Thailand: Brewpubs to benefit the most from new alcohol laws in Thailand
Pubs in Thailand that want to brew their own craft beers will benefit the most from the government’s new alcohol proclamation, which went into effect on November 2, the Chiang Rai Times reported.
According to a professor specializing in the liquor industry, their number is expected to grow, while small investors who want to produce liquor or beer will find it difficult to enter the market due to new restrictions imposed by the proclamation.
According to Assistant Professor Charoen Charoenchai of the Rajamangala University of Thanyaburi’s Faculty of Agricultural Technology, the proclamation gives the impression that the state has removed several restrictions, allowing individuals to produce alcoholic beverages for household consumption and commercial purposes, in an attempt to break up the liquor production oligopoly.
For example, he stated that restrictions on minimum registered capital and minimum amount of production for new investors had been lifted, but new restrictions have been imposed, such as the requirement for new investors to conduct environmental impact assessment studies and install standard machinery that records tax payments for the alcoholic beverages they produce.
According to Charoen, these will make it easier for small investors to enter the craft beer business if they have substantial financial backing.
However, he noted that brew pubs that sell craft beer in their establishments would benefit from the changes.
He praised the government for being astute in convincing people that it has opened up the liquor industry to small investors when, in fact, the situation remains unchanged for small investors.
He also stated that the proclamation would not reduce the prices of liquor or beer because the taxes levied on them remain unchanged, and if prices are reduced, producers’ profits will be reduced accordingly.
The new ministerial regulation on liquor and beer production, which went into effect on November 2, removes barriers for small manufacturers. Small brewers could previously hire up to seven people and have a maximum production capacity of 5 horsepower.
On the other hand, small breweries can use machinery with a horsepower of 50 and employ up to 50 people under the new regulations.
The regulation also eliminates the minimum registered capital and production capacity requirements for brewpubs. Brewpubs were previously required to produce between 100,000 and 1 million litres per year.
Only large breweries are now required to meet annual production and registered capital requirements of 10 million litres and 10 million baht, respectively.
Under the new rules, any legal entity or individual over the age of 20 can apply for a license to brew up to 200 litres of alcohol per year. This provision intends to make it simple for people to brew beer or distill spirits.
The license only applies to non-commercial operations. It is still illegal to sell homemade brews.
Although Thailand’s alcohol industry is not a monopoly, it has been dominated for decades by two giant conglomerates.
Taopiphop believes market rules should be relaxed to allow people to brew alcohol for personal use or sale through small businesses and brewpubs.
Villagers, for example, should be able to use local knowledge to create signature brews that will benefit tourism and those working in the supply chain. According to him, profits could also be transferred to the agricultural sector via ingredients such as rice or wheat.
The young Move Forward MP, whose campaign promise in the 2019 general election was to change laws favouring large brewers, has spent the last three years trying to make that promise a reality.
The Cabinet regulation approved on November 1 and enacted the next day was not the result of Taopiphop’s efforts and instead pre-empted his draft bill.
The so-called progressive liquor bill proposed by the Move Forward MP was defeated in Parliament on November 2.
While the ministerial regulation shares some characteristics with his bill, it differs in important ways. For example, when applying for a license, community distilleries using up to 50-horsepower machines must submit an environmental impact assessment (EIA). Taopiphop’s bill, however, did not pass.
“Excise officials told an entrepreneur who recently sought a license for their brewpub that he needed an EIA report,” the MP said. “However, when he contacted the EIA authorities, he was told that his company was too small for an EIA.” So, what happens next?”
Pita Limjaroenrat, leader of the Move Forward Party, claims that the timing of the regulation and how it was written show that the government camp was attempting to outmanoeuvre the public and his party.
“It is worth noting that, while the new regulation removes some restrictions, it also introduces new ones.” “Implementation will face numerous challenges,” he warned.
Pita believes the new regulation was introduced as a face-saving measure and a favour to large investors ahead of the upcoming general election, which is tentatively scheduled for May 2023.
Wissanu Krea-ngam, Deputy Prime Minister, claims the government acted in the best interests of all parties involved.
“We relaxed the regulations because people complained that the old ones were too stringent,” he explained. “The opposition’s bill is viewed as too lenient.” This new regulation provides a middle ground.
According to Nattakorn Uthensut, spokesman for the Excise Department, the new regulation aims to ensure product quality while protecting the environment.
12 November, 2022
