Diageo Korea Challenges Trade Act Prohibition With Johnnie Walker Order Policy

Diageo Korea is requiring bars, nightclubs, and other establishments to purchase all seven of its imported liquors every month from May to July to be able to place an order for its popular whisky, Johnnie Walker.

The company's less popular brands that they tied in with Johnnie Walker include Singleton, Talisker, Tanqueray, and Don Julio.

Korea's Fair Trade Act prohibits such tie-in sales, penalizing violators with imprisonment of up to two years or fines of up to 150 million won ($112,000). The National Tax Service also restricts suppliers from forcing buyers to purchase unwanted products.

Diageo Korea admitted to sending an official document related to the new sales policy to its customers.

According to Diageo Korea, the new policy is designed to foster continued growth in the domestic whisky market, under their global brand strategy, which it assures is formulated on logical grounds.

The Johnnie Walker series and Ballantine's, which is imported by Pernod Ricard Korea, have long been competing for the No.1 spot in the domestic market.

But Diageo's gin and tequila products Tanqueray and Don Julio have been less popular among Korean consumers.

Whisky importers have long been using this tie-in tactic to boost the sales of unpopular products by bundling them with popular ones.

Foreign liquor importers have previously sold unpopular alcoholic items combined with ones that are in high demand.

DnP Spirits faced criticism for requiring the purchase of 48 bottles of unpopular American whiskeys for every 20 bottles of The Macallan.

Beam Suntory Korea sold the popular Japanese whiskies The Yamazaki and The Hakushu under the condition that a lesser-known single malt whisky Auchentoshan was also purchased.

But none of them had explicitly asked bars and restaurants to do so by sending letters in the name of company CEOs, according to an industry official on condition of anonymity.