No Result from 39 Rounds of Negotiation
The labor union of Oriental Brewery (OB), the South Korean unit of Anheuser-Busch InBev, announced that it would temporarily get back to work from September 21 as the management asked to call off the strike. Previously, unionized workers at OB expanded their strike for eight days from August 13 as wage negotiations with the management fell through. However, they said they would decide whether or not to resume the strike according to the result of negotiations in the future.
The labor and management have held 39 rounds of negotiations since December last year but failed to reach an agreement on wages yet.
Sales of OB, known for its flagship OB beer, showed high growth with an average annual growth rate of 14 percent from 2007 to 2013. Accordingly, the labor union has asked for a 5 percent salary increase, performance-based bonus system improvement and lump sum payment of 3 million won (US$2,680). The management is now in talks with Anheuser-Busch InBev regarding to the request.
Meanwhile, industry sources points out that the relations between labor and management are aggravated as Brazilian-born CEO Frederico Freire (By Korean name, Kim Do-hoon) changed the company’s management policies after he joined the company in 2014.
The Korean liquor market has unique business characteristics, including alcoholic beverage wholesalers. However, Anheuser-Busch InBev and CEO Freire have imposed “global standards,” causing many problems on the ground.
Eventually, a large amount of key workers, which led OB, left the company last year and new employees, who worked at foreign-based companies and were fluent in English, joined the company as executives.
In addition, there has also been criticism that OB has focused on imports rather than exports through production after CEO Freire took office.
OB currently imports beer products of Anheuser-Busch InBev, such as Stella Artois, Corona, Beck's, LöwenBräu, Leffe, Bass, Boddingtons, Franziskaner, Mousel and Harbin. Sales of imported products recorded 80.1 billion won (US$71.55 million) last year, up 44.2 percent from 2014.
Some also say that the company’s sales representatives are suffering from many grievances after CEO Freire has strengthened its high-end beer product lineups rather than Cass.
An official from the industry said, “Most wholesalers and restaurant owners want to purchase Cass. OB wants its sales representatives to sell high-end beer products to them but it is difficult in reality.”