Government Likely to Announce Guidelines No Earlier Than Next Month
Clarifying Cases Allowing Alcohol Discounts to Encourage Price Competition
The government’s announcement of the 'Alcohol Discount Guideline,' part of its measures to revitalize domestic consumption, is being delayed beyond the original schedule. The plan is to gather opinions from each party involved in the supply chain?'manufacturers, wholesalers, retailers, and restaurants'?to establish standards such as the volume of transactions eligible for discounts and payment conditions, thereby encouraging price competition. However, the restaurant industry is delaying submitting opinions by demanding disclosure of alcohol cost prices.
According to government ministries and the alcohol industry on the 18th, the National Tax Service (NTS) is collecting opinions on the 'Alcohol Discount Guideline' from organizations including the Korea Alcohol Industry Association, Korea Foodservice Industry Association, Korea Franchise Industry Association, and Korea Entertainment Foodservice Association. However, only about half have submitted their positions so far.
A representative from the Foodservice Industry Association said, "When restaurants sell soju, they first need to consider how much discount they can offer. To do this, they must first know the cost price of soju, beer, and other alcoholic beverages. Asking for opinions on 'how to discount' without this information is like forcing restaurants alone to lower prices."
Regarding the restaurant industry’s demand for cost price disclosure, the NTS has stated it is difficult to accept. An NTS official said, "The Alcohol Discount Guideline aims to clarify that discounts are possible at various distribution stages and to encourage price competition through this. It is not about identifying the profit margins at each stage but about exploring ways to lower prices during distribution. Demanding disclosure of manufacturers’ trade secrets is excessive."
Earlier, on the 29th of last month, the government announced a 'Domestic Consumption Revitalization Plan' jointly with related ministries, aiming to ease the cost-of-living burden that restricts domestic consumption. It planned to establish specific standards for allowable discounts on alcohol transactions within this month through NTS guidelines to encourage discounts that consumers can feel. Accordingly, the NTS intends to formalize allowable discount transactions as guidelines based on the Enforcement Decree of the Liquor Tax Act. Article 41 of the Liquor License Act, which prohibits providing or receiving money or liquor to establish order in liquor transactions, states that "regardless of name or form, acts of providing or receiving money or liquor" are prohibited. An NTS official explained, "Based on this clause, manufacturers refuse discounts to wholesalers, and wholesalers refuse discounts to retailers, but this is a misinterpretation of the law. The clause’s premise is 'to establish order in liquor transactions,' and discounts that do not undermine this are currently possible."
The government expects that if various types of discounts for wholesalers based on transaction conditions and business types become possible, retailers and restaurants with reduced cost burdens will expand various discount sales such as 3 bottles for 10,000 won, combined discounts on soju and beer (somaek), and food package discounts.
An NTS official said, "Although opinions were originally scheduled to be collected by the end of March, we will listen to opinions on the transaction scale and types eligible for alcohol discounts from each industry by the end of this week. Based on this, we will draft a guideline and hold a meeting to establish an Alcohol Discount Guideline that as many transaction parties as possible can agree on, aiming to reduce the burden on the public."
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