[Sulsul Leaking K-Alcohol Tax]② Profitable Even When Bought in Japan and Resold Used... Thriving Alcohol Resale Market

Price Gaps Driven by Liquor Tax Differences
Overseas Direct Purchases on the Rise
Travelers and Direct Purchases Estimated to Account for Over 15% of Total Imports
Foreign Liquor Bought Cheaply Abroad... Resale Thriving in Korea
Distortion of Domestic Market Order... Potential Threats to Public Health

"Macallan 12-year-old old version 270,000 KRW. Large quantities available. Box unit sales also possible."

Alcohol purchased cheaply overseas to avoid South Korea's 'liquor tax bomb' is being illegally resold through social networking services (SNS), disrupting the domestic liquor market order. So-called 'whiskey expedition teams' who sweep up liquor during trips to Japan are seeking arbitrage profits by engaging in secondhand transactions on liquor-related online communities, turning what was once a space for liquor enthusiasts to share information into a place to learn the loopholes of the domestic liquor market system.

Due to differences in the liquor tax system, the price gap between domestic and overseas markets for alcoholic products has widened significantly, leading to a rapid annual increase in online overseas direct purchases by domestic consumers.
[Photo by Koo Eun-mo]

Illegal Liquor Resale Extends from Telegram and Smart Order Apps to Convenience Stores

The most commonly used channels for liquor resale are SNS platforms. The representative platform is 'Telegram,' where various liquor secondhand trading channels have been established and resale transactions take place. For example, in one channel with over 900 members, the list and photos of products for sale are neatly organized, allowing users to view the types and prices of products at a glance. Posts from sellers indicate that quantities are sufficient to conduct transactions by the box, and buyers also propose purchases by specifying particular products and price conditions.

Another SNS platform, 'Discord,' operates channels with over 1,000 members where resale transactions are thriving. Besides whiskey, famous Chinese baijiu such as Maotai and Xifeng, as well as limited edition products not officially imported into the domestic market, are sold. These channels encourage posting purchase methods and reviews even after transactions are completed to continuously activate trading. The channels maintain security through periodic closures and platform switching, and verify member authenticity through various authentication procedures.

Reconstruction of the private channel screen for whiskey resale within 'Telegram'

Reconstruction of the Private Whiskey Resale Channel Screen within Discord

Additionally, in liquor smart order applications, whose users have significantly increased in recent years, liquor specialty store (liquor shop) operators send direct messages (DMs) to regular customers to induce transactions at low prices or sell small quantities using tasting tickets or vials. Although companies conduct monitoring, detection is not easy. Offline channels are no exception. Last year, resale of whiskey not officially imported was detected in convenience stores in Seoul, prompting an investigation by the National Tax Service.

Arbitrage through Illegal Resale... Rapid Increase in Overseas Direct Purchase of Liquor

Due to differences in the liquor tax system, the price gap of alcoholic products between the domestic and overseas markets has widened significantly, leading to a rapid annual increase in online overseas direct purchases by domestic consumers.
[Photo by Eunmo Koo]

Currently, overseas travelers can bring in up to 2 bottles of liquor under 2 liters and under 400 dollars duty-free. If these limits are exceeded, self-declaration is required. Liquor exceeding the duty-free limit is taxed based on the local purchase price, but due to differences in liquor taxes between countries, it is possible to buy liquor cheaply and underreport quantities, which is exploited for arbitrage resale.

This is also confirmed by statistics on overseas direct purchase of liquor. According to the Korea Customs Service, overseas direct purchase of liquor products increased about 12 times from 2.9 billion KRW in 2019 to 34.4 billion KRW in 2022. Especially for whiskey, overseas direct purchase is the fastest-growing category among domestic import amounts, with 74,950 direct purchase cases in 2022. This is more than 7 times the previous year and about 95 times the 786 cases in 2019.

The direct purchase amount increased from 120 million KRW in 2019 to 9.67 billion KRW. In terms of scale, wine was the largest category, with direct purchase amounts rising nearly ninefold from about 2.5 billion KRW in 2019 to 21.3 billion KRW in 2022. The spread of 'home drinking' culture during the COVID-19 pandemic contributed to this, and active resale through SNS further accelerated overseas direct purchase demand. The liquor industry estimates that considering the larger volume brought in directly by travelers and the annual increase in volume, liquor imports via travelers and direct purchase account for more than 15% of total imports.

Resale Mocking Liquor Licenses... All Illegal

Liquor resale violates related laws including the Customs Act, Liquor License Act, Food Sanitation Act, Special Act on Imported Food, and Food Labeling and Advertising Act. In South Korea, liquor sales require a license issued by the National Tax Service. Any sales without permission are illegal. Products purchased within the liquor duty-free limit or those imported with taxes paid beyond the limit are no exception, as resale violates the duty-free purpose of 'personal consumption.'

Resale is strictly prohibited under the law because it threatens the transparency and safety of the domestic liquor market. Officially imported liquor products in South Korea are tagged with RFID (Radio Frequency Identification) tags. RFID tags enable the National Tax Service to track the entire distribution process of liquor in real time from manufacturing to sales to prevent illegal liquor circulation and ensure accurate tax collection. They also guarantee product quality and protect importers, wholesalers, and retailers in the official distribution channels.

Alcoholic beverage products officially imported into the country are equipped with RFID (Radio Frequency Identification) tags.
[Photo by Eunmo Koo]

On the other hand, counterfeit liquor poses not only personal financial losses from purchasing fake alcohol and government tax losses but also serious health risks to consumers. Liquor of unknown origin without proper food inspection may contain harmful substances that can cause blindness or death. Such products are also difficult to receive proper compensation for damages even if problems arise due to defects.

Purchasing liquor through overseas travel or direct purchase also negatively impacts the domestic economy. Most liquor products bought overseas are readily available domestically, but consumption shifts overseas due to price differences, leading to decreased consumption in the domestic household and entertainment liquor markets. According to the Ministry of Agriculture, Food and Rural Affairs, the dining industry business sentiment index for the fourth quarter of last year was 71.52, down 4.52 points from the previous quarter, with pubs scoring the lowest among industries at 65.40.