OB increasing beer prices 6%

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OB increasing beer prices 6%

Oriental Brewery, Korea’s leading beer manufacturer, said Friday that it will raise prices of its products an average of 6 percent starting next month.

This is the first time the company has raised prices since August 2012.

A 500-milliliter bottle of its flagship Cass will cost 1,147 won ($1) per unit, a 65.01 won, or 6 percent hike from its current price of 1,081.99 won.

The increases will applied to 10 products including those from the Cass and Premier OB lines. Foreign-brand beers manufactured by OB in Korea, such as Hoegaarden and Budweiser, were excluded from the price hikes.

“During the last few years, there were multiple factors that suggested a two-digit price hike this year, but we’ve decided to keep the increase rate low particularly on our most popular product lines,” said an OB spokesman.

In June, the commission that manufacturers pay for returned empty beer bottles was raised from 19 to 31 won, a 63 percent spike. In 2014, the government removed tax reductions for imported malt, beer’s main ingredient. This dealt a blow to manufacturers who rely heavily on malt imports for production.

The move by OB, which has a market share of about 60 percent, may be significant.

Price hikes from one major company in the market frequently prompt competitors to make similar moves. In 2012, Hite Jinro pulled the trigger that ultimately led to a price increase in domestic beers by an average 5 percent.

Competitors Jinro Hite and Lotte Liquor were careful to speak of any price increases.

“We became aware of OB’s hike this morning nor did we have similar plans to do so, therefore the company will need to go through more internal discussions to decide whether we’ll follow the uplift or not,” said a spokesman for Jinro Hite.

For Lotte Liquor who entered the industry in 2014 with its beer brand Kloud, this may be their beer price hike. “The company was aware of the factors that drove manufacturing prices higher and we have discussed on the issue in the past, but we do not have definite plans to raise prices at the moment,” said a spokesman.

Prices of soju were hiked in December. This prompted speculations throughout the year that the beer industry might be facing a similar move.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]
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