So long, soju? South Korea is the fastest-growing whisky market in the world and the likes of LV

But the higher price tag is worth it, according to Choi and many of his peers. South Koreans consumed 14.2 million litres of whisky in 2022, a small amount compared with other nations, but up 46 per cent from 2021, according to Euromonitor International, a London-based researcher. The pace was the fastest in the world, the researcher said.

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“Millennials and Gen Z consumers tend to reject the alcohol culture centred around excessive drinking in late-night gatherings and seek new ways to enjoy alcohol,” said Sunny Moon, research manager at Euromonitor. “With the prolonged spread of Covid-19, the concept of indulging in small luxuries with a small amount of money has risen.”

The boom in whisky adds to Korea’s rising spending on luxury goods, which made the Asian country the world’s biggest luxury spender per capita in 2022, according to Morgan Stanley.

Single malt luxury

LVMH is also seeking to cash in on Koreans’ new-found love of whisky. For the first time this June, its single malt brand Ardbeg held “Ardbeg Day” in Seoul, an invitation-only whisky tasting at a venue set up to look like a Scottish distillery. Another distiller, Scotch whisky maker Balvenie, opened its second bar in Seoul this year – following the first in glitzy Gangnam alongside a Michelin-starred restaurant.

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Label-loving Koreans

“People in their 30s are on Instagram a lot and they want to flex,” said Bryan Do, the founder of Three Societies Distillery just outside Seoul, the country’s first single malt maker. “Like, ‘I’m drinking this single malt whisky or this 18-year whisky.’ You can’t do that with soju and other local drinks.”

Do said he’s focused on exports to avoid the high domestic taxes on his products. Major Korean retailers Lotte and Shinsegae are also planning to build distilleries to take advantage of an ideal climate for making whisky, particularly single malts.

“South Korea has potential to be a whisky nation,” said Dawn Davies, head of buying at The Whisky Exchange, one of the world’s largest speciality online retailers.

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The Whisky Exchange’s website orders from South Korea have surged 91 per cent in the past five years, compared with just 15 per cent for the rest of Asia, according to Davies. Koreans prefer single malts or those made at a single distillery using one malted grain, such as Scotland’s Springbank, she said.

72 per cent liquor tax

Taxes, however, are a major obstacle to continued market growth. Imported spirits can face a mark-up of more than 130 per cent on top of their sales price – 20 per cent customs tax, 72 per cent liquor tax, 30 per cent education tax and 10 per cent value-added tax. Domestic liquor doesn’t fare much better, but the low price of soju – often cheaper than a bottle of water – gives it an advantage.

In contrast, beer and takju – a herbal traditional wine – are taxed based on their percentage of alcohol content by volume. In 2022, the European Chamber of Commerce in Korea recommended that the Korean government expand volume-based taxation for other liquors as the demand for premium alcohol rises in Korea, according to a white paper. Korea has taxed beers this way since 2020 and that improved competitiveness of local beer makers, the paper said.

But taxing liquor using the same model has proven difficult because it would raise the price of soju – Korea’s national drink ubiquitous at restaurants and food stalls – that typically contains at least 13 per cent alcohol. Politicians are wary of public protests if they move to volume taxation, similar to when they raised taxes on cigarettes in 2015, said Kim Woo-chul, a taxation professor at the University of Seoul.

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“If the purpose of the liquor tax is to protect the health of the public, the authorities should tax it based on alcohol content, not the value of the liquor,” Kim said. The low price of soju “is causing Korean citizens to consume it excessively and potentially become alcoholic”.

Korea’s 72 per cent liquor tax is much higher than OECD member countries, which average about 20 per cent, according to Kim. To evade the additional costs, some consumers have resorted to extreme measures. Incheon International Airport’s tax authorities recently asked prosecutors to investigate three travellers, alleging they imported whisky with falsified tariff documents.

For law-abiding residents, highly taxed whisky remains a luxury, even if its most prominent distribution channel is a decidedly non-luxurious location: 7-Eleven convenience stores. When 7-Eleven held an event dubbed “Whisky Run” in Seoul in May for the release of 2,000 bottles of limited supply whisky, including Yamazaki 12-year-old and GlenAllachie 10-year-old Batch 9, customers waited in lengthy queues.

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Choi, the whisky aficionado-turned-home bartender, hopes such spirits become more attainable, similar to soju and beer.

“We want more reasonable prices for whisky,” he said. “It’s still expensive for entry-level workers and university students to enjoy in Korea.”

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