Less Red Tape for Breweries to Challenge Hite, OB Duopoly

      August 20, 2010 13:01

      Brewery giants Hite and Oriental Brewery face a challenge from smaller, more nimble players following liberalization of the market. Hite controls 56 percent of Korea's beer market and OB the rest. At present, a manufacturer needs to have facilities to produce 1,850 kl of beer in order to get a license to operate a brewery, but the government wants to lower that limit to just 60 kl.

      The Fair Trade Commission on Thursday said regulations on breweries are "excessive," making it virtually impossible for small and mid-sized businesses to enter the market and limiting the available varieties of beer.

      The FTC proposed the changes to the Ministry of Planning and Strategy, which is apparently considering them. The requisite 1,850 kl of beer translate into 3.7 million 500 ml bottles, while 60 kl would mean 120,000 bottles.

      When the Japanese government eased regulations in 1994, it led to the creation of around 270 small breweries across the country. In beer country Germany, brewers with less than 100 kl of production capacity account for 44.2 percent of the 1,319 breweries in the country.

      Easier regulations in Korea are expected to lead to the emergence of regional breweries featuring a greater variety of beers at competitive prices. But experts say smaller players will have a tough time competing with the nationwide distribution networks that Hite and OB have built up.

      The FTC is also looking into revising rules for the traditional Korean rice wine makgeolli by allowing bottles to measure less than 10 liters and let producers add herbal ingredients.

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