Diageo Korea Stripped of Liquor Import License
By Ryu Jin
Staff Reporter
Diageo Korea, the South Korean unit of the world's largest alcoholic drinks company Diageo Plc., was deprived of its license to import liquors, including its famous whisky brands such as Windsor, Dimple and Johnnie Walker, at least until the end of this year.
Diageo Korea confirmed Tuesday that it has been informed of the revocation of the license by the National Tax Service (NTS), which also imposed a fine of 290 million won ($313,000) on the company on charges of illicit business practices such as disguised transactions.
According to the tax authority, the company can only apply for the license again six months after the revocation. A Diageo Korea official said there would be a one-month suspension before the withdrawal, which means it may have to stop business for the rest of the year.
But the revocation will not likely have so much impact on the current market share since the company has been allegedly taking many more goods out of its warehouses in recent months, a calculated move in preparation for the license withdrawal.
Diageo Korea held a 34.7-percent market share in the first four months of this year, according to industry sources. Jinro Ballantines, which deals with such famous brands as Ballantines and Imperial, ranks first with 35.5 percent.
``We heard that Diageo Korea has been taking much more whiskies from its storehouses in the past several months,'' one of the sources said. ``It also signed a contract with a third company, Hanchang International, for whisky distribution in preparation for the revocation.''
But the license withdrawal would deal a painful blow not only to the South Korean company but to its headquarters in Britain. The British government even expressed concern about the investigation as it went on for months.
``The company headquarters in Britain would continue to send products but the South Korean unit, Diageo Korea, would have no choice but to face a sharp decrease in sales,'' the source said on condition of anonymity.
Diageo Korea has had both liquor production and distribution licenses but it focused on imports and sales.
``It's regrettable that the tax authorities have found some of our employees involved in the case,'' a Diageo Korea official said. ``We will take steps to re-acquire the license once we are allowed to apply again.''