[The Editors' Verdict] Outdated Liquor Laws Blocking Online Alcohol Sales

Only Two OECD Countries Ban Online Liquor Sales
Excessive Regulation Stifles Industry Innovation

Kwangho Lee, Head of Distribution Economy Department

With the increase in home drinking and solo drinking culture after COVID-19, and the rise in online orders for everything from food to daily necessities, there are growing calls for changes in the liquor industry. Under current law, only regional liquors such as Makgeolli and traditional liquors can be sold online or via telecommunications, but there is a push to expand this to include soju, beer, wine, whiskey, and more.

Among OECD member countries, South Korea and Poland are the only two that prohibit online and telecommunications sales of alcoholic beverages. In contrast, the United States allows online and telecommunications sales of wine in all states and special districts except Alabama and Utah. In 18 states and special districts, sales of other alcoholic beverages besides wine are also permitted. Ten major European countries including the United Kingdom, France, Sweden, Switzerland, Finland, and the Netherlands provide environments where wine, beer, and distilled spirits can be purchased online or via telecommunications.

Recently, the European Chamber of Commerce in Korea (ECCK) pointed out in its "2023 White Paper" that "excessive regulation of Korea's liquor industry not only hinders creative activities but also causes the loss of potential export opportunities." It also advised that "allowing e-commerce for liquor retail license holders would ultimately benefit both the related industries and consumers."

Global market research and consulting firm InsightAce Analytic forecasted that the global liquor e-commerce market, currently valued at about 22 trillion won, will reach approximately 37 trillion won by 2030. In particular, the Asia-Pacific region, including South Korea, was identified as the fastest-growing market for online and telecommunications liquor sales.

However, the government is taking a cautious stance. While strengthening the competitiveness of the liquor industry and enhancing consumer benefits are important, careful consideration is being given to public health and youth alcohol issues. The Ministry of Health and Welfare and the Ministry of Gender Equality and Family oppose allowing online and telecommunications sales of liquor, citing concerns that it could increase alcohol-related mortality and accessibility for minors. According to Statistics Korea's cause of death statistics, alcohol-related deaths totaled 5,033 last year, an increase of 105 from the previous year. Additionally, even with adult verification for online and telecommunications sales, it is nearly impossible to confirm the actual purchaser, raising concerns about increased alcohol purchases by youth.

On the other hand, the National Tax Service recently commissioned a study on "The Status of Online and Telecommunications Sales of Alcoholic Beverages and Other Regulations in Various Countries" to review the possibility of expanding online and telecommunications sales and to prepare supplementary measures. However, the National Tax Service emphasized that the main purpose is to collect overseas cases of online and telecommunications liquor sales and cautioned against excessive interpretation of expansion.

In a situation accustomed to decades-old tax systems and liquor purchasing environments, it is necessary for the government and various business entities to bear some burden to bring about change. It is also important not to overlook the need to anticipate and wisely prepare for greater changes ahead. Considering trends such as population decline and reduced alcohol consumption, continuous innovation and response are required. This is an essential task for the liquor industry to adapt to the new paradigm and develop successfully.