E-Malt.com News article: South Korea: Beer industry expected to change considerably due to new legislation

The relatively bland South Korean beer industry is brewing a big change in the wake of a recent amendment to the Liquor Tax Law, which took effect April 1, The Korea Times reported on April 11.

The revision is designed to lower the entry barrier for small and medium-sized businesses, and brewpubs.

Rep. Hong Jong-haak of the New Politics Alliance for Democracy is one of lawmakers who pushed for the legislation of the deregulation bill.

Before the revision, only companies that have production capacity of more than 150 kilolitres could distribute their beer into the market. Brew masters had to sell their hand-made beer only in their pubs.

The revision lowered the required standard production to 75 kilolitres, so that small- and medium-sized enterprises can easily enter into the market.

It also enabled brew masters to distribute their beer outside their pubs through wholesale dealers, for example, to supermarkets and bars.

The revision also calls for the government to cut the tax rate from 80 percent to 60 percent for a maximum delivery amount of 300 kilolitres, a big boon to small-scale manufacturers.

“It will create an atmosphere where various beer-makers can enter into the market. It will then increase price competitiveness of beer,” said Hong during a forum on the development of the beer industry on April 8.

“Existing conglomerates, such as OB, Hite Jinro and Lotte Chilsung, are moving to introduce new beer as well. Overall, consumers will be able to try diverse and higher-quality beers at more competitive prices,” he said.

Boris de Mesones, a Spaniard who owns brewpub Boris Brewery on Jeju Island, welcomed the new move.

“Now, I need more space and money to buy bottle-filling equipment. I am looking for investment partners,” he said.

But owners of the brewpubs argued that more things need to be improved for further development of the local beer market, which has often been looked down upon by foreign consumers accustomed to diverse and quality house beers.

“Thanks to the revision, brewpubs can work under better conditions, but the government should look into more measures _ for example, to exclude rent that pubs have to cope with from the tax base,” said Lee Won-sik, chairman of Oktoberfest, the country’s first brewery-pub.

Mega CC’s brew master Song Hoon said: “The government should impose a higher tax rate for higher-proof alcohol, and a lower rate for lower-proof alcohol.”

Rep. Hong said he will take all suggestions into consideration and push for further changes to the regulation system.


11 April, 2014