Why Breaking into the Korean Beer Market is Difficult

The Korean beer market is considered one of Asia’s largest beer markets. This might be surprising due to the population size which stands at 52 million and is known mainly for consuming soju. However, Korea ranks in the top 20 when it comes to beer consumption. Beer is the most consumed alcoholic beverage per liter in Korea, followed by soju. According to the Ministry of Agriculture, Food and Rural Affairs of South Korea, Korean consumers drink on average nine days a month. Beer accounts for the largest proportion at 41%, with soju coming in second at 33%. Half buy their alcohol from convenience stores. 

The Korean Beer Market

With so much consumption, it might be shocking to know that It is also a particularly hard market to enter. Global brands have been desperate to enter the Korean beer market, but many find it too competitive. For example, international beer brands such as Anheuser-Busch, Corona, and Heineken have to compete with local Korean giants and craft beer companies.

The leading Korean breweries are Oriental Brewery Company Co. Ltd, HiteJinro Co., and Lotte Chilsung. Oriental Brewery sells the popular beer brand Cass and is responsible for importing and distributing many global brands, such as Budweiser, Corona, and Stella Artois, to name a few. HiteJinro is the maker of Hite and Terra, which have both gained popularity in Korea. Lotte Chilsung is a newer player than the other two however, their beer brand Kloud has been hugely successful in Korea over the past decade. These three breweries account for 85% market share of the Korean beer market.

Korean Drinking Culture

Drinking is seen as an important part of Korean culture. Drinking beer and soju after work is often encouraged, which is a major reason alcohol consumption remains high for male and female consumers. Therefore, there is a lot of demand, leading to more competition. With high competition comes low prices. Consumers in South Korea can buy a local beer for about 1,500 won a can at a local supermarket. This means Koreans drink very cheap commercial lagers, which are just as cheap as bottled water.

The Rise of Craft Beers in Korea

Global beer brands and craft beer startups in Korea want Koreans to drink more expensive beer. Craft beers can make up to 10 times what regular beers make. With so much potential, South Korea has been on a steady rise in craft beer companies in Korea. In addition, the number of microbreweries in South Korea has increased yearly, starting from 2014. 

Craft beers started to take off in Korea in 2020. That year sales grew by over 500% at convenience store chains. The key reason for the rise was due to loosened regulations. In 2020, a tax revision bill put a tax based on the volume of beer sold rather than an ad valorem tax on the cost of production. Therefore, with lower taxes, craft beer companies in Korea could offer convenience stores discounts. This allowed consumers to only pay around 2,500 won instead of the typical 8,000 won they would have to pay at a local pub. In addition, in 2020, Japanese beer brands were taken out of convenience stores due to boycotts. 

Koreans also drove the movement in their 20s and 30s, accounting for over 50% of all craft beer sales in Korea. The wide variety of tastes and the low production volume appealed to the younger generation in Korea. The South Korean draft beer market is estimated to be worth $300 million, while the entire beer market is estimated to be a $5 billion industry. 

How to break into Korea’s Craft Beer Market

The top craft brewer in South Korea is Jeju Beer Co. It was founded in 2015 when it brought the recipe of Brooklyn Brewery, a top craft brewer in New York, to Jeju. Their beers are now the top-selling craft beer in Korea’s top convenience store, CU. It aims to become the first craft brewery company to go public. They are the top competition in the craft beer space in Korea. 

While the Craft Beer Industry in Korea is on the rise. Many Koreans are still not ready to pay for these specialized beers. It is not easy to convince Koreans to spend more money on beer, especially when the pandemic hit the Korean economy.

The key is to tap into the culture. You can’t succeed in the Korean liquor market without understanding Korean consumers. Therefore, craft beer startups and international beer companies need to be on the ground putting in the effort to find long-term success. They must have a long-term strategy that makes the beer look and taste familiar to Korean drinkers. For example, using local ingredients for craft beers that Koreans know and are familiar with is a great way to start. In addition, beers should go well with local Korean cuisine, such as hot spicy dishes/stews. Therefore, it is easy to see why many global brands find it difficult to break into the Korean beer market. Those looking to break in should seek out local partners for collaborations instead.