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Some beer prices fall after new taxation policy

Jan 03,2020
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Lotte beers Kloud and Fitz [LOTTE CHILSUNG BEVERAGE]
Lotte Chilsung Beverage adjusted the price of its beers following a change in alcoholic beverage taxation.

Lotte Thursday announced it lowered the factory price of Kloud and Fitz Superclear beers from Wednesday.

The factory price of a 500 milliliter (16 ounce) can of Kloud beer went from 1,880 won ($1.62) to 1,565 won, while the same amount of canned Fitz beer went from 1,690 won to 1,467 won.

Kloud’s factory price of a 20-liter keg inched up to 38,108 won from 37,000 won, while that of Fitz for the same amount went up to 34,714 won from 30,430 won.

The latest price change reflects a change in the way alcohol taxes are calculated. From Wednesday, beer and rice wine, or makgeolli, will be taxed by volume and content instead of cost of production.

It is the first revision of alcoholic beverages’ taxes in 50 years.

The revision has lowered the taxes imposed on products in aluminum cans while generally pushing up the taxes imposed on beer packaged in other materials, like plastic and glass. Craft beer makers are expected to benefit significantly, since the manufacturing of craft beer is expensive.

“We lowered the factory prices to reflect the government policy to expand consumer benefits, with which we agree,” said a spokesperson for Lotte Chilsung Beverage.

Oriental Brewery made the adjustments in October, reducing the factory price of Cass beers. The beer maker lowered the price of Cass by an average of 4.7 percent.

Hite Jinro, which manufactures Terra beer, said it will take action after observing how people react to the price adjustments.

“Revising tax based on alcohol volume could lower the prices of canned beers, but it will increase the prices of beers packaged in other types of materials,” said a spokesperson for Hite Jinro.

Costs may be passed on to consumers disproportionately, because restaurants or bars don’t increase the price by several won, but by 500 won or 1,000 won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]