E-Malt.com News article: South Korea: Craft beer does not even appear in statistics yet, but interest in it is phenomenal

In a tangle of nondescript alleyways in central Seoul’s Noksapyeong district, a handful of Korean and foreign entrepreneurs are pioneering a new market for homegrown craft beers, The Wall Street Journal reported on September 18.

Hidden opposite a side exit to the U.S. Army’s giant Yongsan garrison is trend-setting brewpub Craftworks Brewing Co. Defying its shabby surroundings, Craftworks’ interior is upscale. The bar’s eight taps pour artisanal ales, wheat beers, lagers and porters — each branded with a Korean name.

Canadian Dan Vroon opened Craftworks with six fellow expats in 2010. The concept: Sell Korean-made North American-style craft beers.

The go-to location for foreign bars in Seoul is Itaewon, the city’s expatriate ghetto a mile away, but Mr. Vroon decided on Noksapyeong for his watering hole. Several small foreign-run bars and restaurants already existed there, spillover from Itaewon, which has gentrified in recent years.

“Rents were overpriced in Itaewon and there was no space,” Mr. Vroon says.

While imported beer sales in South Korea have edged up in recent years, the local market is dominated by a duopoly of giant brewers, Oriental Brewery Co. and Hite-Jinro Co., whose output is exclusively mild, U.S.-style lagers. Mr. Vroon was convinced demand existed among expatriates and Koreans who’d travelled overseas for tastier tipples.

Craftworks partnered with Park Chul, a Korean who had studied brewing in Germany, to supply product. Mr. Vroon and his business partners acted as consultants for Mr. Park’s Ka-Brew Korea brewery — in the town of Gapyeong, about a 90-minute drive northeast of Seoul — on recipes. Craftworks took off.

Noksapyeong’s second craft pub, Magpie Brewing Co., opened in 2012, down another dingy alley just steps from Craftworks. “It was a hobby space that turned into a business,” says co-owner Stephanie Needham, a Korean-American who began by home-brewing. Like Craftworks, Magpie brews its two beers at Ka-Brew. (Ka-Brew also manufactures its own beer.)

Mr. Vroon was originally unimpressed. “I thought Magpie were a little cheeky,” he says. “They worked off our model, for a buck less.” Today, his view has evolved: “It’s raising the profile of the area.”

That profile exploded in November 2012 when the Economist ran a story excoriating Korea’s brewing duopoly, regulatory regime and watery beers, while praising Noksapyeong’s scene. Rather than igniting a nationalistic storm, the piece prompted local media to ask hard questions.

“The Economist story was a catalyst,” says Chun Su-jin, a reporter for the Joongang Ilbo, Korea’s No. 2 newspaper. “It got people talking, and the Joongang ran a series on why Korean beer is so bland.”

As reporters descended on Noksapyeong, Daniel Tudor, who wrote the Economist article, abandoned journalism and with Korean partners launched Noksapyeong’s third craft-beer pub, the Booth, which opened next to Magpie in May. (It, too, sources from Ka-Brew.)

“We wanted to come to this area, to create a cluster,” says Yang Sung-hoo, the Booth’s lead investor. Now, Mr. Vroon’s business card proclaims Noksapyeong as “Korea Craft Beer Valley.”

Mr. Tudor’s article was well timed. Since Korea’s presidential election in December, “economic democratization” — the recalibration of the country’s large conglomerates, known as chaebols, to help level the playing field for small firms — has become a national catchphrase. “I call this beer democratization,” Mr. Tudor says.

“When baby boomers in their 50s lose their jobs, they have big severance packages and [some] tend to open beer places or coffee shops,” says Park Mi-hyang, a reporter for the liberal newspaper, the Hankyoreh, who recently visited Noksapyeong for a story. “So there is potential for small beer businesses.”

Critics say current regulations for the minimum size of a brewery are set too high and that tax authorities’ practice of adding flow meters (for taxation purposes) to taps of in-house beer could cause infections because the meters can’t be removed for cleaning. Craft beer output is so small that it doesn’t appear in statistics: According to a report from the Korea Alcohol & Liquor Industry Association in February, Oriental Brewery sold 51% of locally made beer, while Hite sold 49%.

Still, Noksapyeong’s pubs, bursting with locals as well as expatriates — many drinkers spill over into the alleys — are expanding.

Craftworks already has opened a second location outside Seoul and will boast three further outlets by the end of the year. The Booth has opened a second shop in the trendy Gangnam district, near Samsung Electronics Co.’s headquarters. Ka-Brew beers sell in 130 bars and restaurants around the country.

“Interest is phenomenal,” says Magpie’s Ms. Needham.

Noksapyeong may even have sparked a national beer debate. Brewing-related legislative bills are pending for this month’s parliamentary session, potentially easing entry barriers for entrepreneurial breweries and offering tax breaks.

The major beer makers are taking notice. Earlier this month, Hite released a new beer — Queen’s Ale, Korea’s first mass-produced ale — for test marketing.


20 September, 2013