Imports of Japanese beer to South Korea nearly halved in July as consumers shun Japanese products following a spiraling trade war between the two Asian countries. The relationship between the two neighboring countries has long been strained because of Japan's brutal colonization of the peninsula in the first half of the 20th century. The latest conflict arose, when South Korea allowed former workers to sue for indemnification for forced labor during Japan’s occupation of South Korea between 1910 and 1945. Tokyo refuses payments saying that an agreement from 1965 in which Japan paid USD 500 million was meant to cover such cases. As a counter-measure, Japan imposed strict controls on three key materials for South Korea's semiconductor industry.
"Japan initially cited our Supreme Court's ruling over wartime forced labor as the reason [for the curbs on trade] but it later changed its words by citing South Korea's insufficient export management for strategic materials. Because of that, I come to question what the real intention of Japan is," said South Korean President Moon Jae-in. He also warned Japan not to play "a game where nobody wins and everyone, including Japan, becomes victims".
61 percent of all beer exports from Japan worth JPY 7.9 billion (USD 73 million) went last year to South Korea. This was an increase of four times the amount three years before.
The newest tension between the two countries and a call to boycott of Japanese goods has now reversed the trend and lead to a 11 percent decline in Japanese beer sales in the first half year 2019 compared to the same period one year before. Asahi Group Holdings, one of the biggest exporters of Japanese beer to South Korea already lowered its profit guidance for 2019 saying that the boycott was affecting sales.
Domestic beers and imported beers from countries like Germany and the USA will profit most from the changes in the patterns of consumption. In the long run, however, beer imports are likely to shrink anyway because South Korea is planning to alter its 50-year-old tax system for beer and liquor which so far discriminated locally produced products and has resulted in one of the highest beer import rates in the world. Currently 1 out of 6 beers in South Korea are imported (inside.beer, 11.6.2019).