Oriental Brewery (OB), the South Korean brewery currently owned by AB InBev, has reportedly announced plans to raise the prices of its beer range by approximately 7.7% by March 8, citing current tax rate adjustments on liquor following the growing rate of global inflation.
According to reports, this would be the first time the brewery company has increased its product prices on its own in six years, since November 2016. OB beers such as Cass, Hanmac, as well as OB Lager hve all become subject to the new price hike.
OB stated that for six years it has tried to keep prices frozen, but the hike was unavoidable owing to rising raw and secondary material costs after the coronavirus pandemic disrupted the world’s supplies.
In January of 2021, South Korea’s Ministry of Strategy and Finance updated the tax code to effectively fix the rate of makgeolli products and beer, reflecting elevated consumer prices. Consequently, this led to an involuntary price hike of 1.36% across the board for all of OB's beers last year, mirroring the government's 0.5% yearly inflation rate estimate.
Overall, the international price of barley, the primary component in beer, increased by 33%. In 2021 as compared to 2019. Meanwhile, the price of aluminum, a crucial material used to produce beer cans, also increased 45% year on year last year. Prices of packaging as well as raw materials are projected to rise more this year as a result of Russia's attack on Ukraine.
To reduce the pressure of inflation on consumers, OB stated that it will not raise the price of canned beer beyond the 5% mark. The brewery's canned beers, which come in 500 milliliters and 355-milliliter varieties, are popular across South Korea’s supermarkets.
Additionally, OB also stated that will freeze pricing on bulk purchases such as six-packs to stimulate sales in the domestic alcohol beverage industry.
As of January 23, local distillery enterprises boosted their soju pricing by 7.9%. Soju is a rice-based alcoholic beverage popular in Korea. A day later, retailers such as Lotte Mart, E-mart, and Homeplus upped the cost of soju items in their outlets by ₩100 (8 cents).