Break oligarchy and allow ’beer freedom’

Craftworks Taphouse & Bistro, a pub operated by a Korean microbrewery in Itaewon, central Seoul, offers beers made from its own recipes.

Courtesy of Craftworks Taphouse & Bistro

By Kwaak Je-yup

Koreans have few choices in beer even though they drink more of it than any alcohol beverage year after year.

At any supermarket, convenience store, restaurant, food stall or bar, virtually everywhere, consumers have just two options: cheap and mediocre-tasting local beers or pricey imports.

People have come to accept this sad dichotomy as unavoidable and adjust their consumption patterns to either downing Korean beer served in oversized pitchers or splurging on fancy bottled foreign alternatives on special occasions.

But the situation could change if the relevant regulations were liberalized ― cracking the OB-Jinro Hite duopoly. Local beers suffer not from lack of imagination but from lack of competition, industry sources say.

Craftworks, located in the central Seoul area of Itaewon and an established expatriate watering hole, is a microbrewery that seems to be doing the impossible, but manager Dan Vroon says the outlook is grim.

“It is so much easier to import a beer here than brew a beer here,” said Vroon. “It’s unfortunate when I go to (a 24-hour convenience store) and I see Budweiser and Hoegaarden (Belgian wheat beer) instead of good local craft beers.”

According to Vroon and other microbrewery professionals, current regulations make it difficult to survive because all of their beers can only be sold to and served at pubs they directly own and operate.

Nurturing them into a recognizable brand of national and even international appeal, like Sierra Nevada or Samuel Adams of the United States is well beyond reach.

“It’s about consumers’ choices. We should be able to get fresh local beers,” said Jace Baik, also working on his own beer projects and operating Virgin, an upscale pub also in Itaewon exclusively serving beverages from small Belgian and Dutch breweries and distilleries.

Microbreweries, also known as craft brewers, produce a limited amount of beer but can freely experiment with different flavors and other innovations.

In 2009, there were 77 registered entities worthy of this title in the country, but many are going bankrupt due to limited business opportunities. As of last year, there existed only six that were physically shipping beer to their outlets.

The rumor in the market is that a popular spot called Platinum Microbrewery, which closed shop here recently, moved to China ― to produce there and export back to this country ― yet another testament to the level of difficulty independent small-scale brewers face locally.

The history of microbreweries in Korea borders on ludicrous. In the beginning of 2002, foreseeing the FIFA World Cup and the Asian Games in Busan, the government allowed individuals to set up their own breweries, in what appeared to be an embarrassing admission of Korean beer’s bland taste.

But what the authorities meant by microbrewery was a brewpub, one that produces and sells in the same location. Not many succeeded with the enterprise because they could not distribute to other outlets.

“Foreign pub owners call us from all over, asking how they can get our beers,” said Vroon. “But I tell them: they can’t.”

The Ministry of Strategy and Finance (MOSF) argues that health concerns prevent unpasteurized beer from being distributed nationwide, but that does not explain why having partner pubs is also prohibited.

With the least amount of distribution possible, breweries have little reason to innovate, as they must pay around a million won to be stamped with Korea Food and Drug Administration (KFDA) approval for every new kind of beer.

Calls to the MOSF public relations office were unreturned at the time of reporting.

To take the non-micro route, beer entrepreneurs face the minimum capacity requirement for mashing, boiling and brewing facilities, at 150 tons, requiring billions of won in start-up capital. For microbreweries, the bar stands at five tons.

Beer is the most widely consumed alcoholic beverage in the world, and it is the same for Korea: in the first eight months of the year 2010, about 124 million tons were consumed in the country, from which the calendar year figure could roughly be calculated as about 165 million tons, towering over all other alcoholic beverages.

Mass-produced beer in the country, though taxed most heavily out of all alcoholic beverages, benefit from some of the most lenient quality standards.

At a typical Hite factory tour in Hongcheon, Gangwon Province, guides wearing a portable microphone only stress the pristine quality of the region’s water ― and nothing else. And there is a reason why. Barley malt, a key ingredient, does not even have to be used, the firm preferring to use cheap starch alternatives like rice, corn or potato instead. When brewers actually use malt, it takes up only 10 percent of the total weight of ingredients.

Hops, a fundamental crop used as an irreplaceable agent for flavoring and as a stabilizer, are fully imported. This, Vroon thinks, is a win-win for Korean farmers and consumers, currently decrying the opening of the domestic market to global agricultural powerhouses.

“Hops are the real expenses in beer. The industry is growing, and so is the global consumption… This would be a great place to grow hops.”