South Korea: Oriental Brewery criticized for frequent changes in beer prices

South Korea's largest beer-maker Oriental Brewery (OB) has come under criticism for raising and lowering factory prices of its beer products frequently over the past three years, The Korea Times reported.

Its price moves are in compliance with a commercial law revised in 2019 allowing brewers to freely set prices of their alcohol beverages.

Under the revised law, OB sought to gain price competency over its biggest rival HiteJinro that has been expanding its market share rapidly with its flagship beer Terra, according to industry sources.

But the repeated changes in its beer prices have caused confusion with wholesalers and retailers and made it harder for them to manage their stocks. They pointed out that this also caused problems for customers.

OB argued it has adjusted the prices in line with the changing environment of the beer market.

"Other companies are also adjusting their beer prices too, but it looks like we are doing it more often because we have more beer products than them," an OB official said.

For 500-milliliter bottles of Cass Fresh beer, OB has raised and reduced the price four times between April and October 2019. For Cass Light, the brewer cut the prices of 500-milliliter and 330-milliliter bottles one time in August 2020. In April this year, OB once again raised the prices for 300-milliliter bottles of Cass Fresh and Cass Light.

This is seen as OB's countermeasure against HiteJinro, which launched the megahit Terra beer that pushed its market share instantly to over 40 percent. OB's market share had once marked over 60 percent but it has come down to below 50 percent lately.

Even when the factory price for beer is reduced, there is a limit to customer benefits. Restaurants and bars will not change their beer prices anyway. It takes a long time and procedure for beers to arrive from the factory to restaurants and it is hard to change the store price according to changes at the factory.

14 July, 2021