Beers Up for Markup Amid Growing Sales
By Kim Hyun-cheol
Staff Reporter
To many local froth-blowers, this summer is likely to be cruel with a price hike from breweries in the middle of the biggest beer-selling season of the year.
Hite brewery, the nation's largest, has raised its beer prices by 5.6 percent, which means a half liter bottle will be sold for 70-100 won (7-10 cents) more than before at stores.
Breweries said the markup was inevitable because international raw materials and oil prices have risen substantially of late.
``Malt prices were set around $499 per ton last year, but are now at $870,'' said You Byoung-jong, a spokesman at Hite Brewery.
``And the increase is smaller than initially suggested in internal discussions. There were opinions the rise should be up to 9 percent.''
Critics say the sudden hike was intentionally set for the boom season for beer, but Hite denied this. Previously, the company put up prices in May last year, just before the summer season began.
``We have been regularly raising our product prices on an annual basis, usually at the beginning of the year. It's just that the time was delayed last year and this year,'' You said.
The official also said an additional raise is not likely within the year even though raw material prices continue to rise on the global market.
The decision is likely to set off a chain reaction in the business. Following Hite, Oriental Brewery (OB), the second biggest in South Korea, is purportedly planning a price increase as well.
``It is certain there should be a raise. Details on when and how much haven't been confirmed yet, but will be set soon according to consumer prices in general,'' OB's PR manager Kim Ki-hwa said.
This month is seeing a huge increase in beer sales and a fall in those of soju, as a heat wave has hit the country earlier.
Beer sales at Homeplus jumped 24 percent year-on-year in the first two weeks of July, while the figures showed virtually no change in June.
E-Mart, the nation's biggest discount store, saw sales remain static in the first week of July but then a surge of 12.5 percent in the second.
Soju distillers, in contrast, are not enjoying much success despite their ambitious promotions including the launch of seasonal products.
Sales at E-Mart rose 4 percent in the first week of July but saw a 1.8 percent fall the following week.
Chamiseul Fresh Summer, a new seasonal product launched in May by the biggest local distiller Jinro, has sold 2.8 million bottles this month, a little less than the same period last month.