Draft beer prices may rise by 1,000 won per glass next year

Draft beer prices at restaurants and bars are expected to rise next year after the government announced plans to end a tax discount on draft beer and bring it in line with the rate applied to regular bottled and canned beer. When the tax increase is combined with rising raw material costs and labor expenses, a single 500-milliliter glass could end up costing consumers 1,000 won or more, industry observers say.

According to industry sources Wednesday, the Ministry of Economy and Finance plans to let a 20% draft beer tax reduction — set to expire at the end of December — lapse without renewal. Starting next year, draft beer will be taxed at the same rate as regular beer: 885,700 won ($628) per kiloliter.

Bars and restaurants currently pay only 80% of the standard beer tax rate on draft beer. The discount was introduced in 2020 when South Korea overhauled its beer tax system, shifting from an ad valorem tax based on price to a volume-based specific tax tied to output. The change would have increased the tax burden on draft beer, so the government temporarily cut the rate to cushion the blow. Officials have now decided that enough time has passed since the system was introduced to phase out the relief measure.

The change will add roughly 5,000 won in tax per 20-liter keg of draft beer — about 127 won per 500-milliliter glass. The concern, however, is that consumer prices will not rise by just the tax amount. Draft beer travels from the brewery through wholesalers before reaching restaurants and bars, meaning that once the manufacturer's factory price rises, wholesale margins and delivery costs stack on top at each stage of the supply chain.

Add in the rent and labor costs that bar and restaurant owners bear, and the final retail price could climb well beyond the tax increase alone. Smaller independent operators are expected to feel the pinch most acutely, as draft beer accounts for a large share of sales at neighborhood bars and small taverns where any rise in costs translates directly into higher overheads. Industry insiders say many such establishments could raise prices by anywhere from 500 to 1,000 won or more per 500-milliliter glass.

"There is a strong likelihood that the price consumers ultimately pay will be even higher," one industry official said. "What worries us is that the resulting drop in consumption will make things even harder for small, independent business owners."