Liquor maker faces loss of license

Changes in the distribution of hard liquor at the wholesale level are attracting the attention of industry watchers. Liquor companies have been increasing their output, and Diageo is at the center of the movement.
“Since the start of the year, Diageo’s salespeople have urged us to stock up on their products, like Windsor, in our warehouses,” said an employee at the buying office of Shimin Juryu, a liquor wholesaler in Seocho District, southern Seoul. “Diageo is even making it easier for wholesalers to buy their products, like giving them out on credit.”
Statistics reflect the change. In January Diageo cornered 31.7 percent of the market based on the amount shipped. That rose to 34.8, 35.9 and 36.9 percent between the months of February and April.
Industry watchers say that Diageo is getting ready for a suspension of its liquor license by tax authorities. The company has been under investigation by the National Tax Service since the end of last year, accused of tax evasion. “The government tax agency has almost finalized the suspension, but considering the impact to the market, it seems to be reconsidering,” said an executive at a wholesale company who commented on condition of anonymity.
He said it is most likely that Diageo would lose its license for three months and a subsidiary of the company would get a new license. Another theory is that the government may cancel only the manufacturing license, not the import license, to save face and allow Diageo to continue importing. Currently most Diageo products are foreign made.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]