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Should government take issue with imported beer prices being too low?

November 20, 2015

imported beerBy Yoon Ja-young

Can the government take issue with a merchant for selling imported beer too cheap?

The Ministry of Strategy and Finance said it won’t, denying some media reports that it might ban imported beers from being sold too cheap. However, controversy is continuing in the beer market where imported brands are increasing their stake every year.

It started at a meeting presided over by vice finance minister Joo Hyung-hwan in October, when local beer brewers reportedly complained that imported beers are offered at huge discounts.

When consumers go to shops, they often find promotions that sell diverse imported beers at discounted prices — for example, a bundle of four cans sold for 10,000 won (about $8.66).

Local beer companies say these promotions are “misleading” consumers and distorting the market.

“Domestic beers have their brewery prices. The law bans selling beer at prices lower than these,” said a spokeswoman for a leading domestic beer company.

“In the case of imported beers, however, they don’t have brewery prices. Importers just put a high price tag on them in the beginning, and then pretend as if they are giving a huge discount,” she said. As imported beers aren’t subject to price regulations as domestic beers are, they can sell their beers at any price they want.

She said local beer companies had suggested at the meeting that beer importers should stop misleading consumers by swelling their price on the tag to pretend as if they are selling them cheaply.

Some local media reported that the government is considering measures to stop importers from giving these huge discounts.

However, the news has had a backlash. Consumers complained on Internet sites and social networking services that the government is trying to deprive consumers of their rights to enjoy imported beers at cheaper prices.

The finance ministry thus held a media briefing to explain.

Lim Jae-hyeon, the head of the ministry’s property and consumption tax bureau, said Thursday that the government won’t ban beer importers from giving discounts.

“Their selling beer at discounted prices isn’t something that the government can restrict. We concluded that there was no legal problem.”

Local brewers, however, say that beer importers get more margin than local beers. The imported beer is also subject to lower taxes.

While a can of local beer is levied around 395 won in tax on average, most beer importers pay less than 300 won per can.

The imported beer market is also growing steeply. Imported beers now take around 40 percent of beer sales at retail outlets, compared to below 10 percent three or four years ago.

Due to the potential for huge profits, many are jumping into the import business. There are known to be 500 brands of foreign beers imported into Korea, not only by small trading companies and retail outlets but also by the local beer companies.