Whiskey prices soar in Korea on rising demand

The Balvenie whiskey. [Courtesy of William Grant & Sons Korea]

The recent surge in whiskey prices by major importers is drawing complaints from South Korean consumers. Some whiskies, such as Royal Salute and Glenfiddich, have seen price hikes of about 20 percent in less than two years. Concerns rise that whiskey importers are raising prices on the belief that people will buy whiskeys regardless of price as they have gained popularity.

According to an analysis commissioned by Maeil Business Newspaper to a local major supermarket on Thursday, Royal Salute 21 Year Old saw the largest increase in prices at 18.2 percent from the beginning of last year among the top five whiskeys in Korea.

Until the beginning of last year, the bottle was priced at 230,000 won ($173.58), but it now costs more than 270,000 won.

The price of Glenfiddich 18 Year Old rose to 218,000 won from 189,000 won during the same period, and Valentine 17 Year Old to 160,000 won from 140,000 won.

The prices of Chivas Regal 12 Year Old and Johnnie Walker Blue also increased by more than 10 percent each.

In particular, the price of Glenfiddich 18 Year Old, imported and sold by William Grant & Sons Korea, will be raised by 7.2 percent starting next month.

Whiskies are sold with a margin of 10 to 20 percent on top of the ex-factory price through distribution channels such as supermarkets and convenience stores, and the sales price is expected to increase similarly from next month. It means Glenfiddich 18 Year Old will see its price rise by 20 percent in less than two years.

Meanwhile, Balvenie 12 Year Old Doublewood, also imported by William Grant & Sons Korea, will also see a 4.5 percent increase in the ex-factory price starting next month. The whiskey, in fact, had its price already raised 5.1 percent in April last year. The average domestic selling price of Balvenie 12 Year Old Doublewood is currently in the 130,000 won range but is expected to rise to the level of 140,000 won once the ex-factory price hike is reflected.

Earlier, Pernod Ricard Korea Ltd. also raised the ex-factory price of its Royal Salute 21-year-old and Valentine 17-year-old whiskeys twice in March and December last year. When the ex-factory price is raised, it is usually reflected in the selling price over several months at hypermarkets, supermarkets, and convenience stores in the order mentioned. Some convenience stores have started reflecting the price hike for Royal Salute 21 Year Old this month, sparking complaints from whisky enthusiasts that its price is overly burdensome as it was already expensive.

Some in and outside the market criticize whisky importers and distributors for raising prices ahead of the Chuseok holidays at the end of next month to capitalize on the high demand for gifts.

“It is true that the prices of whiskey raw ingredients and subsidiary materials have increased, but importers and distributors are using it as an excuse to raise prices excessively,” said an industry expert.

“It is true that there are plans to raise prices,” William Grant & Sons Korea said. But the company did not disclose reasons for the hike.

Earnings of imported whiskey makers have been flying high on the back of increased sales and price in Korea.

William Grant & Sons Korea posted 18.3 billion won in operating profit last year, more than double the 9.4 billion won a year ago. Pernod Ricard Korea also posted an operating profit of 39.4 billion won last year, up 46 percent from 26.9 billion won in the year earlier.