Distribution of Wine in Cingapura

Singapore is a mature and yet ever-growing market for the wine consumption and distribution businesses, as virtually all wines sold and consumed domestically are evidently not home-made, considering its size and climate. With some 5.5 million people, an impressively high per capita GDP, a luxury-oriented and multicultural lifestyle, 15% of the population however does not drink alcohol in any form. Additionally, roughly 20% of the population is not of legal age to drink, as in Singapore minors are prohibited from drinking alcohol. Therefore, most alcohol products are not suitable for personal or legal reasons to almost 35% of the Singapore population. This entails that those who drink alcohol actually make up for those who do not in a pretty significant way, in terms of both consumption, expertise and expenditure. Having said that, whilst Singaporeans, whether citizens or members of the large and equally diverse foreign residents’ community, have a penchant for dining and drinking out, a mix of a law-abiding attitude, proper enforcement of rules, high consumer prices and a relatively conservative mindset means that the rate of per capita alcohol consumption is around 2 litres per annum only, the lowest in the Asia-Pacific region, and includes all types of alcoholic beverages (wines, spirits, beers etc.).

According to a 2018 World Health Organisation report, men drank three times more than women.

Beers stands out as the absolute winner in the pool, with 70% of the total consumption of alcohol. Over 11 million litres of alcohol are consumed in Singapore annually and out of these wines contribute about 1.54 million litres. The wine market in Singapore is developing steadily and, at the same time, prices are rising due to a demand composed of generally wealthy consumers, generalised higher production costs and tax increases on the import of alcohol.

Regardless of the small domestic market size – in litres –, over 600 companies are holders of licenses for the legal sales of alcohol, mainly due to Singapore’s role as global hub for business and leisure. In fact, revenues in the wine segment should amount at the time of writing (January 2022) to USD740 in 2022. By 2025, 80% of spending and 58% of volume consumption in the wine segment will be attributable to out-of-home consumption (e.g. in bars and restaurants).

Since a whopping six Southeast Asian Countries claimed the top-10 as emerging sales markets for producers and exporters (Vietnam, Thailand, Malaysia, Philippines and Indonesia), without of course forgetting relatively nearby China, the majority of wine imported to Singapore is re-exported to other markets, due to Singapore’s pivotal role in the region and farther beyond, as well as its leading role within the ASEAN Economic Community, where it stands out for rule of law, ease of doing business and pro-business tax measures. For these reasons, an impressive 50% of producers from France, Italy and Spain list Singapore as their choice of emerging market and so does 1/3 of New World wine exporters.

The top three exporters are France, Australia and Chile. Government’s data show that six exporting countries compose about 86% of wine imports. However, considering the diversity and curiosity that characterise Singapore-based consumers, there is increasing space for wines coming from relatively smaller producing regions, such as Portugal or Lebanon. The same is true for niche labels: whilst top-notch French or Italian names, as well as special editions or vintage bottles are a sure bet for “Crazy Rich Asians” styled consumers, niche, quality products, particularly organic wines, do enjoy significant growth forecasts. Other sparkling wines, notably Prosecco, for instance, are gaining ground, also due to their competitive price, against market leaders (Champagne). Having mentioned these types of wines, it must be noted nonetheless that, for every bottle of any sparkling wine, three of still (red, in particular) are sold.

Local sales, finally include a relatively small portion that is purchased by wealthy non-resident consumers from neighbouring markets, who trust Singapore more than their very own Countries, when it comes to preserving a quality and authentic bottle.

Since Singapore is a signatory to the Madrid Agreement concerning the International Registration of Marks 1939 and the Protocol Relating to the Madrid Agreement (collectively known as the “Madrid system”), to obtain protection of a trademark in situ, trademark holders may file through either the national route or the Madrid system.

A common national trademark registration process for alcoholic beverages follows the ordinary path pursued by trademark applicants in Singapore, which consists of the following steps:

• formality examination: the Intellectual Property Office of Singapore (IPOS) performs an examination to check that the proposed registration complies with its formal requirements and that it does not fall into absolute grounds to refuse applications. The IPOS will also search for earlier registered trademarks that potentially conflict with the application, which the applicant will then have an opportunity to argue against;
• application publication: assuming the application gets through the examination phase, it will then be published on the IP Gazette for the purpose of possible opposition by third parties;
• substantive examination: absolute refusal and relative refusal examination are simultaneously conducted by the IPOS upon publication on the Gazette;
• statement of grant of protection: official fee for grant of certificate indicated therein shall be paid by the applicant to receive the original certificate, which also available in digital format.

If the application is successful, the trademark registration will last for an initial period of ten years, following which it can be renewed for additional periods of ten years each, indefinitely.

However, if a trademark is not used in the first five years of its registration or for a continuous period of five years during its registration, any third party may seek to have the registration revoked for non-use.

Labelling regulations are set by the Singapore Food Act and Regulations. The food labelling requirements under the Act and Regulations are primarily designed to safeguard food safety.

The Singapore Food Agency takes reference from the international food standards setting body, the Codex Alimentarius Commission (the international food standards body established by the Food and Agricultural Organisation of the United Nations and the World Health Organisation), when reviewing the labelling requirements for Singapore.

As mentioned under “Customs clearance, duties and taxation”, importation rules prescribe consistency between the description that was placed on labelling and the actual content of the imported item. In case of discrepancy, fines can be hefty and may involve prosecution and therefore severe punishments and revoke the licence.

The Singapore Food Agency regularly updates its Guide to Food Labelling and Advertisements, currently available at https://www.sfa.gov.sg/docs/default-source/tools-and-resources/resources-for-businesses/aguidetofoodlabellingandadvertisements.pdf.

It is not legally required to apply health warning labels on alcohol containers, nor to give such notices in advertisements.

Similarly, there are no legally binding regulations on alcohol advertising, product placement, alcohol sponsorship or sales promotion.

However, the Advertising Standards Authority of Singapore (ASAS) is an advisory council to the Consumers Association of Singapore (CASE) set up to promote ethical advertising in Singapore and is the self-regulatory body of the advertising industry. It steps in addressing promotional activity, for instance banning the association of minors and alcohol in any advertising instrument. Furthermore, the ASAS specifies that ads must not reveal or focus on the beneficial effects of alcohol on human health.

Before a business can distribute wine in Singapore, it must have obtained a licence.

There are five main classes and a few subclasses, which are essentially divided into:

• type of alcoholic beverage to be sold (e.g. wine);
• time period (yearly fee or pro rata);
• type of business establishment (e.g. a bar, a supermarket etc.).

An applicant can seek to obtain more than one licence in different classes.

The applicant must be registered with the Accounting and Corporate Regulatory Authority (ACRA), with a few exceptions and must be a Singapore Citizen, Singapore Permanent Resident or have a Foreign Identification Number (FIN). Finally, the applicant must be a director of the company, a partner of the partnership, or the sole proprietor of the sole proprietorship, and must be fit and proper.

The application can be lodged online using the GoBusiness Licensing portal which has a gateway for the payment of the fee, that is assessed according to the class of licence one is applying for and as a rule of thumb is below SGD1,000.00 yearly. The authorities may require additional information and supporting documents.

The legal age for drinking is 18.

When it comes to wine importation in Singapore, as always in this jurisdiction there are clear, specific rules, and regulations and procedures are streamlined and almost always conducted online.

The main statutory source is the Sale of Food Act and the so-called “Food Regulations” stemming from it, which, inter alia, regulates the import of alcoholic beverages into the Country.

The importation of wine is allowed only to people who have registered and have a licence to trade or a licensed legal person that possesses an import permit valid vis-à-vis the Singapore Customs. This registered person also has the obligation to pay for excise and other fees. Within the past few years, the rate of registered importers has increased over time because getting licenses to trade has become relatively simpler.

All imported wine must be registered at the Singapore Food Agency and together with Singapore Customs, have the authority to control imported wines and beverages that come into the Country.

Singapore does not have any upper limits for importing wine.

In terms of imported goods, there are no duties to be paid. However, wine is part of one (“intoxicating liquors”) of four categories of dutiable goods (the other three being tobacco products, motor vehicles and petroleum products, and biodiesel blends).

Whilst for beer, a customs duty rate of SGD16.00 per litre of alcohol is applied, the customs duty rate for wine is nil at the time of writing. However, both beer and wine are subject to an excise, the one related to wine being SGD88.00 per litre of alcohol, times the alcohol volume. The formula is therefore: litres * SGD88.00 * alcohol%. In addition to excise tax, the government also applies a 7% GST to all imported goods.

The calculation of the excise does not depend on the product’s actual value, i.e., the same excise is applied to wines of different types, origin and price.

Both the excise and GST are payable for dutiable goods, only if such goods are imported for local consumption.

Violation of Customs rules that include a fraudulent act shall represent a criminal offence.

Singapore is a Common Law jurisdiction, hence having a properly drafted agreement in place is essential, as the parties enjoy significant contractual freedom.

Singapore law does not legislate on commercial agency, unlike Member States of the European Union, where many producers, accustomed to such model, come from. The parties can indeed regulate their business according to a freely negotiated contract, whose content is similar to that of the commercial agency in the EU, but they must do so through a valid contract and bear in mind that the term “agency” in the Singaporean legal jargon does not mean “commercial agency” in the EU sense, although the term “agency” does exist, albeit not statutorily, and is somewhat more similar to that of “representative” in Civil Law jurisdiction.

Similarly, there is no statutory law on distribution contracts, which however represent the gold standard. A distribution agreement is an agreement between a supplier (typically the wine producer) and a distributor which accords rights to the distributor to resell the supplier’s goods or services.

Whilst not mandatory, it is essential that a distribution agreement be regulated by a proper written agreement, which addresses, inter alia, the following clauses:

• licence: the distributor must hold valid licences (see “Make sure you play by the book”) to act in such capacity;
• exclusivity: considering Singapore’s role as a hub, a producer may wish to enter into multiple distribution agreements with various local distributors, including wine bars, restaurants and other retailers specialised in different segments;
• territory: regardless of exclusivity, a Singapore-based distributor may be able to sell the producer’s wines in neighbouring ASEAN markets, provided it holds the necessary permits to do so;
• products that the producer supplies the agent / distributor with;
• pricing may be determined by the producer at its discretion and payment terms, which could include conversion rates of the Singapore Dollar, as well as penalties for delays;
• distributor’s obligations (to name but a few, inventory, minimum quantities, after-sale services) and supplier’s obligations (e.g. provide technical support and marketing material);
• intellectual property rights: on top of safeguarding the producer’s IPRs, the agreement may also set out the distributor’s scope of use of the supplier’s trademarks and trade names;
• governing law and jurisdiction: it is worth mentioning that the Singapore International Arbitration Centre is a favourite choice all across Asia and that Singapore Law is constantly chosen even by foreign contractual parties, thanks to its clarity, sophistication and reputation, which make even ordinary court cases, in absence of a valid arbitral clause, a good option to solve disputes also between parties coming from completely different jurisdictions and cultures.