Korea’s major soju brands squeeze out regional names

[Photo by Yonhap]

South Korea’s well-known soju brands such as Chamisul and Chum-Churum are pushing out regional names in the industry amid the weak market due to sluggish consumption.

According to sources on Sunday, HiteJinro Co.’s soju sales in Korea reached 1.22 trillion won ($881 million) in 2023. Although slightly lower than the previous year, it marked an increase of 11.9 percent compared to 2021.

Lotte Chilsung Beverage Co. has also seen its domestic soju sales surge by 22.4 percent last year to 338.7 billion won.

The surge in major brands’ soju sales is in contrast to the sharp decline in sales of regional brands.

With the exception of Muhak, which managed to weather the storm with its product “Good Day,” most local brands suffered a sharp decline in operating profit, facing their worst times.

For instance, Bohae Brewery, a soju icon in the Honam region, recorded an operating loss of 2.8 billion won last year despite a 2.5 percent increase in sales to 93.1 billion won compared to the previous year.

Kumbokju, a soju company in the Daegu-Gyeongbuk region, saw a 5.7 percent decrease in sales last year, coupled with a staggering 95.7 percent drop in operating profit.

Daesun also saw a 43.7 percent fall in operating profit compared to the previous year, while Sunyang Soju and Hallasan turned into losses.

Industry insiders interpret that while major liquor companies introduce innovative products such as “zero-calorie” soju or soju blended with various fruit flavors to expand the market, local soju manufacturers are struggling due to limited investment capabilities, primarily focusing on marketing with famous models rather than developing new products, leading to deteriorating profitability.

[Graphics by Song Ji-yoon and Minu Kim]

According to the Korea Agro-Fisheries & Food Trade Corporation (aT), HiteJinro accounted for 59.7 percent of the retail soju market at the end of last year while Lotte Chilsung Beverage accounted for 18 percent.

The food industry advises that local soju should pay attention to the recent trend of “loconomy,” a portmanteau of “local” and “economy,” which signifies enjoying various regional food cultures as domestic travel gains popularity amid high inflation and exchange rates.

As young consumers seek to enjoy diverse regional food cultures through various collaborations, there is potential for local soju brands to expand their market share.

Sunyang Soju attracted attention by opening a pop-up store called “Plop Sunyang” in Seongsu-dong, Seoul, last year, drawing a cumulative 17,800 visitors in just three weeks.