Fast growing beer market for Norwegian exporters in South Korea

A change in consumer behaviour in the beer market combined with the new free trade agreement between EFTA and Korea, presents opportunities for Norwegian companies.

The Korean beer market has been solely growing, while other liquor markets have been struggling with almost zero growth for the last 5 years. If you take a closer look at the drivers of this growth, it is easily found that import beers have taken the lead of this growth dramatically.

43% annual growth (170.919 tons) in volume and 27% (USD 141.9 mil) in value in 2015 – 20~40% annual growths of import beers from 2010 to 2016

Consumer behavior change

Previously, people drank beer mainly at restaurants and bars. But now this has been changing and a new trend has started: beer consumers are bringing beers home from hypermarket/supermarkets and convenient stores. So the home consumption has increased through hypermarket and convenient stores drastically and the import beers were the main actor for this home consumption.

beer-figur1

Figure1. Growing home consumption and import beer portion

Challenges

As the market grows rapidly from the strong demand, importers and foreign beer brands, including world beer franchises, have introduced many new international beer brands to Korean consumers. Particularly, German beers have shown an impressive sales growth record for the last 5 years. Since more and more beer brands are coming and competing in the market, the competition is getting fiercer and fiercer at more marketing costs. In other words, in order to be successful and make its brand more visible, Norwegian beer brands should consider and allocate sufficient resources for the quick & appropriate response and promotion.

Market Drivers & Opportunities

One of the main reasons for this change lies in the fact that consumers are looking for better tasting beers and seeking diversity in tastes. Also, there has been criticism about the boring taste of the local beers that has been dominating the market for the last several decades. For the last 5 years, European beers have been getting more and more attention, while Japanese beers are still most popular among other import beers, due to local partnership and the geographical advantages.

Japan 29.9%
Germany 12.4%
Ireland 11.2%
China (German license) 10.1%
Netherland 9.6%

Also, there is a tax advantage for import beers. After the new free trade agreement between EFTA and Korea, import beers are enjoying a relatively lower tax payment structure against domestic beers. Particularly, Norwegian beer exporters are even in a better position with a lower tax rate even compared to other European countries in EFTA.

All these market trends tell that Norwegian beer exporters will be able to leverage their better position against other competitors relatively.

For more details, please contact:

Changan CHOI
Senior Market Advisor, Innovation Norway Seoul
Changan.choi@innovationnorway.no

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