Liquor firms, gov't at odds over price hikes of soju, beer

By Lee Hyo-sik

Hite-Jinro and other liquor companies are at odds with the government over whether to raise the retail prices of soju, distilled liquor and beer, following hikes in bottle deposits.

The companies argue that they have to increase the prices to pay higher deposits to consumers who return empty glass bottles. But the government says the distillers and brewers should keep prices the same as they benefit from a higher recycling rate of bottles.

The Ministry of Environment unveiled the revised recycling promotion bill Thursday, stipulating that the amount of deposits consumers get for returning empty liquor bottles to retailers will go up, a move largely aimed at promoting the reuse of bottles.

According to the revision, which will go into effect on Jan. 21, the deposit on a bottle of soju will increase to 100 won from the current 40 won, and that of beer to 130 won from 50 won. The 60 won hike is the first since 1993.

In addition, the fees that liquor and beer firms pay to retailers for the handling of empty bottles will go up to 36 won from soju’s 16 won and beer’s 19 won.

Citing higher bottle deposits and handling fees, liquor companies say they have to raise retail prices because it costs more to distribute soju and beer.

“The wholesale price of soju will likely increase to 1,097 won from the current 1,002 won, and that of beer to 1,239 won from 1,129 won,” said an official at the Korea Alcohol & Liquor Industry Association (KALIA). “We expect that retail prices of soju and beer will increase by up to 7.6 percent and 4.9 percent, respectively.”

The official said liquor and beer firms have no choice but to hike wholesale prices in January because they will be paying higher bottle deposits to consumers and higher handling charges to retailers.

However, the Ministry of Environment is calling on soju and beer makers to refrain from raising the prices, saying they benefit more from greater bottle recycling, which will reduce their production costs.

“It costs less for companies to collect and recycle bottles than buy new ones,” a ministry official said. “Despite higher deposit and handling fees, they will get to use more recycled bottles, which will help boost their bottom lines.”

However, the KALIA official disagreed with the government, saying that the recycling rate will not likely go up because not many consumers bring empty bottles back to retailers for the deposit.

“Claiming that higher bottle deposits benefit liquor companies is nonsense,” he said. “The majority of consumers still will not return bottles for 100 won each. The amount is insignificant,” he said.

Liquor firms first have to receive approval from the government if they seek to increase the prices of soju and beer. According to the government, soju and beer prices should be managed by the state because the price hikes affect low-income people more severely.