Premium Whiskeys Also Selling Like Hotcakes
"Bloomberg: Korea Tops Global Consumer Growth Rate"
Whiskey Consumption in Korea Registers World's Fastest Growth, Fueled by Luxury Spending and MZ Generation's Demand for Premium Spirits
According to a report by Bloomberg on the 13th (local time), whiskey consumption in Korea recorded a remarkable 45.9% increase from the previous year, reaching 14.2 million liters. This growth rate far exceeded the global average of 8.5%, making Korea the country with the highest whiskey consumption growth globally, at more than five times the world average.
The surge in demand for luxury products in the domestic market has also contributed to the increase in the consumption of premium spirits such as whiskey. Morgan Stanley's research indicates that Korea emerged as the leading country in per capita luxury spending last year. The culture of "certifying" whiskey consumption on social media, akin to luxury purchases, has also spread. As a result, empty bottles of premium whiskeys, like Royal Salute, are being traded in the online second-hand market for prices around 70,000 KRW.
The changing drinking culture among the MZ (Millennial + Generation Z) generation has also played a role. This generation tends to avoid excessive drinking and leans towards enjoying premium spirits alone.
Whiskey brands are taking notice of the rapidly growing Korean market. French luxury company LVMH's single malt Scotch whiskey brand, Ardbeg, opened its first-ever pop-up store in Korea last month and hosted whiskey tasting events. Balvenie, too, opened its second bar this year, following its debut in 2021. Importing companies of whiskeys are seeing substantial profit growth due to the market's rapid expansion.
According to some analyses, the growth of Korea's whiskey market is constrained by high tariffs. Currently, the excise tax on whiskey and other distilled spirits stands at 72%, which is more than three times the average of 20% in the Organization for Economic Cooperation and Development (OECD). When import duties (20%), education tax (30%), and value-added tax (10%) are added to the excise tax, the total tax rate on imported whiskey reaches 130%, significantly reducing its price competitiveness compared to domestic liquor.
This high tax burden is seen as a hindrance to the growth of the whiskey market in Korea. It makes imported spirits, including whiskey, significantly more expensive than domestically produced ones, negatively impacting their sales and market expansion. As a result, some argue that lowering the tax rates on imported spirits could stimulate the market, encourage competition, and potentially drive further growth in the industry.