"Avoiding Distribution Channel Concentration 'At Home and in Pubs' [Craft Beer Economics④]"

COVID-19 Shakes the Core of Industrial Entertainment Channels
Convenience Store-Centered Home Channels Threaten Craft Beer Identity
Recovery of Entertainment Channels Needed to Showcase True Craft Beer
Overcoming Cheap Alcohol Perception... Over 100 Beer Styles Available
Calls to Allow Online Sales for Market Expansion

[Asia Economy Reporter Koo Eun-mo] Since COVID-19, the domestic craft beer market has become similar to a bicycle with one broken wheel. Both wheels, representing the home channel and the entertainment channel, need to run smoothly together, but the entertainment channel has been significantly damaged over the past two years due to the pandemic. This is why, despite recent quantitative growth, there are question marks over sustainable growth. To keep the spark of growth alive and continue the growth trend, voices are calling for a structural environment where the diversity and originality?the charms of craft beer?can be continuously experienced.

COVID-19 brought both opportunities and crises to the craft beer industry. As home drinking and solo drinking cultures spread, craft beer became widely known to the public through home channels such as convenience stores and large supermarkets. However, it also caused people to stop visiting craft beer specialty stores and pubs, which mainly sell draft beer, shaking the entertainment channel?the foundation of the industry?to its core.

While accessibility to the home channel has improved, accessibility to the entertainment channel has declined, threatening the identity of craft beer characterized by diversity and originality. Due to the marketing policy of “4 cans for 10,000 won” in convenience store channels, the upper limit of delivery prices has effectively been set, making it difficult for breweries to produce high-flavor craft beers that showcase their unique characteristics. As a result, only light, low-flavor, similar products that can meet the delivery price have flooded the market.

The strength of craft beer lies in its diverse and rich tastes and aromas that differentiate it from mass-produced beer. Losing this strength would make it difficult to sustain consumer interest and growth. Lee In-ki, CEO of BeerPost, pointed out, “If only low-flavor craft beers without distinct individuality are actively distributed, and consumers repeatedly experience craft beers that fall short of their expectations, they are likely to return to commercial beers.”

The industry believes that the entertainment channel must recover. This is because draft beer distributed through the entertainment channel can showcase the true essence of craft beer. A representative from the Korea Craft Beer Association said, “It is difficult to gain a comparative advantage over major corporate beers and to continuously attract consumer interest with only convenience store craft beers produced under the ‘4 cans for 10,000 won’ distribution structure.”

On the other hand, draft beer distributed in kegs through the entertainment channel is not constrained by delivery prices and is made with the philosophy and individuality of the brewery, making it easier to experience various styles of craft beer. Consumers who have developed an interest in craft beer through convenience store products can also expand their preferences by tasting craft beers that emphasize the characteristics of beer elements such as malt, hops, and yeast.

The industry expects that if consumer interest and demand for various beer styles are created through quality craft beer experiences distributed in the entertainment channel, the price restrictions of convenience stores tied to the “4 cans for 10,000 won” framework will naturally be broken. CEO Lee said, “Recently, consumers want to consume differently from others, and I believe there is definitely an opportunity at that point.”

Another hurdle to overcome is the perception that beer is a cheap alcoholic beverage. Most beers distributed domestically have been light and refreshing pale, light, and dark lagers. Since pale and light lagers are styles that can be comfortably consumed in multiple glasses, some products reduce the use of malt, hops, and yeast relatively, and sometimes use grains cheaper than malt to cut costs. However, beer has over 100 styles such as Weizen, Pilsner, India Pale Ale (IPA), Porter, Stout, and Sour Beer, depending on ingredients and brewing methods, and naturally, prices vary widely. Kim Man-je, CEO of the Korea Beer Education Institute, said, “When the perception that prices can vary by beer style spreads, there will be room for IPAs priced at 7,000 to 8,000 won per glass.”

Additionally, some voices suggest allowing online sales. Since it is a “pipe dream” for small breweries to enter home channels like convenience stores and large supermarkets, they propose enabling online sales like traditional liquors to expand their sales channels. Under the current Liquor Tax Act, alcoholic beverages are prohibited from online sales. However, traditional liquors have been exceptionally allowed online sales since July 2017 to revitalize the domestic market.

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