[The Editors' Verdict] "It's Time to Change the Criteria for Classifying Traditional Liquor"

Due to the government's inconsistent classification criteria for traditional liquor, which apply to some but not others, our local alcohol manufacturers are experiencing frustration. Products like Kooksoondang's ‘Baekseju’, HiteJinro's ‘Ilpum Jinro’, and Kwangjuyo's ‘Hwayo’ have not been recognized as traditional liquor because they are produced by corporations. Meanwhile, beverages such as ‘Wonsoju’ introduced by Korean-American singer Jay Park and ‘Tokki Soju’ enjoy various benefits simply because they use domestic agricultural products.

Under the current Liquor Tax Act, alcoholic beverages cannot be sold or delivered online, but traditional liquor is allowed online sales to promote industry revitalization. If classified as traditional liquor, the liquor tax is also reduced by 50%. However, liquor licenses are broadly divided into general liquor manufacturing licenses, regional specialty liquor licenses, and small-scale liquor manufacturing licenses, and only those holding a regional specialty liquor license qualify. This is why Baekseju, Ilpum Jinro, and Hwayo, despite leading efforts to restore traditional Korean liquors and promoting ‘K-liquor’ through overseas exports, are not recognized as traditional liquor. They all hold general liquor manufacturing licenses.

Granting preferential treatment to certain liquors while excluding corporate-made liquors, despite being the same product, amounts to reverse discrimination. While some traditional liquors may contribute to local economies, the profits generated domestically are likely to flow into the pockets of foreign investors. Moreover, as these products gain an advantage in distribution channels through online sales and expand their reach via exports, domestic companies may be hindered by government-imposed hurdles and unable to spread their wings for growth. Currently, with the rise of non-face-to-face consumption due to COVID-19 and social distancing guidelines increasing ‘solo drinking’ and ‘home drinking,’ demands for online liquor sales are growing.

Insight Ace, a U.S.-based market research and consulting firm, reported that the global online liquor sales market, currently valued at $2.19 billion (approximately 2.67 trillion KRW), is expected to reach $30.5 billion (37.18 trillion KRW) by 2030, growing at an annual rate of over 34%. The Asia-Pacific region was identified as the fastest-growing market for online sales. In response to this market trend, the top 10 European countries including the UK, France, Germany, Switzerland, and the Netherlands allow online sales of all types of liquor. China also fully permits online liquor sales. The U.S. issues licenses for online sales through individual states. Among the 37 OECD member countries, only South Korea and Poland prohibit online liquor sales.

Allowing online sales is not an easy decision for the government due to potential side effects. Issues such as the possibility of underage alcohol purchases, the shrinking traditional liquor market, and conflicting interests among liquor industry stakeholders make the impact of such permission significant. However, since the COVID-19 pandemic, dominating the online market has become an unavoidable mission for companies. It has been over five years since online regulations were relaxed to revitalize traditional liquor. Now, permitting online sales is a way to accelerate the development of the domestic liquor industry.

Lee Kwang-ho, Head of Distribution Economy Department

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