Tobacco Authority of Thailand

The Tobacco Authority of Thailand (TOAT), formerly known as the Thailand Tobacco Monopoly (TTM), is a Thai state enterprise responsible for manufacturing and distributing tobacco products, principally cigarettes. It operates under the institutional framework of Thailand's Ministry of Finance and has historically served both commercial and fiscal-policy functions. Unlike a conventional privately owned consumer-goods company, TOAT combines a regulated production role with responsibilities connected to tobacco-leaf procurement, farmer support, employment, industrial operations and transfers to the Thai state. The organization was established in 1939. Its earliest operations involved cooperation with British American Tobacco, but since 1949 it has operated under the control of the Thai Ministry of Finance. For much of its history, the organization held a domestic monopoly over the manufacture and distribution of tobacco products. That position changed after Thailand's ratification of the ASEAN Free Trade Area agreement in 1992, which enabled foreign tobacco companies to distribute their own products in Thailand and increased competitive pressure in the domestic market. Historically, TTM purchased tobacco leaf through a network of regional offices and sourced additional leaf from international suppliers. Its activities supported approximately 15,000 tobacco-growing households across Thailand, with farmers collectively cultivating tens of thousands of rai. The organization also operated a substantial manufacturing and distribution network, including facilities in Bangkok and a newer plant in Ayutthaya. Its cigarette portfolio has included Krongthip, Wonder, Falling Rain 90, Goal, LINE, Royal 90, Samit 90, SMS and Gold City 90. TOAT was corporatized on 14 May 2018 under the Tobacco Authority of Thailand Act 2018. The change converted the former non-juristic state enterprise into a juristic organization and gave it greater flexibility to establish limited or public companies connected with its business. The legislation also permits foreign shareholders to own up to 49 percent of such related companies, subject to the legal framework. The reorganization was intended to provide a more adaptable structure as Thailand's tobacco market became increasingly competitive and as trade liberalization and changing taxation affected domestic manufacturers. The authority has traditionally been a significant contributor to the Thai treasury. Earlier reported results described the former TTM as one of the country's most profitable state enterprises, although its market position weakened after changes to cigarette excise taxation and intensified competition from international manufacturers. A September 2017 tax restructuring applied a higher rate to cigarettes priced above a specified threshold and a lower rate to cheaper products. Foreign manufacturers responded by adjusting prices, while TOAT faced higher costs associated with locally sourced tobacco, manufacturing and overhead. The resulting pressure contributed to a substantial decline in cigarette volumes and market share and led to an expected loss in fiscal year 2018, reportedly the first such shortfall in its history. TOAT's role also intersects with Thailand's public-health regulation. Electronic cigarettes have been prohibited in Thailand since 2014, and national authorities have continued to support enforcement against their sale and use. The authority itself is not the country's tobacco regulator, but its operations take place within a strict framework of excise taxation, advertising controls, product regulation and tobacco-control policy. Today, TOAT remains a major domestic tobacco institution, although its historical monopoly has been replaced by a state-owned operating model competing in a liberalized and heavily regulated market.

The institution now known as the Tobacco Authority of Thailand began in 1939 as the Thailand Tobacco Monopoly. Its initial development included cooperation with British American Tobacco, but the arrangement did not remain the basis of its long-term governance. From 1949 onward, the organization operated under the Thai Ministry of Finance and became a central instrument of state control over tobacco manufacturing and distribution. For decades, the monopoly structure allowed the organization to manufacture and distribute tobacco products throughout Thailand with limited direct competition from foreign brands. It also gave the government a mechanism for collecting tobacco-related revenue and supporting domestic agricultural production. The organization purchased leaf from Thai growers through regional offices and supplemented local supply with imported tobacco. Its procurement activity supported approximately 15,000 farming households, while its manufacturing, administrative and distribution operations made it a major state-sector employer. Thailand's tobacco market began to open after the country's ratification of the ASEAN Free Trade Area agreement in 1992. Foreign tobacco companies gained the ability to distribute their cigarettes in Thailand, ending the practical exclusivity that had characterized the earlier monopoly period. Competition became especially important as international companies gained influence over the higher-value segments of the market. The former TTM retained a strong domestic volume position for many years, but its relative share was vulnerable to foreign brands, changing consumer behavior, trade liberalization and taxation. By the late 2000s, the organization operated several factories and regional tobacco-leaf purchasing offices and marketed a portfolio of Thai cigarette brands. Reported 2009 figures described sales of approximately 50 billion baht, including exports, and net profit of approximately 5.8 billion baht. At that time it employed more than 4,000 people and remained one of Thailand's most profitable state enterprises. In 2011, it considered cooperation with a global tobacco company to improve technology and management in anticipation of further reductions in trade barriers and the formation of the ASEAN Economic Community. The organization subsequently invested in production modernization and relocation. It operated facilities on a large combined land area, with cigarette production in Bangkok and at a new Ayutthaya plant. The Ayutthaya factory opened in August 2018, and the planned strategy was to move cigarette manufacturing there while closing older Bangkok factories by 2020. This program reflected the need to reduce costs and consolidate production as the market became more competitive. A major institutional change occurred on 14 May 2018. Under the Tobacco Authority of Thailand Act 2018, the former non-juristic Thailand Tobacco Monopoly was converted into the juristic Tobacco Authority of Thailand. The act allows TOAT to establish limited companies or public companies related to its business and permits foreign ownership of up to 49 percent in those related entities. The change was designed to give the state enterprise greater commercial flexibility without abandoning public ownership and its statutory role. Tax policy created another decisive turning point. In September 2017, Thailand revised cigarette excise rates, imposing a higher rate on products above a retail-price threshold and a lower rate on cheaper packs. International manufacturers lowered prices in response, while TOAT faced comparatively high costs for Thai tobacco leaf and domestic manufacturing. Its reported market share fell from roughly 80 percent before the changes to about 55 percent, and annual cigarette sales declined from approximately 42 billion to 30 billion units. The organization anticipated a loss of about 1.5 billion baht for fiscal year 2018, reversing its long record of profitability. TOAT's history has also included controversy. In 2010, three United States tobacco-leaf merchants admitted wrongdoing in a United States case involving kickbacks paid to officials associated with TTM purchasing contracts. The alleged payments related to Brazilian tobacco sold between 2000 and 2004. The case involved Dimon, Standard Commercial and Universal subsidiaries or affiliates and raised concerns about corruption in international tobacco procurement. Separately, Thailand's prohibition of electronic cigarettes, in force since 2014, has reinforced the heavily regulated environment in which TOAT operates. The authority remains an active state tobacco producer, but it now functions in a competitive market rather than the closed monopoly system that defined its earlier decades.

• 2018

  Corporatized as Tobacco Authority of Thailand

  [1]Tobacco Authority of Thailanden.wikipedia.org

  On 14 May, the organization became a juristic state enterprise under the Tobacco Authority of Thailand Act 2018.

• 2018

  Ayutthaya manufacturing facility opens

  [1]Tobacco Authority of Thailanden.wikipedia.org

  A new cigarette factory opened in Ayutthaya on 27 August as part of a planned production consolidation.

• 2017

  Cigarette excise structure revised

  [1]Tobacco Authority of Thailanden.wikipedia.org

  Thailand changed cigarette taxation, intensifying price competition and placing substantial pressure on TTM's market share and finances.

• 2011

  Exploration of international cooperation

  [1]Tobacco Authority of Thailanden.wikipedia.org

  TTM announced that it was seeking a relationship with a global tobacco company to improve technology and management.

• 1992

  ASEAN trade liberalization opens the market

  [1]Tobacco Authority of Thailanden.wikipedia.org

  Thailand's ratification of the ASEAN Free Trade Area agreement enabled foreign tobacco companies to distribute cigarettes in the country.

• 1949

  Placed under Ministry of Finance control

  [1]Tobacco Authority of Thailanden.wikipedia.org

  The organization began operating solely under the control of Thailand's Ministry of Finance.

• 1939

  Thailand Tobacco Monopoly established

  [1]Tobacco Authority of Thailanden.wikipedia.org

  The state tobacco organization was established, initially with cooperation from British American Tobacco.

A government-owned, domestically oriented tobacco producer combining a legacy monopoly position with state-enterprise, farmer-support and treasury-revenue responsibilities.

• Cigarettes

  Krongthip

  Krongthip is one of the cigarette brands associated with Thailand's state tobacco enterprise. It belongs to the legacy domestic portfolio marketed by the former Thailand Tobacco Monopoly and subsequently associated with TOAT.

• Cigarettes

  Wonder

  Wonder is a cigarette brand listed among the former TTM's principal product offerings. Public reference material identifies it as part of the authority's domestic cigarette portfolio but does not establish its current availability.

• Cigarettes

  Royal 90

  Royal 90 is a cigarette brand in the state tobacco organization's reported portfolio. The name reflects the pack format or product designation used in the former TTM brand range.

• Cigarettes

  SMS

  SMS is one of the cigarette brands attributed to the Thailand Tobacco Monopoly. Available reference material provides no reliable current product specifications or distribution information.

• Cigarettes

  Gold City 90

  Gold City 90 is part of the cigarette portfolio reported for TTM before its transformation into TOAT. Its current brand status is not established by the available reference material.

• 2010

  Bribery case involving tobacco-leaf procurement

  Three United States tobacco-leaf merchants pleaded guilty in connection with payments made to Thai officials to secure and coordinate tobacco sales contracts with TTM between 2000 and 2004. The case involved alleged kickbacks from affiliates of Dimon, Standard Commercial and Universal and implicated the integrity of international tobacco procurement linked to the Thai monopoly.

  Source

Read more

• 2018

  Corporatization and organizational restructuringStrategy

  Background

  The former non-juristic monopoly needed a more flexible legal and commercial structure in an increasingly competitive tobacco market.

  Action taken

  The Tobacco Authority of Thailand Act 2018 converted TTM into the juristic Tobacco Authority of Thailand and authorized the creation of related companies, including entities that may have foreign ownership of up to 49 percent.

  Aftermath

  TOAT continued as a state enterprise with broader corporate powers; the available material does not document the complete subsequent use of those powers.

  Source

• 2018

  Consolidate cigarette production in AyutthayaOther

  Background

  TOAT operated manufacturing facilities in Bangkok and was seeking greater efficiency amid declining market share and rising competitive pressure.

  Action taken

  A new Ayutthaya factory opened on 27 August 2018, with plans to move cigarette production there and close Bangkok factories by 2020.

  Aftermath

  The reference material does not confirm whether the full planned closure and relocation schedule was completed.

  Source

• 2017

  Respond to the revised cigarette excise regimeStrategy

  Background

  Thailand's new cigarette tax structure created a large price differential between products above and below the designated retail-price threshold.

  Action taken

  TOAT maintained its pricing and production model while foreign competitors reduced prices to limit the impact of the higher tax band.

  Aftermath

  TOAT's market share, cigarette volume and financial outlook deteriorated sharply, with a projected fiscal-year 2018 loss.

  Projected fiscal-year loss. Approximately 1.5 billion baht projected loss (Fiscal year 2018)

  • Foreign cigarette manufacturers — Foreign manufacturers lowered prices to reduce exposure to the higher excise-tax rate.

  Source

• 2011

  Seek a global tobacco-company tie-upStrategy

  Background

  TTM faced increased competition from foreign brands after ASEAN trade liberalization and anticipated further pressure when regional trade barriers were reduced.

  Action taken

  The organization announced that it was looking for cooperation with a global tobacco company to strengthen technology and management.

  Aftermath

  The available reference material does not identify a completed partner transaction.

  Source

• 2020-09-14

  DuPont receives TTM Global Supplier Award[2]杜邦获得TTM全球供应商奖prweb.com

  Reported: 2020-09-14

  DuPont Interconnect Solutions announced that it received TTM's 2020 Global Supplier Award and was the sole winner in the Chemical category.

1. 1Tobacco Authority of Thailanden.wikipedia.org
2. 2杜邦获得TTM全球供应商奖prweb.com