"Let's Battle in the Summer Peak Season" The Bubbling 'Suje Maekju'

Popularity of Craft Beer in Home Drinking Culture
Exploding Growth of 40% Annually
'Gompyo Wheat Beer' Tops Convenience Store Sales
'Jeju Beer' Heads to KOSDAQ on the 21st
Kyochon and BBQ Also Enter Market
Large Corporations Begin OEM Production

[Asia Economy Reporter Seungjin Lee] The summer peak season, which determines the annual performance of the beer industry, is approaching. This summer is expected to bring record-breaking heat, and while fierce competition is anticipated among the beer industry's big three?OB Beer, Hite Jinro, and Lotte Chilsung Beverage?craft beer is quietly growing in size and expanding its presence.

Craft Beer Market Growing at an Annual Average Rate of 40%

According to the beer industry on the 18th, the domestic craft beer market, which was worth 118 billion KRW last year, is expected to grow more than threefold to 370 billion KRW by 2023. While the overall domestic beer market has stagnated with an average annual growth rate of about 0.3% over the past decade, the craft beer market has shown a high growth rate of 40% annually from 2017 to last year, with its market share rising from the 1% range in 2019 to 3% last year.

Gompyo Wheat Beer, launched through a collaboration between Sevenbrau and Daehan Flour Mills, ranked first at CU for the first time in 30 years, surpassing products from large manufacturers. Within two weeks of mass supply, the monthly production of 3 million units sold out completely, causing a shortage. At CU, the average daily sales of Gompyo Wheat Beer have reached 170,000 units, with a peak sales volume of 260,000 units. Thanks to Gompyo Wheat Beer, the sales proportion of craft beer within domestic beer reached an all-time high of 35.5%.

Jeju Beer is on the verge of listing on the KOSDAQ on the 21st, becoming the first craft beer company to do so. Jeju Beer's sales growth rate over the past three years is 147.9%. Production facilities are also expanding. The annual production capacity, which was 2.85 million liters in 2017, will expand to 20 million liters this year.

Domestic chicken franchise companies such as Kyochon Chicken and BBQ are also entering the craft beer market. Their goal is to increase profitability and expand loyal customers by developing craft beers that pair well with their chicken.

Kyochon F&B, which operates Kyochon Chicken, signed an asset transfer agreement on the 4th with Indulge, which operates the craft beer brand ‘Moon Bear Brewing,’ for the craft beer manufacturing business. Kyochon Chicken plans to target the market using breweries with production competitiveness and its infrastructure of over 1,280 Kyochon Chicken franchise stores nationwide.

Genesis BBQ introduced six types of ‘BBQ Beer’ including GPA, IPA, Weizen, Dunkel, and Helles last July through collaboration with Microbrewery Korea. BBQ plans to build a brewery in Icheon, Gyeonggi Province, to produce craft beer independently and sell it to customers. Other chicken franchise companies are reportedly closely monitoring the situations of BBQ and Kyochon and considering entering the craft beer market.

Top 1 and 3 Enter Craft Beer OEM

Existing major beer companies have also entered the craft beer market through Original Equipment Manufacturing (OEM). Due to the prolonged COVID-19 pandemic, the entertainment market has been depressed, and active promotional activities visiting restaurants as before have become difficult due to concerns about the spread of COVID-19. Also, with only limited attendance allowed at professional baseball games, the largest beer sales channel during the summer peak season is effectively blocked.

Lotte Chilsung Beverage has invested in facilities for craft beer production at its first plant in Chungju, Chungbuk, and is conducting OEM for craft beer companies such as Jeju Beer, Sevenbrau, and The Seoul Brewing Company. The currently scarce Gompyo Wheat Beer is also produced here. OB Beer, the number one in the beer industry, is also preparing for OEM production, setting aside pride. The products currently being prepared for production include ‘Baekyang BYC Vienna Lager,’ ‘Nordisk Camping Beer,’ and ‘Seoul IPA.’ Hite Jinro is reportedly unable to proceed with OEM as its factory operation rate is at maximum capacity.

A beer industry official explained, "With the prolonged COVID-19 pandemic, home drinking culture has spread, and consumers' tastes are becoming more diverse, so the craft beer market will continue to grow," adding, "Since 40% of beer sales occur in July and August, existing beer companies plan to focus on market expansion through new product launches and craft beer OEM."