November 27, 2024

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Carlsberg's beer products (GoldenBlue)

GoldenBlue, a South Korean whiskey maker and distributor of imported liquor, said Friday it had filed a complaint against its former partner Carlsberg Group for unilaterally ending their distribution contract.

In its complaint filed with the Korean Fair Trade Commission on Wednesday, GoldenBlue also argued that Carlsberg Group engaged in unfair trade practices during their contract period.

In March, Carlsberg Group "unilaterally" terminated their contract for the distribution of Carlsberg beer in Korea. The two companies had been in partnership since they signed the deal in May 2018.

The Korean distributor insisted that the Danish brewer abused its superior bargaining position to demand GoldenBlue achieve a high sales target, leading the company to increase marketing expenses.

GoldenBlue said its marketing expenses between 2018 and 2021 accounted for around 50 percent of net sales of Carlsberg beer products. It added that the company made a significant investment to add some 50 new employees and set up a unit dedicated to increase sales of Carlsberg.

“Losses continued due to increased expenses (in marketing and investment) as Carlsberg Group pushed with excessively high sales goals. But, the company endured the losses in hopes that the company would be able to generate profits from a long-term perspective,” an official from GoldenBlue said.

Between 2018 and 2021, GoldenBlue boosted sales of beer products significantly, making Carlsberg one of the top 10 foreign beer brands in the country.

“Yet, (Carlsberg Group) started to make preposterous propositions in 2021, when they were negotiating for a contract renewal,” the official added.

From January 2022, when the contract expired, the Danish firm offered only short-term extensions of two to three months.

After October 2022, Carlsberg Group refused to renew the existing contract with GoldenBlue.

The partnership breakdown came as Carlsberg Group decided to directly operate its business in South Korea. In October 2022, Carlsberg Group established its own sales office and started to distribute Carlsberg products through Carlsberg Korea.

“GoldenBlue is also considering taking (other) legal measures to settle the issue. The company will also discuss the issue with the Embassy of Denmark in South Korea,” the official added.

By Shim Woo-hyun (ws@heraldcorp.com)