The domestic craft beer market in South Korea has experienced significant growth and diversification, fueled by government efforts to ease regulations and boost competition, according to the Fair Trade Commission (FTC) on Tuesday.
The government’s regulatory changes have fostered a more competitive environment, benefiting small and medium-sized enterprise (SME) breweries. As a result, breweries have introduced a wider variety of products while reducing retail prices. The FTC noted that these improvements marked a stark contrast to 2016, when market conditions were found to hinder SMEs’ ability to compete effectively.
In 2018, the government increased the maximum vat size for SME breweries from 75 kiloliters to 120 kiloliters. This year also saw the FTC permit breweries to sell their products at convenience stores and major retail chains, expanding their reach to a broader customer base.
The following year, the government further expanded distribution options for local breweries, giving them greater flexibility in wholesale and retail channels. In 2020, a shift in the taxation system—moving from an ad valorem tax (based on product value) to a per-unit tax—reduced production costs for local breweries. This change leveled the playing field by decreasing the tax burden on domestic beers, which had previously been higher than those on imported beers.
These regulatory adjustments have led to a surge in the number of local breweries, which grew from 33 in 2019 to 81 in 2023. The market share of domestic craft beer in the overall beer market rose sharply from 0.2 percent in 2019 to 2.8 percent in 2022. During this period, imported beers saw a decline in market share.
The impact was especially evident in convenience stores, where the market share of craft beer cans jumped from 0.18 percent in 2019 to 5.3 percent in 2022. The number of craft beer brands in convenience stores also saw a dramatic increase, rising from 26 in 2019 to 154 in 2023. Additionally, prices for craft beer cans dropped, with prices falling from over 3,700 won ($2.57) per can to 2,765 won.
The FTC concluded that these regulatory changes have not only increased the number of businesses in the market but have also spurred competition, expanded consumer choices, and led to more varied price options, benefiting both producers and consumers alike.
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