NEWS
TAX CUT ALLOWS S. KOREAN SOJU MAKERS TO REVERSE PRICE HIKES
By Susan Lewis
19-12-2023
Credit: Markus Winkler/Unsplash
South Korea's major soju producers including Hitejinro and Lotte Chilsung Beverage are set to reduce wholesale prices for their soju brands starting next year, after the government announced that it will lower taxes for domestically produced alcoholic beverages.
The decision by Hitejinro is tied to the government's introduction of the standard sales ratio, a form of tax discount, with the National Tax Service setting the ratio for soju at 22 percent and domestically produced whisky at 23.9 percent.
Last month, Hitejinro increased wholesale prices of soju, with the cost of a Chamisul bottle rising from WON1,166 (USD0.9) to WON1,247.
The upcoming price reduction will bring this down by a WON51, with the expected new wholesale price of WON1,115 starting next year.
Lotte Chilsung Beverage, South Korea's second-biggest soju maker known for the Chum-Churum brand, will also lower wholesale prices of their soju products starting next year."
Consumers can expect a 4.5 percent reduction in the price of the 360-milliliter bottle of Chum-Churum and a 2.7 percent price decrease for its sugar-free soju Chum-Churum Saero.
Although Lotte Chilsung initially raised the prices by 6.8 percent and 8.9 percent, respectively, the company said the actual prices would decrease after reflecting the application of the government's standard sales ratio.
The cut in wholesale prices is likely to impact retail prices, with price reductions expected in liquor products sold in hypermarket chains and convenience stores.
However, price for soju served in restaurants or bars is less likely to be reduced despite of the expected tax cut.
It is because many restaurants are struggling in the current economic climate and they rely on liquor sales to offset losses incurred in the food and snacks sector.
(the writer can be contacted at: info@thewinechronicle.com)
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