On July 22, a vendor at Malbau Market in Buk-gu, Gwangju, completes a transaction using the Livelihood Recovery Consumption Coupon received from a customer. (Photo provided by Yonhap)
SEOUL, July 25 (Korea Bizwire) — South Korea’s latest round of stimulus coupons, intended to boost domestic consumption, is drawing scrutiny as some recipients are reportedly using them to purchase large quantities of tobacco products—prompting renewed calls to restrict eligible items.
According to reports gathered by Yonhap News Agency on Friday, a significant number of citizens are flocking to convenience stores and neighborhood marts—where the “Livelihood Recovery Consumption Coupons” can be redeemed—specifically to buy cigarettes. Large supermarkets, where the coupons are not accepted, have seen less foot traffic in comparison.
One store owner in Seoul’s Yeongdeungpo District said, “From the first day of distribution, elderly customers have been coming in to buy two or three cartons of cigarettes at a time.” He noted that he’s now considering increasing his stock of tobacco and alcohol, as he did during the COVID-19 relief payouts.
Following the rollout of the government’s Livelihood Recovery Consumption Coupons, convenience stores have seen a boost in sales not only of meat and ready-to-eat meals but also of less commonly purchased items such as rice and premium ice cream. (Photo provided by CU)
On social media, users have posted images of bulk cigarette purchases made with the coupons, referring to them ironically as “smoker subsidies.” Some have dubbed the campaign the “Livelihood Support Gone Wrong,” citing the unintended side effect of subsidizing unhealthy habits.
This isn’t the first time cigarette sales have surged following government stimulus measures. Data from the Ministry of Economy and Finance showed that cigarette sales between May and August 2020, after the first pandemic stimulus payments, rose by 4% compared to the same period the previous year.
Despite the spike in sales, retailers see little financial benefit. Cigarettes offer razor-thin profit margins—around 5% compared to the 20–30% margins on typical goods. For a pack priced at 4,500 won, store owners earn less than 200 won.
Experts also warn of the risk of cigarette resale schemes, where tobacco is stored and later converted to cash—so-called “cigarette laundering.” The coupons, being time-sensitive assets, may incentivize consumers to convert them into storable goods like cigarettes for future use.
The Ministry of the Interior and Safety announced on the 24th that, within just three days of the first round of applications for the “Livelihood Recovery Consumption Coupon” — which provides 150,000 won per person — a total of 21.48 million people, or 42.5% of all eligible recipients, had applied. (Photo provided by Yonhap)
“Because these coupons expire, consumers see cigarettes as a stable commodity that can be used or sold later,” said Lee Hong-joo, a consumer economics professor at Sookmyung Women’s University. “But buying cigarettes does little to stimulate meaningful economic activity. Restrictions on eligible items should be considered.”
Kim Dae-jong, a business professor at Sejong University, echoed the sentiment: “Given the public health costs of smoking and drinking, allowing stimulus funds to be used for such purposes may backfire.” He recommended looking to the U.S. model, which restricts alcohol and tobacco purchases with food stamps for low-income recipients.
As criticism mounts, policymakers may face growing pressure to review the guidelines governing how stimulus coupons can be spent.
Ashley Song (ashley@koreabizwire.com)
