No small beer in S. Korea as imported brands threaten incumbents

HiteJinro

14/04/2016 24:00

* Beer imports in South Korea jumped 43 pct last year 
    * Japanese, European brands make inroads amid changing 
tastes 
    * Local brewers say they disadvantaged by discounting rules 
 
    By Rebecca Jang 
    SEOUL, April 14 (Reuters) - South Korean beer drinkers are 
drinking to the more robust flavours of imported brands, 
encouraged in part by attractive discounts for multi-packs - so 
much so that local brewers are crying foul over pricing tactics 
and have asked for government help. 
    Beer imports surged 43 percent last year in South Korea, as 
consumers, among the most enthusiastic beer drinkers in Asia, 
move beyond often-bland local lagers. Lighter domestic beers may 
be well-suited to accompany traditional spicy food but Korean 
drinkers increasingly crave variety. 
    The jump in imports has seen the two main local brewers - 
Anheuser-Busch InBev SA's  ABI.BR  Oriental Brewery and Hite 
Jinro  000080.KS  - go from commanding 99 percent of the market 
in 2012 to sliding to 82 percent in the first half of last year 
- a swift encroachment that is expected to take further ground. 
    "Foreign beer has boosted its share of the household retail 
market rapidly and I expect the same trend will emerge as they 
find favour in bars and restaurants over time," said Park 
Sang-jun, an analyst at Kiwoom Securities Co Ltd. 
     Asahi Group Holdings Ltd  2502.T  and Kirin Holdings Co Ltd 
 2503.T  have led the invasion - aided by a weak yen, with 
Japanese products alone accounting for more than a quarter of 
imports. 
    European and U.S. brands, helped by free trade agreements in 
2011 and 2012, account for about half of imports led by the 
likes of Heineken  HEIN.AS . Chinese labels have also made 
inroads with E-mart  139480.KS , the country's biggest 
hypermarket chain noting that Tsingtao's  600600.SS  flagship 
brew is now its top-selling beer. 
    The drastic increase for foreign beer is no trivial matter 
in a country known for consuming the most alcohol per person in 
the Asia-Pacific region. Beer accounted for 42 percent of the 
country's 9.1 trillion won ($8 billion) alcohol market in 2014, 
government data shows. 
    But South Korean brewers, including new domestic entrant 
Lotte Chilsung Beverages Co Ltd  005300.KS , are keen to stem 
the tide - rolling out new products with higher malt content, 
expanding exports and making their case to authorities that 
local laws hamstring their ability to compete. 
    Where imported brands have no restrictions on discounts or 
promotions, local brewers cannot by law discount below factory 
prices. 
    "Domestic brands have suffered from reverse discrimination 
as imported beers have more flexibility in their pricing," said 
Lee Eun-a, deputy general manager at Oriental Brewery. 
    South Korea's Fair Trade Commission said last month it is 
conducting a review of competition in the beer industry- a 
statement that analysts view as heralding fewer discounting 
restrictions for local players. 
    An Asahi spokesman said that while the company does offer 
discounts, changing tastes have been the primary force driving 
the success of imported beer in South Korea. 
    Yu GoEun, a 24-year-old student in Seoul, who often joins 
friends for a pint of Hoegaarden, a Belgian wheat beer made by 
Anheuser-Busch InBev, seems to agree. 
    "I don't drink domestic beer for the taste, only when I want 
to get drunk cheaply," she said. 
     
 
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GRAPHIC: South Korea beer imports     http://tmsnrt.rs/1SrLwAN 
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 (Reporting by Rebecca Jang; Additional reporting by Ritsuko 
Shimizu in Tokyo; Editing by Tony Munroe and Edwina Gibbs) 
 ((rebecca.jang@thomsonreuters.com; +82 2 3704 5667; Reuters 
Messaging: rebecca.jang.thomsonreuters.com@reuters.net)) 
 
Keywords: SOUTHKOREA BEER/