Baesangmyun Brewery faces probe
Baesangmyun Brewery CEO Bae Young-ho speaks to reporters after paying a visit to the memorial altar of an owner of one of the firm’s wholesale stores, surnamed Lee, in Bucheon, Gyeonggi Province, Thursday. Lee was found dead inside its warehouse, Tuesday, with a note saying he was under pressure from the leading traditional liquor maker, which continuously forced him to buy more products than he needed. / Yonhap
Wholesaler kills himself for firm’s sale pressure
By Kim Tae-jong
Baesangmyun Brewery, a leading maker of traditional alcoholic beverages, is under fire for allegedly forcing wholesalers to buy more products than they needed and products close to their expiry date.
The Fair Trade Commission (FTC) plans to soon launch an investigation into the business practices of the liquor maker.
The liquor industry is concerned that the allegations will have a negative impact on other liquor makers because so-called “enforced sales orders” are believed to be a well-established convention.
The allegation regarding Baesangmyun Brewery was made public after a wholesaler was found dead at his warehouse in Incheon, Tuesday. A note at the scene said he could no longer endure continuous demands for payment of his debts, which he took out due to enforced sales orders from the firm.
As criticism and suspicion grew, the company posted a letter of apology on its website the day after the suspected suicide, saying that it felt sorry for the death of the wholesaler and admitted responsibility. It added that it will support the bereaved family.
Baesangmyun is the second firm to be criticized this year for unfair business practices, with both owned by siblings.
Earlier this year, Kooksoondang Brewery was fined 100 million won by the FTC for unfair contracts with its wholesalers. The firm was found to have enforced unfair conditions in 2009 and said that it could break contracts if wholesalers failed to meet sales quotas.
Baesangmyun Brewery and Kooksoondang Brewery are run by Bae Young-ho and Bae Jung-ho, respectively, the first and third sons of the founder of Kooksoondang Brewery, Bae Sang-myun.
The two firms are the top makers of traditional alcoholic beverages. Kooksoondang’s Baeksejoo and Baesangmyun’s Sansachoon are some of their popular products.
Industry insiders say liquor companies tend to force wholesalers to buy more products than needed in order to increase their sales volume. Under the current liquor law, liquor makers are not allowed to directly sell their products to customers. Liquor sales are only allowed to licensed wholesalers or retailers.
Baesangmyun Brewery seems concerned the criticism could cause a huge drop in sales, no doubt because of the massive boycotts that recently affected Namyang Dairy Products.
Namyang Dairy Products saw a huge drop in sales and stock value in the past week, after its alleged unfair business practices angered consumers and led to a series of boycotts.
These occurred after its wholesalers claimed that they were forced to buy more products than needed, and those approaching expiry.
The firm was also severely criticized for poor business ethics, after an audio file of one of its officials verbally abusing a wholesaler went viral on the Internet.
In the conversation between the Namyang official and the wholesaler, the former in his 30s shouted and berated the latter in his 50s, threatening him in order to have him buy more products.