Oriental Brewery will delay price hike again

Apparently succumbing to pressure from the government, Oriental Brewery yesterday withdrew its decision to raise its factory price of beer by 7.48 percent, just three days after it made such an announcement to the public.

The nation’s second-largest beer maker on Thursday said it would raise prices across its entire beer line citing rising costs of raw materials, such as malt and hops, as well as other costs related to logistics and production.

The company was scheduled to raise the factory prices of its beers yesterday, but it suddenly jettisoned the plan.

“We originally planned to raise the factory prices of beer by 7.48 percent from today, reflecting the double-digit rise in raw material prices for producing beer,” Oriental Brewery said in a statement released yesterday.

“But to stabilize consumer prices in tandem with the government’s policies to tame inflation, we decided to put the plan on hold for the time being.”

If the hike happened as originally planned, it would have come two years after the company raised its beer prices in October 2009.

This is not the first time that Oriental Brewery has met with fierce opposition from the tax agency.

The maker of Cass, OB Beer, Cafri, Budweiser and Hoegaarden originally planned to issue a 9.6 percent hike last month.

But it reversed its decision in the face of opposition from the National Tax Service.

This time, the company suggested a lower price increase and sought approval from the tax agency on Friday, which is in charge of administrating alcohol prices.

Industry sources said that the brewery changed its mind after its executives had lunch with NTS officials at a hotel in Seoul at the latter’s request on Saturday.

During their meeting, the tax officials asked Oriental Brewery to withdraw its decision and comply with the government’s efforts to tame consumer inflation.

They expressed concern that the company’s beer price hike would spur similar hikes for other liquors such as whiskey and soju, which are heavily consumed at year-end gatherings.

According to Statistics Korea, the Consumer Price Index rose 4.2 percent in November from a year earlier.

“Under the current regulation, the NTS can formally order [Oriental Brewery] to withdraw the hike,” an industry official was quoted as saying by the JoongAng Ilbo.

“But because the related administrative procedures take some time, NTS officials met with the company executives and asked them to cancel the move.”

Oriental Brewery said it will not raise its beer prices this year for the sake of consumers pinched by inflation, but that such plans will probably be carried out early next year.

By Kim Mi-ju [mijukim@joongang.co.kr]