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18 Sep 2020

Econ Digest

Prohibition on sales of alcoholic beverages by electronic means

             

The Prime Minister’s Office has issued a proclamation of Prohibition on Sales of Alcoholic Beverages by Electronic Means B.E. 2563 on August 7, 2020, the main contents of which are: 1) It is prohibited for any person to sell alcoholic beverages or provide services related to alcoholic beverages directly to consumers by electronic means, or to recommend the purchase, promotion or sales of alcoholic beverages directly to consumers by electronic communication where the consumer and the seller do not have to meet. 2) This proclamation does not apply to electronic payment for the purchase of alcoholic beverages in shops, restaurants or places where alcoholic beverages are served; and 3) This proclamation shall come into force 90 days after the date of its publication in the Government Gazette (or from November 6, 2020 onwards).

 

KResearch believes that there has been an increase in the numbers of complaints about online sales of alcoholic beverages recently, likely due to the following reasons: 1) Consumers are changing their behaviors and are shifting more to electronic channels for a variety of daily activities; 2) The lockdown measures in response to the COVID-19 pandemic have led to a decline in physical shop sales, but the online channel sales are expected to be relatively small or t account for less than 1% of the total alcoholic beverage market. Given the situation that the sales of alcoholic beverages contracted by 16.8% YoY in the first half of 2020, manufacturers and sellers have had to struggle to find channels accessible to their consumer bases, making them shift more towards selling their products through other channels, especially online. This in turn leads to easier access to alcoholic beverages for consumers. The sale of alcoholic beverages online is difficult to regulate, although provisions have been made in the Alcohol Beverage Control Act,. B.E. 2551 and Excise Tax Act,. B.E. 2560 regarding the date and time of sales, the manner of advertising, the license to sell and the buyer age. There are no special provisions yet for the sales of alcoholic beverages online.

 

            In the social dimension, the above-mentioned decree coming into effect will help reduce the risk of increased consumption of alcoholic beverages and the accessibility of alcoholic beverages to public, especially for underage groups, and will reduce the marketing activities and practices by alcoholic beverage operators through online channels that violate the regulations on alcoholic beverages. In the business competition dimension, it is undeniable that the alcoholic beverage manufacturers will face tougher challenges in their marketing activities, because marketing channels will be more limited, but manufacturers with well-known products and diversified channels will have more comparative competitive advantages.

 

The enforcement of the Prohibition on Sales of Alcoholic Beverages by Electronic Means will initially enable the government authorities to prevent or restrict consumers from easily accessing alcoholic beverages via online channels, although it will not have a significant impact on the alcoholic beverage market. However, the impact on underage consumption of alcoholic beverages must be addressed in parallel with a variety of approaches. Meanwhile, possible changes in legislation must be tracked in the next phase, as the government may again allow the marketing of alcoholic beverages through online channels if it can effectively and systematically regulate the inspection mechanism and obtain the operator’s information in the future, as is the case in the following countries where operators are allowed to sell alcoholic beverages via online channels if they are regulated by laws:

 

New Zealand: 1) Vendors selling alcoholic beverages online must hold an off-licence that must be presented on the sales website. There are no restrictions on sales dates and hours, but the deliveries to consumers cannot be made between 11.00 p.m. and 6.00 a.m., or on Good Friday, Easter Sunday, Christmas Day or before 1.00 p.m. of Anzac Day; 2) Vendors must ask the age of the buyer when they first access the website and, and must make sure that the buyer is 18 years of age or older. Australia: 1) Vendors selling alcoholic beverages online must prominently display their sales license on their website and may only sell to buyers who present an ID with a birth date to prove that they are 18 years old; 2) Adolescents are prohibited from receiving alcoholic beverages purchased online[1]     

 

[1] Legal problems in regulating the sales of alcoholic beverages online (Prita Pitiwattanaphat, 2019)


 



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Econ Digest