Liquor industry: One family control

Liquor industry liberalization happened in 2000 and now "90% of spirit products come from one source - the Sirivadhanabhakdi family."

The Sirivadhanabhakdi family is better known as the family that owns Thai Beverage that produces Chang Beer.

For a detailed history of Thailand's liquor monopoly and the whole story of how the Sirivadhanabhakdi family gained control of this monopoly, see chapter in the book Thai Capital after the 1997 Crisis by Chulalongkorn professor Dr. Pasuk Phongpaichit and historian Dr. Chris Baker (See Silkworm book and also see Bangkok Post book review).

In the photo above flaming cocktails show how a distilled beverage will readily catch fire and burn (flammable) (Source: Wikipedia)

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ALCOHOL: Liquor industry monopoly decried, Strict regulations limit competition by Wichit Chantanusornsiri

The liquor industry's dominance by a single wealthy family is at the root of its slow development, says Pongpanu Svetarundra, director-general of the Excise Department.

The Finance Ministry liberalised the industry in 2000, abolishing the distillation concession system and replacing it with licences granted to spirit producers.

It also sold all 12 of its state-owned white-spirit distillers to the private sector in a bid to upgrade ingredients from poor-quality ones such as molasses, the use of which was widespread in the past.

However, Mr Pongpanu called it disappointing that no market improvements have yet been realised and blamed it on the fact that 90% of spirit products come from one source - the Sirivadhanabhakdi family.

"No benefits have been gleaned from the liquor industry's 2000 liberalisation, as the entire industry is dominated by one large group of companies, thereby stifling competition," he said.

There are more than 4,000 local liquor producers nationwide, but none can compete with the liquor tycoon Charoen Sirivadhanabhakdi due to the Industrial Works Department's strict liquor regulations.

Community liquor producers are limited to maximum 5-horsepower machinery and no more than seven workers.

"These conditions are not practical, resulting in many illegal operations. The rules should be amended," said Mr Pongpanu.

He also suggested setting up a liquor body to help set industry standards, especially ingredient quality.

Thailand ranks fifth in the world in terms of liquor consumption due to low production costs and prices for white spirits, the most popular alcoholic beverage in rural areas.

Mr Pongpanu said the government has been unable to stop people from drinking, so it should protect them by promoting better-quality ingredients and revising the liquor tax.

"Low-quality spirits would then become more costly, and people would turn away from them and opt for higher-quality products instead. The liquor tax rate is now based on volume, which costs producers less than if calculated by value," he said.

He added the excise tax on liquor does not meet World Trade Organisation (WTO) standards of "national treatment", which requires equal treatment of foreign and local products.

"The duty on imported liquor is still higher than on locally produced beverages. Imports are taxed at 400 baht a litre, while local spirits are levied only 120 baht a litre," said Mr Pongpanu.

He said Japan and South Korea used to protect their liquor industries by levying a similar low rate, resulting in them losing disputes brought before the WTO.

Thailand is at risk of a similar situation, especially after losing a dispute with US-based cigarette maker Philip Morris, Mr Pongpanu added.

(Source: Bangkok Post, ALCOHOL, Liquor industry monopoly decried, Strict regulations limit competition, 28/06/2011, Wichit Chantanusornsiri, link) 


Liquor Industry Vocabulary

alcohol (noun) - alcoholic beverages, drinks that make people drunk such as whisky, beer or wine (See Wikipedia)
alcoholic (adjective) - drinks containing alcohol
alcoholic (noun) - a person who cannot stop drinking large amounts of alcohol when it is making them ill and sick (a disease) (See Wikipedia)

spirit - a strong alcoholic drink เหล้าที่มีแอลกอฮอล์แรง
white-spirit - the traditional very strong rice whisky brewed by farmers in Thailand and Laos เหล้าข้าว

beverage - drink (for example: milk, fruit juice, beer, whisky) เครื่องดื่ม
alcoholic beverages - drinks with alcohol in them

distillation - purifying a liquid by a process of heating it, cooling it and condensing its vapors: "Distillation is a method of separating mixtures based on differences in their volatilities in a boiling liquid mixture. Distillation is a unit operation, or a physical separation process, and not a chemical reaction" (See Wikipedia and Google Definitions)
liquor distillation - creating liquor through the distillation of fermented grain, fruit or vegetables (See Wikipedia)
distiller - a person or company that uses liquor distillation to produce a liquor product
purify (verb) - a substance made by removing dirty, harmful or harmful substances from it
purification (noun) - the process of purifying a substance

liquor - strong drinks with high amounts of alcohol (such as whisky, vodka, gin, etc; not beer)
liquor industry - all the companies in the country that produce drink products with high amounts of alcohol in them
liquor body - a government organisation making regulations for the liquor industry
revising the liquor tax - rewriting and improving the liquor tax law (to improve it and make it better)
ranks fifth in the world - is the 5th highest in the world
consumption - using, eating or drinking something การบริโภค
liquor consumption - amount of liquor drunk per year by the whole country

flame - the hot red-yellow things that jump out of a fire เปลวไฟ
flaming cocktails - burning cocktails
distilled beverage - an alcoholic drink produced by distillation
flammable (adjective) - can catch on fire easily

Sirivadhanabhakdi family - the wealthy family that owns Thai Beverage, produces Chang Beer and holds a liquor industry monopoly (See Forbes, Wikipedia, Thai Beverage and Thai Capital after the 1997 Crisis (See chapter on liquor industry, for the whole long story).

tycoon - a person who has succeeded in business or industry and has become very rich and powerful นักธุรกิจที่ร่ำรวยและมีอิทธิพลมาก
wealthy - rich; having a large amount of money, land, and other valuable things ที่มั่งคั่ง ร่ำรวย
dominance - being more powerful and more control than all others
dominated - controlled ถูกควบคุม ถูกชักใย บงการ
dominance of industry by Y - control of industry by one company or family Y

strict - strong; very exact and controlling เข้มงวด
regulations - rules made by the government to control how some activity is done กฎระเบียบ
limit - control and prevent from increasing or decreasing beyond a certain value

strict regulations limit competition - strong regulations reduce competition (in a market) 
stifling - prevent a good thing from continuing
stifling competition - preventing competition in an industry or market (which would benefit consumers with lower prices and/or higher quality)
monopoly - companies that have complete control over a market

liberalisation - to reduce rules and regulations in an industry, when laws or attitudes become less strict and people are allowed more freedom of action (See glossary) เสรีภาพในการแสดงความคิดเห็นหรือแสดงออก
liberalised - to make the rules for an industry less strict, so it is easier to do business and for new companies to enter the industry

concession - permission from the government to run a certain kind of business (example: telecommunications, transportation, etc) สัมปทาน
license - official permission to do some activity (example: a driver's license, a business license)
abolish - put an end to something (such as a system or practice used)
grant - give ให ้

excise tax - taxes made by a government on some types of goods produced and used within their own country ภาษีสำหรับสินค้าในประเทศ
Excise Department - the government agency that collects excise taxes

standards - an acceptable level of quality or achievement มาตรฐาน
set industry standards - create acceptable levels of product quality for the industry

upgrade - improve; make new, modern, and up-to-date
ingredient - substances or foods that are combined to make something ส่วนผสม ส่วนประกอบ
molasses - a thick syrup by-product from the processing of the sugarcane or sugar beet into sugar (See Wikipedia) กากน้ำตาล

maximum - the most possible ที่สูงสุด ที่มากที่สุด
horsepower - 1. a unit of power equal to 550 foot-pounds per second (745.7 watts); 2. the power of an engine measured in terms of this
5-horsepower machinery - a relatively small engine (for a factory)

General Vocabulary

decry - criticise strongly; find fault with
development - the gradual growth and formation of something
X at the root of Y - X is one of the main causes of Y

state - government รัฐ
sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
private sector - all the businesses owned by individuals (not government) in the economy
bid - an attempt to do something ความพยายาม
widespread - happening or existing in many places, or affecting many people อย่างแพร่หลาย

realised - achieved ทำให้เป็นจริง
source - the place or person something comes from or starts at, or the cause of something ต้นกำเนิด, แหล่งกำเนิด

benefits - goods things that can happen from an activity ผลประโยชน์
glean - gather (slowly and patiently)

local - in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
nationwide - throughout a whole country ทั่วทั้งประเทศ

practical - useful for real people in real situations, suitable for the situation in which something is used ที่ขึ้นอยู่กับความเป็นจริง
illegal - against the law ผิดกฎหมาย, นอกกฎหมาย
illegal operations - running an illegal business
amend - change

rural - in the countryside (farms, forests), not the city  ในชนบท, บ้านนอก
opt for - to make a choice or a decision from a range of possibilities เลือก
tax rate - the percentage of some amount (price, income, etc) that must be paid to the government as tax
volume - the quantity or amount of something
duty - tax on goods brought into the country (tariffs)

levy taxes - when the government creates a new tax on some activity (that some individual or business must pay)
risk - the possibility that something dangerous or unpleasant might happen ความเสี่ยง
dispute - a serious disagreement; a conflict, fight, argument ข้อโต้แย้ง การโต้เถียง, ความขัดแย้ง ข้อพิพาท