South Korean beer makers are furious over an Economist magazine article saying their beers are inferior in taste to those of North Korea. In its latest issue, the British magazine carried a story filed in Seoul saying South Korean beers have poor taste that is worse than that of the North`s Taedonggang Beer. The article blamed an insufficient volume of malt contained in raw materials and relative lack of competition due to an oligopoly enjoyed by Hite Beer and OB Brewery, adding that the South Korean beer market is an oligopoly due to high entry barriers imposed by authorities.
South Korean beer companies denied the allegations, with one saying, “Most (South) Korean beers contain more than 70 percent malt, and some including Hite Max of Hite and OB Golden Lager of OB contain 100 percent malt. Rice and corn are not cheaper than malt, and these grains are used in the mixture to generate a mild taste.” Hoegaarden, a premium Belgian beer that requires a highly sophisticated brewing technique, is produced through an original equipment manufacturing arrangement at a South Korean plant owned by OB Brewery. Other than Belgium, Hoegaarden is produced in South Korea and Russia only, which demonstrates how advanced South Korea’s beer production technology is. Hite and OB Brewery say differences in flavor between imported and Korean beers are due to consumer preference. Angry at the article, the two companies plan to complain about it via a letter to the editor of The Economist.
Beer has three main types: lager, ale and bitter. The South Korean market is dominated by lager, which is fermented at low temperatures and offers a mild and crisp taste. Europeans prefer ale, which is fermented at room temperature and has higher alcohol content and a bitter taste. Bitter is black beer, which is brewed by frying barley sprouts into a dark color. In the past, Korean breweries had introduced a number of beer types, including ale and bitter, but the market share of non-lager beers remained small. Korea also exports a large volume of beer, with its main market being Southeast Asia, where the weather is hot and humid. The U.S., which has a large ethnic Korean population, is another major importer of Korean beer.
Despite the angry reactions by the South Korean breweries, quite a few beer drinkers in South Korea complain about the taste of domestic beer. The Economist was also correct in that the oligopoly here is due to regulations that only grant a license to produce beer to a company with production capacity of 2.77 million liters or more. This standard was eased to 150,000 liters last year, and a wider variety of domestic beers have been introduced to South Korea. Yet they still have a small market share. The Economist report includes many pieces of misguided information, but the debate it incited will hopefully lead to richer-tasting beer made in South Korea.