August 2009 - The market for wine in Thailand presents good opportunities for U.S. exporters. The market is growing and there is strong competition from other world suppliers. However, Thai importers are committed and eager to develop beneficial relationships featuring U.S. wines.
Market Overview
Thailand has a population of 67 million. As estimated 10 percent of the population drinks wine. This accounts for 3 percent of the alcohol beverage market. Even though wine has a much smaller market share compared to beer and spirits, there are strong developments in the level of consumer awareness and appreciation of wines. Wine consumption is increasing and still light red and white wines are often considered and positioned as beverages with superior health benefits. Wine is linked to fashionable lifestyles, particularly in urban areas, due to its high-quality image.
Thailand has fewer than ten local wine producers and retail price ranges starting from $6 per bottle. However, the price of the better Thai wines, which are viewed locally as competitive with imported wines, will be over $20 per bottle, which is almost the same range that the consumers can shop for good imported wines. Most wines consumed in Thailand are imported from France, Australia, Italy, Chile, and the USA. In 2008, the total import value of wines was $33 million, a 31 percent increase from the previous year. Even though good performance is expected this year for wine, it is still likely to be affected by the economic downturn and a slight decline in purchasing power among some consumers. Consumers may cut down on unnecessary spending, which would have an impact on wine consumption. Even though the consumption of Old World wine has a long history in Thailand, there is strong penetration by New World wines due to price competition, a product availability and product variety. Popular Old World wines in the Thai market are from Italy and France.
Consumption Trends
As is the same as for drinkers in other nations, the Thais also consume other alcoholic beverages. The most popular types of alcoholic drinks in Thailand are beer, whisky, and wine. Due to the economic slowdown, a number of Thai consumers are increasingly price-sensitive and price is a major determinant in their buying decision. As a result, economical alcohol beverages continue to enjoy the strongest expansion in each product category, across beer, wine and spirits. For instance, New World wines retail at a 20-30 percent discount to Old World wines and have gained tremendous ground along with beer. Wine appears to compete mostly with beer as a drink of choice for the vast majority of Thai alcohol beverage drinkers.
Wine drinkers in Thailand are between 25-55 years of age. In Thailand, red wine dominates and holds a 70 percent market share in the retail market. The most popular varietals for red wines are Cabernet Sauvignon, Shiraz, Merlot, and Pinot Noir respectively. Chardonnay and Sauvignon Blanc are well known in the white wine category. Wine consumption is still limited to expatriates, tourists and Thais with medium to high-incomes. Even though consumers now enjoy a greater variety of wine available on the shelves in supermarkets and wine shops, price is still a key determining factor for consumers purchasing a bottle of wine.
A significant number of wine drinkers in Thailand lack a thorough knowledge of wines, so low to medium-priced level wines (below US$40) retail hold the biggest market share of about 70 percent. This price level targets middle-income classes who possess higher education levels and higher spending power. Another factor persuading consumers to purchase wines are attractive packaging and labeling because it adds value to wine as a gift item. Wine is now becoming a popular Thai gift for special occasions and festivals. With limited purchasing power for some consumers, Thai consumers typically are willing to pay an average of $23-29 (Baht 800 – 1,000) per bottle of wine. Most view $14 (Baht 500) as the minimum price for good taste and good quality wine in red wine and white wine. Middle-aged consumers as well as white collar workers are the main target groups and are expected to see the strongest growth in wine consumption. Wine will benefit from the health consciousness trend. Drinking wine is considered to offer heart health benefits. Thai consumers are likely to become more familiar with wine and a wine culture is expected to develop further in the country as wine consumption increases gradually.