Alcohol Industry Faces Headaches Amid Consecutive Strikes... Will a Liquor Shortage Hit the Summer Peak Season?

HiteJinro Followed by OB Beer Strike on Next Month 1st
OB Beer "Making Every Effort for Amicable Negotiations Before Strike"
Concerns Over Supply Disruptions Ahead of Summer Peak Season

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-yoon] The liquor industry is struggling with consecutive strikes. Following HiteJinro, the number one soju company, OB Beer is also scheduled for a strike due to labor-management conflicts, raising concerns that the supply of alcoholic products may be disrupted ahead of the peak summer season.

According to the industry on the 27th, the OB Beer labor union under the National Chemical Workers' Union Federation affiliated with the Korean Confederation of Trade Unions recently resolved to go on strike starting next month on the 1st after wage negotiations with management broke down. Among the three factories located in Gwangju Metropolitan City, Icheon in Gyeonggi Province, and Cheongju in Chungbuk Province, strikes at the Gwangju and Icheon factories have been confirmed, while the Cheongju factory will decide on participation later.

Previously, OB Beer proposed a 5% wage increase and a 2.3% increase in welfare expenses, while the union demanded a total 24% increase, including a 10% wage hike and 14% welfare expenses, failing to narrow the gap. Last year, OB Beer labor and management agreed on a 2.1% wage increase and a 3 million KRW encouragement bonus for employees. In 2020, they agreed on a 2.5% wage increase and a 700,000 KRW encouragement bonus.

If the strike proceeds from this day, a disruption in beer supply is inevitable. The two factories produce nearly 70% of OB Beer's total products. Last month, OB Beer’s beer shipments dropped to about 20% of the usual level due to a strike by the Cargo Solidarity Union. At that time, beer shipments were difficult, but this time, production itself may be disrupted.

In this situation, liquor wholesalers are actively securing inventory in advance. OB Beer is not currently increasing production but is devising various countermeasures in case the strike prolongs. As beer supply and demand may become difficult ahead of the peak summer season, they plan to focus all efforts on improving shipment rates and reaching a smooth negotiation.

[Image source=Yonhap News]

In the soju industry, HiteJinro’s strike is still ongoing. HiteJinro has been in conflict for over four months with truck drivers belonging to Suyang Logistics, a freight transport subcontractor. About 130 truck drivers from Suyang Logistics joined the Cargo Solidarity Union under the Korean Confederation of Trade Unions in March and went on strike. They are demanding increases in transportation fees and empty bottle transportation charges, as well as payments for vehicle advertising, idling, and waiting costs.

Recently, as the strike intensified, rallies involving about 500 people were held at the Icheon and Cheongju factories on the 22nd and 23rd, respectively. At that time, HiteJinro judged that normal shipment of soju products would be impossible and suspended shipments for two days. After normal shipments resumed, the shipment rate rose to about 80%, but as the strike shows signs of prolonging, the damage is expected to increase further. On the other hand, under current law, it is difficult for HiteJinro, the primary contractor, to intervene in labor disputes within subcontractors, making it hard to find a solution.

An industry insider said, "If the strikes continue, losses will inevitably accumulate in various areas beyond product supply," adding, "Especially since it is just before the peak summer season, if a quick agreement is not reached, the damage could snowball."

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