BBII 6/2020 · 15
Leading domestic breweries use large amounts
of non-malt grains such as wheat and rice to
reduce costs and soften flavors. They have focused
on lager-style beer over the years, reflecting
South Korean consumer preference for dry,
milder flavored beers. However, evolving consumer
tastes have forced domestic breweries
to launch or expand production of beers with
more malt and hops.
The beer industry has registered negative growth
in volume in the last two years. Still, value-wise
the industry has been able to put small increments
in these years. Before the current Covid
crisis, which has impacted the beer industry
and volumes in the current year, South Korea’s
trade-reliant economy was among those worst
hit by cooling demand of U.S.-China tariff war in
2019. Slower economic growth had an adverse
impact on beer consumption in these years.
However, the beer industry has great potential
in the country as drinking is considered an important
part of social life and is often encouraged
at social and business occasions. Although
drinking is decreasing among the elderly population
for health concerns, overall alcohol consumption
remains high partially due to increased
female consumers.
Much like the European countries, craft beers
are getting increasingly popular in South Korea.
The number of microbreweries in South Korea
has increased sharply from 61 in 2014 to 133
at the end of 2018 on account of huge due to
consumer demand.
Stiff competition from soju
The beer market and producers in South Korea
have faced very stiff competition from another
popular alcoholic beverage, soju. Soju is a clear
and colorless distilled beverage traditionally
made from rice, wheat or barley. When in the
1990s there was a rice shortage in the country,
the Korean government implemented a ban on
using rice to make soju. Even though the ban
was lifted eventually, present-day manufacturers
converted to use starches such as potatoes,
sweet potatoes, and tapiocas. This has also
resulted in lower alcohol content in soju.
Soju is easily identified by its signature bright
green glass bottle. You can find these green bottles
for about KRW 1,000 won ($0.94) in supermarkets
and around KRW 1,600 won in convenience
stores. This is one reason why soju is very
popular in South Korea, thanks to its affordability.
New taxation
The South-Korean government has transitioned
from a value-based liquor tax system to a volume
based system for beer since January 1,
2020. Under the volume-based liquor tax, beer
is subject to an 830.3 won (72 cents) per liter
liquor tax. Beer distributed to restaurants and
bars in kegs will be taxed at 664.2 won per liter
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