South Korea: Oriental Brewery set to raise its prices
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Oriental Brewery (OB) is set to raise the prices for its beer products by an average 7.7 percent on March 8, affected by the recent adjustment of the tax rate on alcohol following global inflation, The Korea Times reported on March 2.
It is the first time in six years for the brewery firm to increase its prices on its own since November 2016. Its beers such as Cass, Hanmac and OB Lager are subject to the price hike.
"We have tried to freeze the prices for the last six years, but it was inevitable due to the rising costs of raw and secondary materials after COVID-19 hit global supplies," an OB official said.
In January 2021, the Ministry of Strategy and Finance revised the tax law to fix the rate on beer and "makgeolli" products reflecting increased consumer prices. That resulted in an automatic price increase of 1.36 percent for all of OB's beers last year, reflecting the government's calculation of the annual inflation rate of 0.5 percent.
The international price of barley, the main ingredient of beer, soared by 33 percent in 2021 from 2019. The price of aluminum, which is a key material used to make cans, also jumped by 45 percent year-on-year in 2021. Due to Russia's invasion of Ukraine, the prices of raw and packaging materials are expected to continue rising further this year.
However, OB said it will increase its prices for canned beer by a maximum 5 percent to reduce the burden on consumers. The brewery firm's canned beers that come in sizes of 500 milliliters and 355 milliliters are steady sellers at grocery stores.
At the same time, OB will freeze its prices for bulk items such as six-packs to encourage sales in the household alcohol beverage market.
HiteJinro, another local brewery firm, said it is reviewing a price increase for its beers such as Hite and Terra in the face of market pressure to do so. However, it said nothing has been confirmed yet.
Lotte Chilsung Beverage, which sells Kloud beer, said it has no plans to hike its prices up, at least not for a while.
Local distillery firms have increased their prices for soju by 7.9 percent as of Jan. 23. Soju is a Korean alcoholic drink traditionally made from rice. Following this, retailers including E-mart, Lotte Mart and Homeplus raised the prices for soju products at their stores by 100 won (8 cents), a day after.
