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Changes to Korea’s beer market dilute lager’s dominance

July 29,2019
With the summer, the beer season has arrived.

And lager and ale are waging a fierce battle to win over beer drinkers.

Between July and August, Koreans drink roughly 30 percent of all the beer they will consume in that calendar year.

Last year, 21 percent of Korea’s beer imports came in July and August. Some 28 percent of its beer exports were shipped in the same months.

Korea’s exports of beer exceeded 200,000 tons for the first time last year. Beer accounts for more than two-thirds of Korea’s total exports of alcohol at 297,345 tons.

Since 2010, beer has been Korea’s biggest alcoholic beverage export in volume terms, outperforming soju.

Lager is by far the most popular category, including beer made in Korea, imported to Korea and exported from Korea.

But statistics aside, many beer drinkers have moved on. Some say lagers are so bland they’re only good for “bomb shots,” the Korean soju-and-beer boilermaker.

As lager loses aficionados, craft beers pick them up.

“Lager tastes like horse piss,” said Ra Kyung-mo, who was quoted as he unwound at a craft beer joint in Gyeonggi.

Budweiser and Miller, some of the best-selling beers in the world, are American lagers, similar to Korea’s Cass.

People who like lager say they simply like something cold, fizzy and alcoholic.

“Is ale even a beer?” asked Yang Hee-chun, a 46 year-old. “It tastes like bitter medicine.”

Some industry experts say one of the reasons lager is pilloried is because of its drab uniformity.

“Conglomerates used to produce ale beer in the past, but it didn’t sell much, and they chose to focus on lager to boost sales,” said Hwang Ji-hye, head of a beer-related content developer. “As consumers’ preferences began to diversify, people began to take lager lightly” - and to start putting it down.

Consumers in Korea are experimenting more with beers such as ales.

According to the Korea Craft Brewers Association, the craft beer market in Korea was estimated at around 63.3 billion won ($53.7 million) last year.

Although this is only 1.3 percent of the overall beer market in Korea, it has been growing an average of 40 percent a year over the last three years.

Industry analysts estimate the craft beer market in Korea will grow to 150 billion won by 2023.

In 2014 there were only 54 small beer manufacturers. Last year, that number nearly doubled to 109. This year the market expects the number of small manufacturers to exceed 120.

Changing lifestyles and government tax reform on alcohol could further speed up the rate at which people are switching from lager.

One of the biggest transformations is in the Korean drinking culture.

Dinners with coworkers and bosses are becoming less frequent.

As a result, fewer people are guzzling down the time-honored mixture of soju and beer known in Korea as somaek.

Additionally, younger people are trying to balance work and personal life. They enjoy languishing over a bottle or two instead of spending countless hours chugging Cass or Hite.

That’s one of the reasons Daily Beer, a craft beer franchise founded in 2014, now has more than 200 branches across the country.

Sales of ale and wheat beer last year at Daily Beer outlets exceeded 50 billion won.

On July 16, LG Electronics released LG Home Brew, a home beer brewing machine. By using the machine, people can create five types of beers including ale, wheat beer and Pilsner at home. It costs a whopping 4 million won.

Changes in the tax law on alcohol are expected to boost the popularity of ale.

Starting next year, the government is taxing beer and makgeoli, Korean rice wine, on volume and the alcohol content rather than on price.

Under the current system, a 72 percent tax is charged on the factory price. Under the new system, a flat tax rate of 830.3 won per liter is applied.

This change is expected to benefit ale beers by lowering the retail price.

Although it will still be more expensive than lager, the cheaper price should attract new fans.

“If you’re a beer aficionado, you should respect the distinctive taste and characteristics of different beers,” said Kim Jin-man, an official with the Korea Craft Brewers Association.

BY KIM CHANG-WOO, KIM HONG-JUN [kim.heyu@joongang.co.kr]


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