Global Consumer Brands Overcharge Koreans

      January 13, 2015 12:26

      Koreans buy around 30 million cups of Americano coffee at the 720 Starbucks outlets across the nation every year. But according to Consumers Korea on Monday, a cup of coffee is more expensive in Korea than in 12 other major countries where Starbucks operates.

      In won terms, the same coffee costs W3,000 (US$1=W1,085) in Spain, W2,913 in Taiwan, W2,660 in Germany, W2,530 in Canada, W2,477 in the U.S. and a whopping W4,100 in Korea -- 28 percent more than the average.

      ◆ Starbucks

      Starbucks has been repeatedly criticized for overcharging Korean customers but raised the price of an Americano from W3,300 in 2008 to W4,100 in 2014.

      Around half the Starbucks outlets in Korea are in Seoul, where rents are notoriously high, and the company spends close to W100 billion annually in rent. Yoon Myung at Consumers Korea said, "They're passing on to customers the cost of opening stores in central areas where rents are high in order to maintain their brand image."

      But since many other coffee shop chains also charge more than W4,000 for a cup of Americano, some say Korean consumers are also to blame for putting up with daylight robbery.

      ◆ Chilean Wine

      Chilean wine was also the most expensive in Korea despite a free trade agreement between the two countries. Last year, Koreans bought 260,000 bottles of Chilean wine. The most popular is Montes Alpha Cabernet Sauvignon, which costs W42,125 per bottle.

      The same bottle costs just W27,507 in China, W23,525 in Japan, W21,406 in the U.K. and W21,150 in the U.S. In the Netherlands and Canada it costs even less at W18,603 and W18,832.

      One industry insider said, "There is no need to lower prices since it sells like hot cakes as it is."

      Importers claim the final price tag includes costs incurred during the complicated distribution process, including workers' wages and marketing expenses.

      Tariffs on Chilean wine were scrapped under the FTA in 2009, and the price of a bottle of Montes Alpha Cabernet Sauvignon fell from W47,000 in 2011 to W43,000 in 2012, but there has been no further price cut since.

      An official at Consumers Korea said, "If the dollar weakens, the prices of imports should fall, but this is not happening when with imported wine."

      The won has strengthened 6.5 percent against the dollar from W1,126.7 in 2012 to W1,053 last year.

       ◆ Easy Prey

      Other products are overpriced as well. The price tags of 19 percent of the 42 imported products surveyed by Consumers Korea, including grapes and cheese, are the highest in Korea among the 13 countries, those for pineapples, carbonated drinks, beer and eight other imports are the second highest.

      The prices of another 38 percent of products surveyed are the third to fifth highest.

      The Consumers Korea spokesman said, "Foreign brands are taking advantage of Korean consumers." But global brands say prices are adjusted based on various factors in each market, so it is wrong to compare prices only.

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