Convenience stores slash soju prices, but restaurants hold firm

Industry

Published: 04 Jan. 2024, 06:00

Convenience stores slash soju prices, but restaurants hold firm

Bottles of soju are displayed at a convenience store in Seoul. Major convenience store chains including CU, GS25, 7-Eleven and Emart24 lowered their prices for the liquor by 200 to 300 won on Tuesday. [NEWS1]

Soju prices are falling at convenience stores and supermarkets — but many restaurants, due to the sector's rising operational costs, do not plan to follow suit.

Major convenience store chains including CU, GS25, 7-Eleven and Emart24 lowered their soju prices by 200 to 300 won on Tuesday.

A 360-milliliter bottle of Hitejinro’s Chamisul Fresh or Chamisul Original now costs 1,900 won ($1.50), down 200 won, or 9.5 percent, from the previous price of 2,100 won. A 640-milliliter bottle now costs 3,300 won, down 300 won, or 8.3 percent, from 3,300 won.

Individual convenience stores sometimes adjust their prices to be lower than those set by headquarters, and some locations are selling soju at 1,800 won per bottle to be price competitive.

The country’s three largest supermarkets — Emart, Lotte Mart and Homeplus — all lowered their soju prices on Monday. Emart lowered the price of a bottle of Chamisul Fresh by 150 won, from 1,480 won to 1,330 won, while Lotte Mart knocked off 140 won, from 1,480 won to 1,340 won, and Homeplus dropped its tag from 1,490 won to 1,350 won.

The price of a bottle of Chamisul Fresh rose in November last year but dropped back down in January. [YOO YOUNG-RAE]

The retailers’ price reduction follows the government’s introduction of the standard sales ratio on Monday.

The standard sales ratio is a tax discount that reduces the amount of money that is subject to liquor tax. Taxes were previously levied based on the sum of a company's manufacturing costs, costs of goods sold and profits, but will now be levied on just 22 percent of that sum.

With taxes slashed, factory prices are also falling. The factory price of a 360-milliliter bottle of Chamisul Fresh, for example, fell 132 won from 1,247 won to 1,115 won.

But consumers will only see modest price cuts, as soju prices jumped last year before the standard sales ratio was introduced.

Hitejinro raised its factory prices for a 360-milliliter bottle of Chamisul Fresh by 6.95 percent on Nov. 9 last year. A bottle of Chamisul Fresh, which used to cost 1,166 won, rose to 1,247 won after the price hike and dropped down to 1,115 won this year starting Monday. This means a bottle now costs 51 won less than it did at the beginning of last November.

Convenience store soju prices, in line with factory prices, also became only 50 won cheaper, moving from 1,950 won to 2,100 won and finally 1,900 won. Supermarket soju prices also dropped by 50 won, from 1,380 won to 1,480 won, to end at 1,330 won.

The soju price cuts won’t be particularly tangible when eating out, either. When asked if they had plans to lower their soju prices, seven out of eight owners of restaurants in Seoul said they did not. The one anomaly was a restaurant that had raised soju prices in December but later cut them down.

“It costs more money to change the menu to lower the price of soju by a few hundred won,” said Lee Kyu-yeop, who owns a kimchi duruchigi (stir-fried pork with kimchi) restaurant in Gwanak District, southern Seoul. Lee has been selling a bottle of soju for 5,000 won since late 2022.

“Prices have gone up a lot, such as a bundle of green onions that cost 1,400 won now selling for 6,000 won. It will be difficult to operate business if even soju prices are lowered,” said an owner who runs a samgyeopsal (pork belly) shop in Mapo District, western Seoul. It is difficult to lower soju prices while the costs of rent and labor continue to rise, the owner said.

One restaurant did lower booze prices. Ryu Chang-jun, who owns a Korean barbecue restaurant in Mapo District, says he knocked soju prices down to 5,000 won on Monday after raising it to 5,500 won last December.

“Restaurants nearby sell soju at around 5,000 won, and since soju costs are going down, we lowered our prices as well,” Ryu said.

Price reductions for domestically produced clear or fermented liquor, such as rice wine, are also planned. The National Tax Service said it plans to implement the standard sales ratio on fermented liquor in mid-January after deliberation by the council. The move aims to lower consumer prices by cutting liquor taxes.

BY LEE SU-JEONG, KIM JU-YEON [kim.juyeon2@joongang.co.kr]