher income, operators see their costs rise.

"It's impractical and unusual. We'll check and fight on this," |he said, adding that local products would then be at a disadvantage when compared to beer from China.

Gran-Monte managing director Wisut Lohitnawee, also president of the Thai Wine Association, said smuggling always increased following tax increases, and this would eat into the extra taxes the government should be reaping.

He added that imbalances in taxes collected from products with different degrees of alcohol also left some operators at a disadvantage.

WHITE SPIRIT

A source in the white-spirit industry said the Charoen Sirivadhanabhakdi empire, which is the major producer of the liquor, had not yet increased its retail prices.

Beer and liquor agents have complained that Boon Rawd Brewery stopped distributing products yesterday morning, while the country's largest brewer, Thai Beverage, followed suit in the afternoon.

Thai Beverage told provincial offices to notify agents that distribution would be temporarily halted until new prices are finalised. Agents without stocks were unable to deliver as a result.

Surat Pipatchaisiri, managing director of Khon Kaen Beer - a Boon Rawd agent - said the higher taxes would affect sales.

"After Songkran, it is considered the low season for alcohol sales, due to the Buddhist Lent.

"Sales become active again from October to April. Sales should drop 15-20 per cent from the peak season [this year] due to the low season and higher taxes, compared to a 10-per-cent decrease in previous years," he said.