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South Korea: Online sales ban hurts soju and beer makers in Korea
Korea's soju and beer companies claim the ban on online liquor sales is hurting their market competitiveness, as imported liquors have grown their pies in the market, The Korea Times reported on February 5.
Supporters of the ban argue that public health and potential ethical issues outweigh market concerns. The government acknowledges that the issue has been debated for years and cannot be resolved quickly.
The liquor companies complain that the ban does not apply to imported liquors like wine, whisky and sake. They are available online once buyers verify they are at least 19, Korea's legal drinking age.
Vendors then place the ordered liquors at designated pickup points — usually alcohol retailers — where consumers can collect them in person.
Liquors registered as traditional products in Korea, such as "makgeolli" (rice wine) and Andong soju, are exempt from the online sales ban, allowing them to be delivered directly to consumers' doorsteps.
In contrast, domestic soju and beer products are only accessible via offline stores and restaurants. Major local producers argue that lifting the ban would expand their distribution channels and improve market competitiveness.
Korea and Poland are the only member states of the Organisation for Economic Co-operation and Development, or OECD, where an online liquor sales ban remains in effect.
“If the online sales were allowed, it would mean more space for us to distribute and sell our products, which is certainly good for us,” an industry official said. “That would allow us to further diversify our business strategies.”
The situation particularly pressures smaller craft beer breweries. Compared to major companies like Oriental Brewery, HiteJinro and Lotte Chilsung Beverage, they have smaller distribution channels, being limited to local beer pubs or fewer shelves at convenience stores or supermarkets.
Even the most popular craft beer breweries in Korea, like Jeju Beer Company, are chasing the tails of heavyweight rivals due to their limited options for retail distribution.
To such companies, online channels can help boost their sales. Considering that the country’s liquor market has downsized and diversified since the COVID-19 pandemic, with new trends featuring highballs and whiskies emerging, online sales can effectively expand the consumer base for those smaller breweries.
“If online sales of our products became a reality, our products could reach consumers more easily,” a Jeju Beer Company official said. “Although our nonalcohol liquor or those with an alcohol percentage of 1 or below are currently available online, our signature brands are still currently off-limits online.”
However, there are also concerns that the online sales ban should not be lifted without a thorough legal framework to ensure safety. Central to these concerns are ethical issues, particularly the risk of underage consumption.
Such concern is even shared by liquor companies here. They believe that if the online sales of soju and beer becomes legal and the liquors somehow reach the hands of underage consumers, they will be held responsible for the problems.
“Drinking problems involving underage consumers will almost certainly boomerang on liquor manufacturers like us,” a HiteJinro official said. “Besides, if the online sales becomes a reality, small-size retailers of soju and beer that rely on offline customers will get directly hit. It also involves tax problems. So many things are intertwined here.”
The corporate tax bureau under the National Tax Service (NTS), which handles the country’s liquor-related policies, said that whether to lift the online sales ban on soju and beer is a “mighty equivocal matter” that requires careful consideration. An official said that the issue has persisted for decades because supporters and opponents of the ban have been debating without reaching an agreement so far.
The NTS said the government introduced the online liquor sale ban in accordance with the country's Juvenile Protection Act. The authority cited a clause under the law that states the sale of liquors here should be transacted in person to verify buyers' identity and age. The authority added that it is now partially allowing online sales of liquors via "smart order," through which consumers order liquors online and claim them at a designated offline pickup point.
"If all liquor products became available online, it would usher in positive market impacts such as improving consumers' convenience and boosting e-commerce for liquor products," said Jung Hee-jin, chief of the consumption tax division under the bureau. "On the other hand, that will also generate negative impacts in terms of public health, youth protection and leveling the playing field for the country's liquor industry."
"We should take into account both safety in liquor trades and securing tax revenue through the country's Liquor Tax Act," she added. "The mission also requires joint efforts with multiple government authorities including the ministries of health, family, trade and food."
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