HiteJinro Beverage's Operating Profit Soars 297% in First Half... Seoksu and Black Barley Gain Popularity

[Asia Economy Reporter Lee Seon-ae] Hite Jinro Beverage continues to show growth in sales and profits in the first half of this year, following last year’s trend.

Hite Jinro Beverage announced on the 13th that its sales in the first half of this year grew by 15% compared to the same period last year. Operating profit during the same period surged by 297%. This is a remarkable performance compared to the overall stagnation in growth across the beverage industry due to the impact of the novel coronavirus (COVID-19).

Since 2017, Hite Jinro Beverage has been focusing on business diversification and improving its profit structure, maintaining a positive earnings trend since last year. In fact, the water business, which had a weak profit structure, achieved economies of scale through PET line expansion, resulting in a 28% growth in PET sales compared to the same period last year and establishing a profitable structure. Additionally, the expansion of new trading partners such as Coupang and CU diversified home delivery channels amid growing preference for untact (contactless) consumption, which is analyzed as a key factor.

Following the water business, Hite Jinro Beverage actively implemented a product portfolio strategy by launching new products and completely renewing existing ones to expand the beverage business segment. As a result, the contribution of beverage sales compared to water, which was about 16% in 2016, increased more than twofold to 37% this year.

While most domestic tea beverage products recorded negative growth in the first half, ‘Black Barley’ led the co-growth of the barley tea beverage market with a 32% increase in sales compared to the previous year. In June, it was confirmed to enter Trader Joe’s, the largest organic specialty channel in the United States, marking the first shipment in Korean beverage history. A reorder was received within a month, raising high expectations for pioneering the U.S. market. Domestically, it plays a key role in strengthening the company’s sales power through about 360 handling agencies and new contracts.

‘Jinro Tonic Water’ showed a 33% increase in sales compared to the previous year. Considering the formation of drinking cultures such as home drinking and home parties instead of dining out due to COVID-19, the company increased the proportion of e-commerce sales and targeted discount stores and large supermarkets with 6-pack and 12-pack bundle packages. As a result, it is analyzed that this led to an expansion of the so-tonic (soju + tonic water) culture base and boosted performance. Over the past three years, Jinro Tonic Water’s sales have nearly tripled, and follow-up products have been launched consecutively due to its rapid rise. Accordingly, Hite Jinro Beverage is executing a sustainable mid- to long-term business strategy to lead the tonic water market expansion by promoting a healthy drinking culture through so-tonic and conducting Jinro Tonic Water advertisements in collaboration with soju brands in the second half of the year.

In addition, ‘Hite Zero 0.00,’ the first non-alcoholic beverage in Korea, recorded a 26% growth compared to the previous year. Since launching ‘Hite Zero 0.00’ in 2012, Hite Jinro Beverage has led the growth of the domestic non-alcoholic beverage market and encouraged major beer brands to release non-alcoholic beverages.

In Japan, a major beer-consuming country in Asia, large beer companies such as Kirin, Suntory, and Asahi launched non-alcoholic beverages starting in 2009, growing the market to about 700 billion KRW in the first five years and currently forming an 800 billion KRW market. The domestic market is heating up as major beer brands have consecutively launched non-alcoholic beverages following Hite Zero 0.00 in 2012. The company expects that once a market involving major beer companies is formed, a non-alcoholic beverage market worth around 200 billion KRW will be established within 3 to 4 years. Hite Jinro Beverage has fully renewed the taste and design of ‘Hite Zero 0.00’ and is ready to launch aggressive marketing. Having effectively waited eight years for the non-alcoholic beverage market boom, the company plans to continue leading domestic market growth.

A Hite Jinro Beverage official said, “We plan to strengthen the supply of key products to home channels in the second half, when the beverage peak season begins. We will also focus on enhancing marketing for key products such as advertising for Black Barley and Jinro Tonic Water, and the full renewal launch of Hite Zero 0.00 to continue the strong performance from the first half.”