Will passing Progressive Liquor Bill help small producers and consumers?
Thailand not only ranks first in the alcoholic beverage market in South East Asia, but is also the first among ASEAN countries with highest consumption per capita, at 8.3 litres/year. Even though there are numerous brands of alcohol on the supermarket shelves and annual sales are 300 billion baht, 93% of the brands are owned by few giant corporations, namely Boon Rawd Breweries (Leo, Singha), Thai Beverage (Chang, Archa) and Thai Asia Pacific Breweries (Tiger, Cheers). Other smaller local producers and imported beer account for a less than 1% market share.
Under the current law, the home brewing of alcohol is restricted and small to medium size alcohol producers are not able to obtain a license, since the Ministry of Finance requires 10 million baht capital and a production of 100,000 to one million litres per year in order to get a license. The “Progressive Liquor Act”, a draft proposed by the Move Forward Party is aimed at amending section 153 of the excise tax law of 2017, which requires alcohol producers to register for a license under some strict exceptions and high-cost criteria. The regulation has been criticised for favouring large corporate producers and hindering small to medium size producers from entering the market. The proposed amendments would reduce the criteria, so that small and medium size businesses can enter the market, allow home brewing for household consumption and allow unlicensed distilling of alcohol.
The founder of the Beer People Group, who advocates for the bill, Thanakorn Tuamsahgeam, stated that the purpose of amending the law is to provide consumers with more choice and to distribute 10-20% of the market share (up to 60 billion baht) to small producers.
“Instead of having consumers drink three bottles, we want to have 3 different brands. That’s the basic idea of it,” he remarked.
The bill was, however, rejected by the government led by Prayuth Chan-O-Cha. Concerns have also been raised by academics, the first of which are the risk to public health from higher consumption and whether the new law should come with stricter rules and enforcement.
A public health researcher said in an interview that he supports a competitive market but he is concerned that more consumption could lead to increased problems in society and for the health of consumers, such as accidents, domestic violence and so on.
“My concern is that, if you repeal all the regulations, there will be a lot more producers in the market. If you see it from the economic perspective, it actually makes sense to let the market be competitive, because more competition is better for the consumers, for the people,” stated Associate Professor Udomsak Saengow, Director of Research and Innovation at the Institute of Excellence at Walailak University.
While Thanakorn has a different, he said that, when the laws were quite fixed, it makes troubleshooting difficult and we needed to fix the root cause of the problem, such as drunk-driving and enforcement of anti-drunk driving regulations.
Another concern among academics is over the standard and quality of the alcoholic products. Some say that big companies’ factories can ensure the quality of alcohol in ways smaller producers cannot.
“Actually, when we consume alcohol, we intake ethanol. If you make it incorrectly, however, you may end up with methanol. Methanol is very toxic to the human body,” Professor Udomsak explained.
Progressive liquor bill advocates claim, however, that there are already many strict laws controlling alcohol production, regardless of the size of the producers. Thanakorn asserts that, when alcoholic beverages are made for sale, they are required to meet quality control standards set by the ministry of public health and excise departments and, as the laws already cover it, it almost closes any door for producing bad products.
The complication seems to lie in the various laws issued to cover alcohol from production to consumption. The proposed Progressive Liquor Act focuses mainly on reducing the restrictions on small producers. Therefore, even if this bill is rejected, the issues concerning alcohol consumption will remain, because there is also an existing law covering consumption control and distribution, which also needs to be discussed.
The “Alcoholic Beverage Act 2008” determines the sales hours, advertising, distribution and sale only to people 20 years old or over. When it comes to quality control, however, there is another regulation under the Ministry of Finance that places restrictions on licenses for alcoholic beverage production by small producers. They aim to control the quality of the liquor and ensure consumer safety.
When asked what should be done first in amending the law, Thanakorn suggests that it be amended in any way that prevents monopolisation, as the current laws are so strict that it blocks small producers from growing.
“We can do it like other countries. For example, we can set a rule on how many percent of the market share that one brand can have. This is what is going to solve the problem in the long run. It will benefit us more than restricting small local independent producers,” remarked Thanakorn.
Back to the question of whether passing the progressive liquor bill would actually help small producers and consumers, Thailand might need more than this to make the market more competitive and to create more opportunities for small producers. We should see whether there are appropriate restrictions, along with the Progressive Liquor Bill, that would allow more producers to emerge, yet limit the possible impact of higher consumption. Furthermore, we have to see how all laws and regulations, related to production, distribution and consumption, are managed and enforced.
The future direction of the progressive liquor bill and its arguments lie with the next government. The complications will remain a challenge, including how best to protect the producers, the consumers and everyone in between.