'Beer market in need of competition'

By Yoon Ja-young

Amid complaints among beer lovers on Korea’s boring beer market, experts advised the government to lift market regulations to encourage more players to jump in, for better quality beer.

A research team at the Seoul Venture University presented its analysis on Korea’s beer market, at the public hearing held Tuesday. The report was prepared at the request of the Fair Trade Commission (FTC).

The report noted that the country’s beer market, which is dominated by three major players, is lacking in competition.

Beer is the most heavily consumed alcohol in Korea, taking 49 percent of the alcohol market in 2015. The market has been dominated by the top two or three players, Oriental Brewery (OB), HiteJinro and Lotte Chilsung. Imported beers, coming from 87 countries, are raising market share through aggressive promotion. They took 8.4 percent of the market in 2015, which compares to 2.8 percent five years ago.

Even though the government started issuing licenses for small breweries in 2002, they take only 0.1 and 0.2 percent of the market and the number of businesses have been declining since 2005. It contrasts with developed overseas markets, where craft beer is expanding its stake while the total beer market has been stagnant. “The United States is seeing the small brewery market grow on average 10 percent annually, and craft beer takes 45 percent of the total market in Germany,” the report notes.

It pointed out that regulations are hindering small players, and the lack of competition is behind the dull beer market. For instance, while small manufacturers can produce beers of diverse tastes and flavors, they can’t lower manufacturing cost due to regulation on their facilities. Small beer businesses can supply their beer to pubs and restaurants, but not to retail channels such as retail outlets or supermarkets.

“In line with changing trends among consumers and imported beers coming in diverse types, the local beers also need diversity. If there is regulation that restricts this, it needs to be changed,” the report noted. It added that regulation that restricts price competition also should be scrapped when considering that imported beers are cutting prices through diverse promotion events.