South Korean craft brewers struggle to get distribution channels due to the online sales ban
South Korean brewers are complaining that the current ban on online beer and soju sales is reducing their competitiveness and is contributing to the rise in sales of imported products, according to a recent The Korea Times report.
Supporters of the ban argue that public health and potential ethical issues relating to alcohol purchase outweigh market concerns, but local companies maintain that the ban does not apply to imported liquors which become available online once buyers have verified that they are at least 19 years old, Korea’s legal drinking age. Moreover, liquors registered as traditional products in Korea, such as ‘makgeolli’ (rice wine) and Andong soju, are exempt from the online sales ban, allowing them to be delivered directly to consumers’ doorsteps.
In contrast, craft beer products are only accessible via offline stores and restaurants. Local producers argue that lifting the ban would expand their distribution channels and improve market competitiveness. “If online sales were allowed, it would mean more space for us to distribute and sell our products, which is certainly good for us,” an industry official said. “That would allow us to further diversify our business strategies.”
The situation is particularly damaging to smaller craft breweries. Compared to the major companies such as Oriental Brewery, HiteJinro and Lotte Chilsung Beverage, they have much smaller distribution channel options, being limited to local beer pubs and limited shelf space at convenience stores or supermarkets. Even the most popular craft breweries in South Korea, such as Jeju Beer Company, struggle against bigger rivals in this regard.
The corporate tax bureau under the National Tax Service (NTS), which handles the country’s liquor-related policies, said the government introduced the online liquor sale ban in accordance with the country’s Juvenile Protection Act. The authority cites a clause under the law that states the sale of liquors in the country should be transacted in person to verify buyers’ identities and age. The authority added that it is now partially allowing online sales of liquors via “smart order” arrangements through which consumers order liquors online and claim them at a designated offline pickup point.
