In Korea, drinking soju (소주) is a part of daily life. For Koreans, drinking is a social activity. It’s not only a drink, it’s a culture, and Koreans’ affection for soju is famous all over the world.
Because of this, soju is insanely popular in Korea. A 2011 survey identified it as the most popular alcoholic drink in Korea, and the average person is estimated to consume nearly six bottles of soju a month!
One of the reasons for this high consumption of this rice-based drink is its low price. A bottle can be picked up for as little as just one US dollar, though of course as it is in any country, it can be more expensive in restaurants and bars. But just why is soju so cheap in Korea? We’ve researched this, and you can find out the reasons below – just read on…
Historical reasons
The history of soju dates back nearly a thousand years to the 1200s, thanks to the introduction of the brewing technique to Korea by the invading Yuan Mongols. So it’s no surprise with a history this rich that the distillation process has been honed to a fine art by the larger industrial producers like Jinro.
And given it’s been around for this long, there’s inevitably downward cost pressure due to various competitors jostling for market share.
The cost of production is cheap
The ingredients used to make soju are relatively cheap and widely available. While the spirit is traditionally made from rice, more modern methods have involved the use of alternatives like tapioca or wheat, and bringing in other ingredients like barley and sweet potato.
Different types of flavored soju have also become popular in recent years, which has involved bringing in more flavorings and sweeteners.
Nevertheless, all of these ingredients are widely available, and despite upward cost pressures on the constituent parts, as well as the ever-present threat of inflation, soju producers are still able to make a good margin on their products despite the low sale price.
Taxation and government policy
Another reason for soju being so cheap in Korea is a favorable taxation rate. Perhaps that’s no wonder given its popularity and how long it’s been around, but the government are keen to ensure that this Korean staple remains widely affordable. Soju was one of 52 household essentials that the previous president, Lee Myung-bak, froze the price of in 2008 to combat price rises for the Korean public.
And yet, whilst there have been arguments that global policy should combat the habitual drinking of hard liquor like soju, Korean parliamentarians have fought back ferociously whenever the suggestion has been made to increase levies on soju to try and effect a reduction in heavy drinking (a policy that has been seen to work successfully in countries such as Scotland).
Abundance
As we’ve noted above, competitors such as Jinro, Chamisul and Chum Churum vie for space in Korea’s convenience stores, restaurants and bars. But another factor in favor of low prices is that it’s sold all over the place.
Whilst you might expect to buy soju in specialist liquor stores in other countries, by contrast in Korea soju is available in pretty much all supermarkets and local stores, as well as bars and restaurants, and even from street hawkers. Shops also don’t need a licence to sell soju, making it even simpler for anyone who wants to be able to sell Korea’s favourite alcoholic beverage to do so.
As with any fast moving consumer good, this massive competition benefits the consumer as vendors and shops compete to provide the best pricing to lure in the punters.
Small bottles
Linked to the above, another reason for the ubiquity of cheap soju in South Korea is that it’s typically sold in small bottles of around 360ml. This means that it’s easy for sellers to stock a wide variety of different brands and types of soju, as they don’t need much space to store the bottles.
Likewise, smaller bottles mean that more can be transported at a time, resulting in lower distribution costs that mean these savings can be passed on to the Korean consumer.
Low wages
According to the latest OECD statistics (2020), the average wage in South Korea adjusted for purchasing power is $41,960 (USD). Whilst this means South Korea is rooted in mid-table in the statistics, ranked 19 of the 35 countries measured, it’s important to note that this isn’t a pure dollar measure of the wage, but is adjusted for the cost of living in the respective countries the organisation measures.
Indeed, it is reckoned that Korea is the world’s worst country for unpaid wages, and South Korea is also a highly developed nation, meaning there are lots of other costs for the average consumer like housing, travel, leisure and transport. So given this, as we’ve already mentioned, the government in Korea act to mitigate the impact of this on its electorate.
But what about other countries? Is soju cheap there?
I’m afraid that soju can’t be found so cheaply outside of Korea, and other low cost of living countries like the Phillipines where it will appear comparatively cheap by US and UK standards. That’s bad news for those of us that live in those countries, but why is this?
Unfortunately there’s a very simple explanation for this – import costs. As soju isn’t widely produced outside of Korea, there’s limited ability for foreign countries to get hold of locally produced soju. As a result, and also due to interested drinkers and emigrants to drink authentically produced Korean soju, the vast majority of soju drunk outside of South Korea is imported.
This means there’s all sorts of costs and taxes to pay – not only the cost of shipping what is a fairly delicate item a long way around the world, but then import taxes and duties are usually also owed when the distinctive green bottles reach their destination. Depending on the country, there may also be additional tariffs to pay, as the country may look to protect its local distillers and breweries.
Given all of these costs and difficulties, a bottle of soju can still be picked up for a reasonable price outside of Korea. For example, in the UK where the writer of this piece is based, a bottle of soju can be bought for a good price on Amazon and delivered direct to your door.
Indeed, if you’re willing to buy in bulk, for example a multipack of our favorite flavored soju varieties, you can potentially bring the price down even further – and they’ll even throw in a soju glass if it’s available.