Wine Allowed but Makgeolli Not... Controversy Over Fairness of Traditional Liquor [Backtracking Distribution Regulations]

⑤Market Expanding... Traditional Liquor Standards Still Based on 20 Years Ago

Jin, Apple Cider, and Wine Are Also Traditional Liquors, but 'Makgeolli' Is Not
Standards Focus on Production Region and Producer, Not Manufacturing Method
Experts Say "Concepts Should Be Separated for the Development of Both Industries"

The photo is unrelated to specific expressions in the article. [Source=Getty Images Bank]

[Asia Economy Reporter Song Seung-yoon] The fairness controversy over the classification criteria for traditional liquor is heating up. While liquors made using overseas manufacturing techniques but using local agricultural products are recognized as traditional liquor, those that have historically fallen within the category of traditional liquor are not being recognized as such. This ongoing situation has led to calls for updating regulations that were established decades ago to reflect current realities.

According to the Korea Agro-Fisheries & Food Trade Corporation on the 16th, the traditional liquor market size grew by more than 56% in three years, from 40 billion KRW in 2017, when online sales were first permitted, to 62.7 billion KRW in 2020. It is estimated that the market maintained the 60 billion KRW range last year as well. The allowance of online sales and the emergence of traditional liquor curation companies are cited as major growth factors.

However, the appearance of “Wonsoju” by One Spirits, which has recently gained great popularity among the MZ generation (Millennials + Generation Z), has ignited the fairness debate. Wonsoju is difficult to regard as a typical traditional liquor but is actually classified as a regional specialty traditional liquor. Online sales are also possible for this reason. Under the Liquor Tax Act, traditional liquors receive benefits such as tax reductions and permission for online sales. On the other hand, liquors like Baekseju or Makgeolli, which have been recognized as traditional liquors historically, are legally classified as general alcoholic beverages and are only sold offline. Although they are traditional liquors, they do not receive the benefits granted to traditional liquors.

According to the current Liquor Tax Act, a liquor must be made by a nationally designated artisan, or ▲ a liquor made by a government-designated food master, or ▲ a liquor made by local farmers using local agricultural products to be recognized as traditional liquor. Even if the liquor is made using traditional methods or has historically been considered traditional liquor, if it does not meet these requirements, it cannot receive traditional liquor benefits.

This is because the current Liquor Tax Act’s classification criteria for traditional liquor focus on the manufacturing region and manufacturer rather than the manufacturing method. The “Act on the Promotion of Traditional Liquor Industry,” enacted in 2009, was based on the “Farmer’s Liquor” system created in 1995 to promote agricultural product consumption and benefit farming households. The act was largely intended to protect the traditional liquor market, which was mainly composed of small-scale breweries operated by individuals. However, as this law, based on those criteria, has continued to the present, ambiguous cases have arisen where domestically produced wine or foreign liquors such as “gin” or “apple cider” are recognized as traditional liquor, while historically recognized traditional liquors are no longer considered traditional liquor.

Voices within the industry have consistently called for revising the outdated criteria. There is a demand to amend the law to separately manage regional specialty liquors and traditional liquors. In fact, the Ministry of Agriculture, Food and Rural Affairs, the relevant department, attempted to revise the law with this focus in 2017, but the bill was not processed within the legislative session, resulting in no progress for several years.

Lee Dae-hyung, an agricultural researcher at the Gyeonggi-do Agricultural Research and Extension Services, advised, “Since the purpose was to protect small businesses, it is desirable to maintain benefits for regional specialty liquors while managing traditional liquors and regional specialty liquors separately. This kind of change is necessary to prevent general consumers from confusing the concept of traditional liquor and to allow each industry to develop independently.”