E-Malt.com News article: South Korea: Consumers and restaurant owners frustrated with Oriental Brewery’s price hikes

Consumers and restaurant owners are expressing frustration with Oriental Brewery (OB) for the brewer's decision to hike beer prices by 5.3 percent from April 4, the Korea Times reported on March 27.

Beer lovers complain it will be more financially burdensome to have a glass of beer with family or friends as many struggle with soaring housing prices and the tight job market. People running restaurants and other eateries say it will be difficult to charge more, despite higher beer prices, in fear of losing customers amid sluggish domestic consumption.

"Why don't domestic beer companies take measures to upgrade instead of raising the price?" Jeon Hyung-joon, 29, a regular beer consumer, said. "From now on, I'd rather spend more money on imported beers or prestigious or specialty beer brands."

Another beer consumer, who asked not to be named, said "I'm worried OB's shift will lead to a collective price rise. If that happens, I'd have to be rational about selecting a beer from restaurants and bars for financial reasons."

Restaurant owners are also wary about the price hike as they are faced with the situation to increase beer prices in accordance to brewers' moves.

"We'll have to see how the industry reacts, but it seems inevitable for us to increase the beer price to 5,000 won ($4.4) from the current 4,000 won sometime during the first half of this year," a restaurant owner, who runs a restaurant in Samseong-dong, Seoul, said.

"If that happens, I think consumers will shift to other available alcohol products like soju or makgeoli."

On March 26, OB said the prices of its major beer brands, including Cass, Premier OB and Cafri, will go up by an average of 5.3 percent starting April 4. It is the first time for the Korea's largest brewer to adjust price since November 2016.

Under the new policy, the factory price of a 500ml bottle of Cass will rise from 1,147 won to 1,203.22 won, up 4.9 percent.

"The price hike was made in consideration of the overall business conditions, including increased costs associated with the production and supply of our beers," an OB official said. "But we tried to keep increases to a minimum for our customers."

The costs of packaging materials rose 65 percent in two years and aluminum can prices went up 25 percent. Furthermore, the commodity prices of barley rose 31 percent compared to last year.

Other brewers including Hite Jinro and Lotte Liquor are yet to reveal any price changes, but it is highly likely that price hikes by the liquor market leader will trigger other firms in the market to raise their prices.

"We're also facing a rise in production costs, but we don't have any immediate plan to increase the price yet," an official at Hite Jinro said. "In the second quarter, we're going to focus on promoting our new product Terra."

In 2016, Hite Jinro followed OB's price hike in less than two months, increasing the price by an average 6.33 percent.



27 March, 2019