No Japanese Beer... Boycott Movement Continues into the New Year

December Japanese Beer Imports Down 98%... Annual Import Value Declines for First Time Since 2009
Convenience Stores and Large Supermarkets "Boycott Campaign Continues This Year... Domestic Craft Beer Will Fill the Gap"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The boycott movement against Japanese beer shows no signs of cooling down. Especially since the beginning of the new year, the liquor tax on beer has shifted to an ad valorem tax based on quantity, enhancing the price competitiveness of domestic craft beers and further diminishing the market share of imported beers.

According to the Korea Trade Statistics Promotion Institute on the 11th, the import value of Japanese beer in December last year was $210,000, a 97.8% decrease compared to the same month the previous year. The annual beer import value also declined for the first time since 2009. Last year, beer imports dropped by 9.3% to $280.88 million.

Although imported beers did not hold a large market share in the domestic beer market, they had been growing at double-digit rates annually. The explosive growth began in 2015 when convenience stores and large supermarkets started promotions offering four cans of imported beer for 10,000 won. From 2015 to 2018, the market share soared vertically from 8.5% (2015) to 20% (2018), with an average annual growth rate of 30%.

The industry analyzes that the decline in beer imports last year was mainly due to the boycott movement against Japanese beer products that continued from summer. The sales volume of Japanese beer, which had been the undisputed number one among imported beers domestically, collapsed to near elimination levels. In September last year, the import value of Japanese beer bottomed out at just $6,000.

Additionally, the popularity of HiteJinro’s 'Terra,' launched in March last year, also contributed to the strong sales of domestic beer.

[Image source=Yonhap News]

With the introduction of the ad valorem tax this year, the price competitiveness of domestic beers has been strengthened, and the decline in imported beer sales is expected to continue. OB Beer’s Cass and Lotte Chilsung Beverage’s Cloud and Fitz have already lowered their wholesale prices, and Jeju Beer has also reduced its beer prices.

Convenience stores expect that domestic craft beers, offering a variety of flavors and cost-effectiveness, will fill the gap left by Japanese beers. From September to December last year, CU’s monthly sales of Japanese beer dropped by more than 90% compared to the same months the previous year. In contrast, CU’s domestic beer sales increased by only 1-5% in the first half of last year but surged by more than 30% in the second half.

Among domestic beers, the sales increase of craft beers was particularly remarkable. CU’s craft beer sales growth rate was around 40% in the first half of last year but jumped to between 160% and 307% year-over-year in the second half.

CU Handmade Beer.

CU forecasts that this year will be the 'Year of Domestic Craft Beer.' Accordingly, it has launched promotions offering a uniform price of 3,500 won per can and discounts of 9,900 won for three cans. Normally, craft beer prices range from 3,900 to 5,200 won, but through these promotions, consumers can purchase them 15-40% cheaper.

Lee Seung-taek, MD of the Beverage Food Team at BGF Retail, said, "With the restructuring of the liquor tax system, domestic craft beers, which had been overshadowed by imported beers, are releasing a variety of new products one after another. As the variety of craft beers available at convenience stores increases and prices gradually decrease, the related market is expected to grow even further."

A representative from a major supermarket stated, "Japanese beers are still representative boycott products and are hardly sold in supermarkets. Distribution channels continue to exclude Japanese beers from the four cans for 10,000 won promotions and reduce or remove them from shelves, so it is expected that sales of Japanese beer will not easily recover in the future."

This content was produced with the assistance of AI translation services.