Ⅰ. Title
Developmental Strategies for the Farm and Traditional Technology-Based Korean Liquor Industry
Ⅱ. Objectives of the Study
Liquor market size in Korea is more than 8 trillion won, and all the liquor industries pay 2.6 trillion won as a tax in 2003. However, Korea seriously depends on foreign market to import foreign liquor in terms of raw material and final goods. Korea imports more than 316 million US dollars foreign liquor in 2003.
Why does Korea have to import so much foreign liquor? This might be caused by lack of appropriate promotional policy program in this industry. Actually Korean government only focused on efficient taxation on the liquor rather than promotion as an industry. Therefore, government rigorously controls the production and marketing of liquor based on the liquor tax regulation.
There are large scale deregulation in this sector in 1998 following world trends such as liberalization and free trade, decreasing tax, etc. This allows easy participation for the liquor production, but it is still difficult to develop because of poor understanding liquor as an high value added industry with strong forward and backward linkages.
Objectives of this study are to identify current situations and problems of the farm and traditional technology based Korean liquor(FTKL : Urisul) industry to figure promotional strategies of the industry as a whole. Development of the Urisul industry can save foreign currency through substitution with Korean liquor and help safety of the food supply and demand, and increase farm-household income through facilitating consumption of domestic agricultural products. Furthermore, Urisul industry help enhancing people’s health with traditional food made from various domestic raw materials such as rice, fruits, medicinal herbs, etc. It also provides opportunity to succeed and develop traditional culture through this procedure.
Ⅲ. Results and Suggestions
Number of Urisul industry including farmer's liquor industry 121 and traditional folk industry 45 is sharply increased to 166 in 2003 because of deregulation for this sector. However, share of this Urisul industry out of total liquor industry is 12.1% in number, 0.13% in production quantity, and 0.47% in total tax for liquor industry in each. Especially, production quantity per number of farmer's liquor industry and traditional folk liquor industry is 38.5 and 24.2㎘ in each, while that of general liquor industry is 2,390㎘. This implies that size of the Urisul industry is very small compare to general liquor industry in Korea.
Small size of this Urisul industry is caused by limited consumption for the Urisul products. Based on the questionnaire for the purpose of purchasing Urisul, 55.9% of respondent buys the liquor as a gift and 18.2% as a sacrificial rite which implies this types of liquor is known as a special and unusual liquor for consumer in general. On the question that why the consumer dislike Urisul, consumer answers as follow ; high price(49.7%), headache after drinking(44.9%), unfavorable taste (31.7 %), difficult to purchase(18.6%), etc.
Responds for the question what are the faced difficulties in the business of Urisul industry are as follow ; excessive tax rate(80.0%), lack of capital(40.0%), poor sales(34.7%), rigorous regulation on the manufacturing methods(15.8%), lack of technology(11.9%). In additions, they suggest followings as the tasks for the development of Urisul industry ; to provide capital for facility and management (50.3%), to approve for sales through telecommunication and internet(32.9%), to support for advertisement and sales promotion(27.1%), etc. They also recommended followings as tasks for institutional reformation ; different taxation based on the business size(72.3%), repeal of the factory price indication system(45.7%), encouragement of sales through telecommunication and internet business(37.2%), deregulation on the manufacturing methods and the utilization of raw material (16.1%), and improvement of laws and administration system for the Urisul industry(12.9%), etc.
Based on these findings, policy goals can be set up as follow ; first of all, Urisul industry should be thought as an industry rather than simple articles subject to taxation, and facilitated production and market in close relation with domestic agriculture and food culture because of its size and roles in national economy. In addition, reformation of the taxation and management system for Urisul industry are also important because industry development is impossible without rational and efficient institution. Finally, introduction of the sound drinking culture and protection people’s health and youth from the excessive drinking also should be accounted for one of the most important policy objectives.
Policy directions to meet above goals are recommended as follow : (1) deregulation and policy reform in the fields of standardization and manufacturing methods, etc., for facilitating market order and vitalizations of private sector, (2) development of the Urisul industry should be based on Korean agriculture and traditional food custom, (3) tax reform is necessary. For example, tax rate for low alcohol contained liquor and small size business should be decreased for the purpose of people’s health and promotion of very small Urisul businesses, (4) law and administration system should be improved to coordinate various issues and tasks accomplished by related institutions.
Based on the policy goals and directions, followings are recommended as revitalization schemes for the Urisul industry in Korea : (1) to take shape of the target group for the farmer's liquor and traditional folk liquor industry and reform supporting policy programs, (2) to reform taxation system and provide incentive for small farmer's liquor and traditional folk liquor businesses which are using domestic raw materials (3) to diversify manufacturing methods and allow utilization of various raw materials, (4) to reform the quality control and indication system for Urisul industry, (5) to enforce for promotion of sales and advertisement, (6) to establish sustainable raw material supply system and facilitate utilization of the domestic materials, (7) to increase fund support for small Urisul business, and (8) to reform administration system and activization of the association of the businessmen in this sector.