Exporting Wine To Se Asia Essay

2579 words - 11 pages

Exporting Oregon Wines to SE Asia

With the increasing popularity of Oregon wines, especially its Pinot Noir, state wineries are looking abroad to new markets to expand their reach and increase sales. One of those new emerging markets is Southeast Asia, which consists of Vietnam, Thailand, Singapore, the Philippines, Indonesia, and Malaysia. For the purpose of this paper I have left out Laos, Burma, and Cambodia because of import restrictions and poor demand for imported wines. In 2010, Oregon saw an increase in the number of wine cases exported to 59,537 from 35,664 in 2009. As the fourth largest wine producing state, Oregon is still far behind California, the largest US exporter ...view middle of the document...

Being a former French colony, there is an acquired taste for Old World wines. This is a not a huge obstacle, but there is also competition from the beer and spirits industries who have a much larger market share among the total Vietnamese population. The next hurdle, and this is a big one, are the taxes on imported wine. There are three taxes on wine, an import tax, a special consumption tax, and a value added tax. This increases the price of a bottle to almost 100%. If you make an arrangement with a wine importer, they may be able to help you avoid these additional costs to the price per bottle. There are three major importers that handle US wines in Vietnam according to Wine Trade Asia, and they would most likely handle the distribution in country of Oregon wines. Another distribution channel could be to get a contract with some major US hotel chains that have outlets in Vietnam. They might help in bypassing some of the import taxes, and give Oregon wines free marketing through their promotions on restaurant menus. As far as marketing, internet advertising might be a good way to reach the younger, more savvy drinkers. Also, let the Northwest Wine Coalition, which receives USDA Market Access Program (MAP) funds, do the marketing for Oregon wines.

Thailand
The Thai wine market is also on a positive trend for US wines, but there is a lot of competition both from locally produced wines and imports from other countries. In 2011, US wines increased exports to Thailand by 17% from $3.2 million in 2010 to $3.7 million in 2011. But still, wine is only 3% of the consumer market when compared with beer and spirits. Wine appreciation is on the increase though because of the positive health benefits associated with red wine, currently 70% of the wine consumed per year. Alcohol consumption is widely prevalent and accepted in this predominantly Buddhist country. It is also a popular tourist destination which has helped to increase wine sales. Wines are also a great thing to have when paired with the predominately spicy Thai food. Still, wine is mostly consumed by those with medium to high incomes.

Even with the increasing amount of US wine exports to Thailand, there is fierce competition in the marketplace between Old World wines, Australian wines, and as of recently, home-grown Thai wines. The New World wines, like those of the US, are still cheaper by about 20-30% when compared with Old World wines. The one big restriction to Oregon wines are the taxes and tariffs that would be added on as shown below from a sample on calwinexport.com:

A CIF Invoice Value of Imported Wine $100.00
B Tariff (Import Duty): A x 54% $ 54.00
C Excise Tax Paid: Excise Tax Rate x (CIF value+import duty+excise tax paid+municipal tax) or 1.7647059(A+B) $271.76
D Municipal tax: C x 10% $ 27.17
E Health tax: C x 2% $ 5.44
F Value Added Tax: (A+B+C+D+E) x 7% $ 32.09
G Total Cost: (A+B+C+D+E+F) $490.46 Effective Duty and Tax Burden 390.46%

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