South Korea: Beer market duopoly leaves few opportunity for taste variety

South Korea’s cuisine is one of the world’s most exciting. However, when it comes to beer, the nation has a surprisingly small variety of tastes to offer, The Economist reported on November, 24.

Local brews such as Cass and Hite go down easily enough. Yet they leave little impression on the palate. Some South Korean beers skimp on barley malt, using the likes of rice in its place. Others are full of corn. And despite the recent creation of Hite Dry Finish—a step in the right direction—brewing remains just about the only useful activity at which North Korea beats the South. The North’s Taedonggang Beer, made with equipment imported from Britain, tastes surprisingly good.

The problem for South Korean boozers is that their national market is a cramped duopoly. Hite-Jinro and Oriental Brewery (OB) have nearly 100% of it. Their beers are hard to tell apart; their prices, even harder.

Until 2011, regulations required all brewers to have enough capacity to brew well over 1 mln litres at a time. This in effect kept all but Hite and OB from bringing foamy goodness to the masses. Smaller producers were allowed to sell their beer only on their own premises.

Today, anyone with the capacity to produce 120,000 litres can apply for a wholesale licence. This is still a lot, but there are short cuts. One brewer says the loose wording of the law means some have bought gigantic but shoddy old vats to make up the difference, and simply left them unused.

However, only a handful of small brewers have risen to the challenge. One of them, Craftworks Brewing Company, is owned by a Canadian, Dan Vroon. Mr Vroon’s pub in Seoul is packed every night. But several hurdles still make it hard for him to sell his pilsners, stouts and pale ales more widely, he says.

Brewers are taxed heavily if they deliver their own beer. Craftworks’ unpasteurised brews must be kept chilled from the vat to the tap, which creates a problem. Cold distribution is a tiny, pricey niche. This is because the big boys don’t use it: their beers have their tasty, bureaucrat-bothering bacteria removed at the brewery. They can thus be delivered warm and then chilled in the pub.

Punitive tariffs prevent brewing experimentation. The Korean taxman treats malt, hops and yeast as beer ingredients, which are subject to low import duties. Anything else you might put in the brew is deemed an agricultural import, and thus a threat to the nation’s farmers. “Speciality grains like oats aren’t on the approved list, so we must pay more than 500% if we want to use them,” says Park Chul, another frustrated brewer.

Those who do not qualify for a wholesale licence have it even worse. Though they sell only through their own pubs, government inspectors place meters on their vats. These can become contaminated, causing costly stoppages. “It’s enough to drive you to drink,” sighs Mr Vroon.

23 November, 2012