Hitejinro Announces Price Reduction of Soju in Response to Tax Benefits

SEOUL - Hitejinro Co., South Korea's leading beverage company, has declared a 10.6 percent reduction in the factory price of its soju products starting January. This decision is influenced by the government's provision of tax benefits to the company.

According to Yonhap News Agency, the price of its soju products, Chamisul and Jinro, will be lowered to 1,115 won (US$0.9) per bottle for wholesale clients, down from the current price of 1,247 won. The company explained that this price cut is facilitated by a decision from tax authorities to offer a 22 percent tax discount on the company's soju manufacturing costs. This measure aims to create a level playing field in competition with multinational companies in the domestic market. The government's tax policy has historically differed for multinational and domestic firms, with multinationals being taxed only on import costs, while domestic companies faced taxes on manufacturing and earnings.

Last month, Hitejinro had raised its soju and beer prices by approximately 7 percent due to increased raw material and manufacturing costs. Soju, a popular distilled liquor in Korea, is made from ethyl alcohol and water, with added sweeteners. Hitejinro produces all its soju domestically and earns 10 percent of its total sales from exports, which include soju, Korean rice wine "makgeolli," and other liquors. Soju represents 80 percent of its exports, with the Jinro brand being its flagship overseas, while Chamisul and Jinro are sold domestically. The company also globally markets its beer under the Hite and Terra brands.

In contrast, Lotte Chilsung Beverage Co., the country's second-largest soju maker, initially refrained from raising soju prices despite higher costs but later announced an increase in the factory prices of its soju products, Chum Churum and Saero, by 6.8 percent and 8.9 percent, respectively, from January 1. However, Lotte Chilsung plans to apply the 22 percent tax discount to its product prices, resulting in a net reduction of 4.5 percent and 2.7 percent in the prices of Chum Churum and Saero soju, respectively. Lotte Chilsung, a unit of the Korean retail giant Lotte Group, also offers a range of other beverages in global markets. Hitejinro holds a 65 percent share of the 3.5 trillion-won domestic soju market, with Lotte Chilsung claiming 20 percent and the remaining share held by other competitors.

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