A customer carrying conventional Korean costume tastes a pattern of makgeolli, a Korean fermented rice alcoholic beverage, on the primary day of the Korea Makgeolli Expo at aT Heart in southern Seoul, Could 10. Newsis
By Baek Byung-yeul
Makgeolli, a conventional Korean fermented rice alcoholic beverage brewed from nuruk (a fermentation starter), has a singular milky and sweet-sour taste that Koreans have loved for over a thousand years.
This standard conventional Korean beverage, which has seen declines in each home gross sales and exports, is at a crossroads for brand new adjustments as the federal government is pushing to amend tax legal guidelines to permit a greater diversity of makgeolli brewers to enter the market.
In July, the Ministry of Financial system and Finance introduced this 12 months’s tax reform, together with amendments that permit the addition of synthetic flavors and colorings to makgeolli, probably broadening its enchantment each domestically and internationally.
With the worldwide recognition of Ok-culture, makgeolli has not too long ago made its title within the international alcohol market, with elevated exports to the US, Japan, Southeast Asia and Europe.
Furthermore, the COVID-19 pandemic noticed an increase in solo consuming, which contributed to a rising perception within the well being advantages of fermented drinks like makgeolli, additional driving up export volumes.
Nevertheless, main home makgeolli firms have not too long ago proven declining performances. For Kooksoondang Brewery, gross sales fell 5.5 p.c year-on-year to 70.5 billion gained ($52.5 million) in 2023, whereas working revenue plunged 51.2 p.c from the earlier 12 months to 4.5 billion gained.
Distinguished makgeolli breweries like Seoul Jangsu and Jipyeong Brewery additionally skilled respective year-on-year declines in working revenue of 10.4 p.c and 40 p.c in 2023.
A buyer chooses makgeolli or Korean fermented rice alcoholic drinks at a grocery store in Seoul, Oct. 4, 2023. Newsis
Makgeolli firms are additionally dealing with export difficulties. In response to knowledge from the Korea Customs Service, the export quantity of takju — which is a broad time period for uncooked, cloudy Korean rice wine that features makgeolli — peaked at 15,396 tons in 2022 however fell by 9.2 p.c to 13,982 tons in 2023.
The export quantity additionally decreased by 6.3 p.c to $24 million, contrasting with the export surge of soju, a Korean distilled liquor, which recorded $101 million throughout the identical interval.
Trade specialists have acknowledged that for the reason that COVID-19 pandemic, makgeolli makers have tailored effectively to altering developments, however they’re now dealing with decreased demand.
“Because the COVID-19 pandemic, Korean eating places in abroad nations have struggled to function, resulting in a lower in makgeolli exports. Moreover, the whisky growth has diminished the recognition of makgeolli,” an official from the native liquor business acknowledged on situation of anonymity.
On this state of affairs, the federal government’s tax regulation amendments are anticipated to supply a brand new breakthrough. Beforehand, if synthetic flavors or colorings have been added to makgeolli, it was categorized as “different alcoholic drinks,” topic to increased tax charges, and the usage of the title “makgeolli” was restricted. Nevertheless, this modification permits for the authorized manufacturing of assorted flavors of makgeolli, resembling banana, chocolate and strawberry.
The tax imposed on these drinks with totally different flavors and colours may be dramatically diminished. If the modification is carried out, the tax quantity on these drinks with a price ticket of 1,000 gained for 750 milliliters will lower from 246 gained to 33 gained, a discount of over 80 p.c.
The Korean Makgeolli Affiliation, a foyer group representing the pursuits of home makgeolli producers, welcomed this measure, saying it allows a extra numerous vary of makgeolli to grow to be competitively priced in each the home and abroad markets.
“At present, makgeolli manufacturers with added flavors or colorings, categorized as different alcoholic drinks, can’t be labeled as makgeolli and thus are usually not acknowledged as such out there,” mentioned Nam Do-hee, secretary common of the affiliation.
The secretary common famous that this legislative modification is anticipated to be significantly helpful for exports.
“Exporting makgeolli could be very difficult. It’s tough to discover abroad markets. Exporting makgeolli to the Chinese language market had been stalled, but it surely began to select up within the latter half of final 12 months. The Japanese market is stagnant or declining, making it onerous for brand new makgeolli merchandise to enter,” he mentioned.
“The issue in exporting makgeolli stems from the truth that most producers are small-scale companies. There are about 820 firms registered below the Ministry of Meals and Drug Security, with 70 p.c to 80 p.c being companies with fewer than 5 workers. For these firms, overcoming worth pressures to achieve exports just isn’t simple.”
On this Joseon-era portray “A Tavern,” by Kim Hong-do (1745-1806), persons are gathered in a jumak or tavern consuming takju, a broad time period for Korean fermented rice alcohol that features makgeolli, exhibiting the alcoholic beverage has been historically consumed by many Koreans for a very long time. Courtesy of Nationwide Museum of Korea
Issues over dilution of custom
Nevertheless, not everybody within the business helps these adjustments.
Some makgeolli makers argue that if alcoholic drinks containing flavorings and colorings will be categorized as makgeolli, it might dilute its conventional identification that many brewing firms search to keep up.
Representing these considerations, Rep. Lim Ho-sun of the Democratic Social gathering of Korea identified that such legislative amendments may solely profit sure firms.
“The federal government ought to rethink the tax regulation amendments that develop the usage of components in takju,” the lawmaker mentioned throughout a price range assessment assembly on the Nationwide Meeting in Seoul, Sept. 3.
In response, Finance Minister Choi Sang-mok answered, “The federal government plans to take heed to the opinions of related departments and the business and assessment the matter as soon as once more.”
Consultants anticipate that this transfer might really contribute to the globalization of makgeolli, viewing the modification as a chance to broaden the business’s scope. Just like the success tales of Korean delicacies, extra abroad clients will grow to be focused on conventional Korean alcohol by way of the diversification of makgeolli, they added.
“The time is ripe for exporting Korean alcohol, as curiosity in it’s rising abroad. To advertise makgeolli extra broadly in worldwide markets, home makgeolli makers must be allowed to create a wide range of flavored makgeolli merchandise by way of this legislative modification,” the native liquor business insider mentioned.
Staff of Nakchun, conventional Korean alcohol brewer, maintain a banner to commemorate the corporate’s first export of its Jijangsu makgeolli to the US on the firm’s headquarters in Donghae, Gangwon Province, Aug. 14. Courtesy of Nakchun
Hopeful abroad markets
Though makgeolli exports have not too long ago declined, the drink’s international enchantment stays robust as a result of unfold of Ok-culture, and makgeolli makers are exploring new markets for progress by way of exports.
Nevertheless, firms aiming for worldwide markets face a big hurdle: makgeolli’s quick shelf life, which complicates export efforts. To handle this, most makgeolli for export is sterilized to increase its shelf life by killing the yeast and enzymes, however this course of usually leads to a much less flavorful drink, missing the distinctive style of contemporary, naturally carbonated makgeolli.
Regardless of these challenges, some firms are discovering success. Nakchun, a makgeolli producer primarily based in Donghae, Gangwon Province, identified for its makgeolli model Jijangsu, exported 11,200 bottles of makgeolli to the U.S. for the primary time final month.
Jijangsu makgeolli gained the grand prize within the takju class on the Korea Wine & Spirits Awards in 2022. Till not too long ago, it has primarily been exported to Asian nations resembling Hong Kong, Vietnam and Indonesia, with this being its first entry into the U.S. market.
“We determined to export our makgeolli to the U.S. to hunt alternatives in a bigger market. We hope extra abroad shoppers will come to like makgeolli,” an official of the makgeolli brewery mentioned.
