Tuesday, December 18, 2007

Ministry scraps plan to control prices of local white spirits

Business News - Tuesday December 18, 2007


Ministry scraps plan to control prices of local white spirits


The Commerce Ministry has dropped a plan to put white liquor on its price-control list as the prices are already overseen by the Excise Department.

The government uses tax measures to control the sales and prices of a wide range of alcoholic products, including white and blended liquor.

The cabinet in August increased taxes to reduce consumption, raising prices for white liquor with alcohol content of 28-40% by 9-12 baht per 625ml bottle, to around 110 baht per litre.

Commerce Ministry officials acknowledged yesterday that putting liquor on the price-control list might send the wrong signal to consumers that the government wanted to bring down prices of the spirits, which are drunk mainly by low-income consumers.

Most of the products on the price-control list are daily staples such as milk and cooking oil. The ministry yesterday added three more products _ automobile batteries, yoghurt and instant noodles _ to the list.

However, Yanyong Phuangrach, the director-general of the ministry's Internal Trade Department, said his department had received many complaints from consumers about overpriced white liquor.

''The sale price at the factory site is 49 baht per bottle but it sometimes goes up to 90 baht which is not fair to consumers,'' he said.

The white liquor market is worth about 70 billion baht a year and for that reason Mr Yanyong said his officials would continue to watch the business closely.

Prin Malakul, the corporate affairs director of Thai Asia Pacific Brewery (TAPB), the maker of Heineken and Tiger beer, said he was glad to hear that the ministry had rejected a bad idea.

Mr Prin said that collecting excise tax based on alcohol content was still the most effective way to control alcoholic beverage prices and consumption. ''That measure is better for society as well because that will force beverage makers to make low-alcohol beverages,'' he said.

Fluctuations in prices of alcoholic beverages, in particular beer, were not a result of normal rules of supply and demand, he said. Instead, prices tended to vary depending on ''forced sales'' by distributors, many of whom require customers to purchase certain quantities of the liquor they distribute if they also want to purchase beer.

The ministry has the Trade Competition Act to regulate such practices but it has not been used effectively, he said.

Bangkok Post

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