South Korea: Oriental Brewery decides to hike prices of its beers by an average 6%

Oriental Brewery (OB) has decided to hike the prices of Cass and its other beer brands by an average 6 percent effective Nov. 1, placing a heavier financial burden on low-income households, the Korea Times reported on October 28.

Hite-Jinro, Lotte Chilsung and other beer makers are expected to follow suit although company officials have remained mum about when and by how much they would raise prices.

OB, the country's largest brewer owned by Anheuser-Busch InBev (AB InBev), said on October 28 that it will increase the factory price of a 500-milliliter bottle of its flagship Cass beer by 6 percent to 1,147 won ($1) from the current 1,082 won.

This is the first time OB or other brewers have hiked prices since August 2012 when they charged nearly 6 percent more. Over the past year, beer producers have been seeking to raise prices to cope with higher costs of labor, logistics and raw materials. But no company was willing to make the first move.

"We had no choice but to hike the prices of our products by 6 percent because of rising costs, associated with the recycling of used bottles," an OB official said. "Not to mention the soaring prices of raw materials and logistics, employee wages have also gone up sharply over the years. We tried to increase the price by as little as we could for our customers."

Attention is now shifting to Hite-Jinro and Lotte Chilsung, which produces Kloud brand beer, as to whether they will follow OB's move.

"Nothing has been decided yet," a Hite-Jinro official said. "The issue of price hikes has been around for a year, but still we haven't decided what to do. We will continue to consider carefully if and when we would raise beer prices."

Lotte Chilsung also echoed Hite-Jinro's views, saying that it will make an announcement when it reaches a decision.

"We are still considering if and when to increase beer prices," a company official said. "It is too early to say at the moment."

Last December, Hite-Jinro raised the prices of soju, and other soju makers followed suit shortly after.

28 October, 2016