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EU spirits industry keen to tap ‘unfulfilled potential’ in Vietnam

spiritsEUROPE tells BeverageDaily.com that the EU is keen to seal a free trade agreement (FTA) with Vietnam to help members including Diageo, Beam Inc. and Pernod Ricard open up a ‘priority’ market.

January talks in Brussels were aiming at a deal to improve access for the bloc’s producers to Vietnam – where 2m nine-liter cases of spirits are sold every year – by scrapping import tariffs set at 45% in 2013.

The sixth round of negotiations last month focused on finalizing a draft deal ahead of the key Asia-Europe summit in Milan this October, but Marie Audren, spiritsEUROPE director of trade and economic affairs warned that hopes of a deal by October “seem quite ambitious”.

‘Historically it’s an important market’

spiritsEUROPE members include Diageo, Beam Inc. , Brown Forman and Pernod Ricard, and Audren told BeverageDaily.com: “We’ve been established in Vietnam for a long time – historically it’s an important market. There’s quite a significant tariff, so it’s very interesting for us.”

 “Certainly talks are going quite well, and it seems at some point they will have to come to the more contentious issues I think in the initial rounds negotiators examine a general framework, but the difficult parts are left to one side,” she added.

Spirits imports rose 350% from 2002-2012 in Vietnam, and producers expect significant growth in coming years as more affluent Vietnamese consumers trade up to western brands including spirits.

EU spirits producers are pressing for the abolition of import tariffs, and spiritsEUROPE says this is also in Vietnam’s interest since a large share of imported alcohol enters the market without paying duties and tax – where high import tariffs and excise taxes create incentives for smuggling.

The FTA can help to improve IPR laws and enforcement. EU spirits with GIs will be better protected. The volume of counterfeit spirits is naturally difficult to quantify but it has been estimated that up to 20% of the spirits currently available in the market place are counterfeit," Audren said.

Better consumer protection

"The other issue is an excise tax system that we don’t really like," Aubren said.

"The current excise taxation is based on a Special Consumption Tax, consisting in an ad valorem excise tax of 50% for all spirits of 20% ABV or greater. Although this is part of Vietnam WTO accession package the ad valorem system in itself penalizes high-value products," she said.

The EU is also keen on protection of traceability information for consumer protection – lot codes on packages to trace products throughout the supply chain, in accordance with CODEX Alimentarius guidelines and EU law.

“Ensuring that this traceability information is legally protected from any tampering in Vietnam will greatly enhance consumer protection,” Spirits Europe said in a January communique.

Another wish is for secure rules of origin (ROO) to allow use of regional hubs such as Singapore to consolidate shipments – decreasing order fulfilment time, saving money and adding flexibility.

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