Hitejinro to cut factory price of soju by 10.6% in January

Bottles of Chamisul soju are at a large discount store chain outlet in Seoul, Nov. 8. Yonhap

Hitejinro, Korea's leading beverage company, said Monday it will cut the factory price of its soju products by 10.6 percent in January, helped by the government's tax benefits.

Hitejinro will deliver its soju products, Chamisul and Jinro, at 1,115 won ($0.86) per bottle to its wholesale clients starting Jan. 1, down from the current 1,247 won, the company said in a statement.

"The price cut comes as tax authorities have decided to give a tax discount of 22 percent of the company's soju manufacturing costs to offer a level playing field in competition with multinational companies in the domestic market," a company spokesperson said.

The government has collected taxes from multinational firms only from their import costs of beverage products, while imposing taxes on domestic players on their manufacturing and earnings, she said.

Last month, Hitejinro raised its soju and beer prices by about 7 percent to reflect higher raw material and manufacturing costs. Soju is a distilled liquor made of ethyl alcohol and water, with the addition of sweeteners.

Hitejinro produces 100 percent of its soju products at its domestic plants. It earns 10 percent of its total sales from exports of soju; "makgeolli," Korean rice wine; and other liquors. Soju accounts for 80 percent of the exports.

lts soju products are sold under its flagship Jinro brand overseas, while two soju brands, Chamisul and Jinro, are sold domestically. Its beer is available globally under the brands Hite and Terra.

Lotte Chilsung Beverage, the country's second-biggest soju maker, said it will also reflect the discounted taxes in its soju product prices.

"We haven't raised soju product prices despite higher costs. So we are planning to raise soju prices as soon as this week before reflecting the tax discounts in product prices," a Lotte Chilsung spokesperson said.

Lotte Chilsung, a unit of the Korean retail giant Lotte Group, sells Chum Churum and Saero soju products and other beverages in global markets.

Hitejinro accounts for 65 percent of the 3.5 trillion-won domestic soju market, with its smaller rival Lotte Chilsung claiming 20 percent and others holding the remainder. (Yonhap)