Korea bubbles over with craft beer rush

It has long been a common remark that the best beer on the peninsula is found north of the Demilitarized Zone.

But increasingly this refrain is failing to do justice to South Korea’s much-diversified beer market, which has lately seen the rise of craft beer.

Craft beer refers to beer produced by small brewers ― known as microbreweries ― and in small batches. In the Korean context, it is beer that is not brewed by any of the major liquor corporations ― Oriental Brewery, Hite Jinro and Lotte Liquor.

Until recently, craft beer was considered an exotic gourmet option, as big name tap houses such as Craftworks and Magpie were mostly located in Itaewon, Seoul, reflecting the demand of foreigners who frequented the area.

The recent growth spurt started with Alley Kat, a Canadian beer that started selling here in 2005 and went viral among expats seeking a taste of home.

Based on this ardent response, the craft beer culture soon spread to the local food and beverage industry, capturing the attention of domestic consumers.

Spearheading the market expansion was the nation’s first-ever craft beer company, 7Brau, which incorporates the popular 7Brau Pub. When the government revised the liquor tax law in 2002 to allow small-batch beer production, the company swiftly applied for a business license and become the No. 1 microbrewery brand.

Some late movers deliberately chose to stay away from Itaewon, claiming that craft beer should no longer be considered an exclusive experience.

“I refuse to think that the craft beer culture is mostly for foreigners and a group of trend-followers,” said Ray Chung, CEO of Beer Company One.

Chung operates Craft One, a tap house located in Yeonnam-dong, Seoul, a block away from the bustling streets of Hongdae.

He was the creator of Mingle, the first craft beer to be produced with a purely Korean recipe.

“The so-called first generation craft beers here were based on foreign recipes and had a rather strong and bitter taste, which didn’t quite suit the average taste of Korean consumers,” he said.

Mingle, with its relatively soft taste and milder yeast flavor, was successful in becoming popular among beer lovers.

But sustainability is the greatest challenge for craft beer, which is mostly manufactured in small batches by contracted brewers. This is why Chung decided to launch his own brewery, Brew One.

“After launching Mingle, I was flooded with order requests but chose to hold back on sales as our products are currently manufactured by outside contract breweries,” he said.

“I wanted to take 100 percent responsibility for my products, which is why I am taking the risk of operating my own exclusive brewery.”

But despite such elevating vigor of the market, industry practitioners have a number of reasons to be concerned.

According to the Korea Microbrewery Association, Korea’s liquor tax law places too much burden on small-sized brewers, as its flat taxation system favors mass quantity producers.

The entry of conglomerates into the market is another threat to individual microbreweries.

Jinju Ham, a local processed food manufacturer, took over Ka-Brew earlier this year, with a pledge to expand into the beverage sector and create a synergy effect with its conventional business.

Shinsegae Group, too, opened Devil’s Door Pub, a 200-seat craft beer pub, in Banpo-dong, southern Seoul, late last year.

“The conglomerates’ entry added a sudden momentum to the craft beer market that has long remained dormant,” Chung said.

“But a trend that was fast to rise is also likely to fade out just as fast, a lesson that we learned from the once-hot makgeolli (a rice-based traditional liquor) business.”

In order for the recent craft beer fever to last, it is important that small-sized, independent breweries continue to communicate actively with the market and create a stable fandom, he added.

By Bae Hyun-jung (tellme@heraldcorp.com)