Spirits lifted as gov't permits cut-price alcohol in restaurants, supermarkets

Industry

Published: 02 Aug. 2023, 17:18 Updated: 02 Aug. 2023, 17:19

Spirits lifted as gov't permits cut-price alcohol in restaurants, supermarkets

A customer passes by the alcohol section at a large supermarket in downtown Seoul on Tuesday. The government enabled discounts and sales of alcohol below the purchase cost as a measure to boost domestic consumption, allowing various retail stores, including supermarkets, convenience stores, restaurants and bars, to offer discounted prices on alcoholic beverages. [NEWS1]

Alcohol prices are expected to fall at restaurants and supermarkets after government approval to sell alcohol at lower rates in a move designed to stabilize soaring living costs.

The National Tax Service recently issued a notice to the alcohol industry association, permitting retailers to offer discounted prices. The new guideline allows retailers "to sell alcohol to consumers below the purchase price." This move aims to stabilize soaring alcohol prices and boost benefits for consumers.

Currently, selling alcohol below the supply price is prohibited to maintain the market order. For instance, if a restaurant buys beer at 2,000 won ($1.54) per bottle, they must sell it at a higher price. This move aims to prevent deceptive practices where sellers offer discounts and later seek losses from suppliers.

The recent interpretation by the National Tax Service allows for more flexibility, enabling discounted alcohol sales without disrupting the market order, which covers aspects such as dumping sales.

Restaurants and retail stores now have the autonomy to set alcohol prices, fostering alcohol price competition among them. This decision aligns with the Ministry of Economy and Finance's plan, announced in March, to promote domestic consumption and expand perceptible discounts in the alcohol market.

Establishments are expected to make efforts to offer competitive prices for alcoholic beverages. For example, restaurants may strategically sell beer received at 2,000 won for the same price or even lower to attract customers. Alcohol prices at restaurants, currently ranging from 5,000 to 6,000 won, may revert to levels previously witnessed. Large supermarkets with extensive distribution networks may also use discounted alcohol to attract more customers.

However, some skeptics argue that the actual impact of reducing alcohol prices might be limited. Many restaurants already sell alcohol with significant profit margins above the purchase cost. Hence, even with the new allowance for discounts, an immediate reduction in alcohol prices might not be easily achievable.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]