South Korean craft breweries grow by 250% since 2019 following industry deregulation

The South Korean government’s relaxation of production and distribution regulations for small- to medium-sized beer producers, has helped the number of local beer manufacturers to increase by 2.5 times and the number of beer brands to increase by four times over the past five years, according to a report in ChosunBiz, citing the recent findings published by the country’s Fair Trade Commission (FTC).

The FTC analysis assessed the effects observed in the beer market due to the government’s recent regulatory improvements. Moreover, not only has there been an expansion of consumer choices for beer and breweries, but prices have dropped by about KRW825 (USD0.575) per 500ml can, according to the Commission’s estimates.

Regulatory improvements to the domestic beer market began in 2016. Since then, facilities for fermentation and storage that limited the production volume of small beer producers have been relaxed. Small producers were also allowed to sell in retail stores such as convenience stores and large supermarkets, expanding their distribution channels. The liquor tax system was also changed from an ad valorem tax based on the ex-factory price to a specific tax based on production volume. The command system for liquor pricing by the National Tax Service head was also abolished.

The FTC’s analysis has found that from 2019 to 2023, the number of domestic beer manufacturers increased from 33 to 81, more than doubling, while the market share of craft beer (based on sales) rose from 0.2% in 2019 to 2.8% in 2022, before decreasing to 1.7% the following year. The total number of beer brands increased from 81 to 318, according to the ChosunBiz report.

Competition among craft breweries has also intensified following the easing of regulation. “The reduction in canned beer prices has become possible due to increased competition among suppliers”, says the FTC analysis.