[Expanding Overseas K-Distribution] Liquor Exports Hit Hard by COVID-19... Rebound Riding the Reopening Wave

Overseas Alcohol Exports Expected to Rise Again After Hesitation
Soju Tops Exports Last Year... Traditional Liquors Also Show Significant Growth
Industry Adopts Customized Strategies for Southeast Asian Markets
Experts Say "Must Go Beyond Simple Consumer Goods Concept"

Soju is displayed on the HiteJinro's Chamisul stand installed at the Thai large-scale mart Makro. Photo by HiteJinro

[Asia Economy Reporter Song Seung-yoon] The alcoholic beverage market, which was hit hard by COVID-19, underwent a major transformation as the focus shifted from the entertainment market to the home drinking market represented by 'home drinking.' During this period, overseas exports slowed somewhat, but the liquor industry is preparing to make a new leap forward with the global reopening of economic activities.

According to the Korea Customs Service export-import statistics as of the 20th, the total volume of alcoholic beverages exported from South Korea last year was 320,166 tons, with export value reaching approximately 320 million USD. Compared to the previous year (343,108 tons), export volume decreased by 6.7%, but export value actually increased by 0.2%. However, this still falls short of the 2019 figures two years ago (425,869 tons, 380 million USD). In 2018, the export value exceeded 400 million USD with 462,352 tons exported. The industry analyzes that this decline was due to the global shutdowns and significant reduction in food service consumption caused by the full outbreak of COVID-19. On the other hand, with economic activities resuming in earnest this year and shutdowns lifted in most countries, export volumes are expected to follow a gradual upward trend.

By type of alcoholic beverage, soju had the highest export value last year at approximately 82 million USD, followed by liqueur (81.2 million USD), beer (59.98 million USD), ethanol (38.06 million USD), and other alcoholic beverages (36.19 million USD). In the case of soju, HiteJinro, the number one domestic soju company, holds the highest market share overseas as well. HiteJinro's soju export value last year was 102 million USD, growing more than 36.3% compared to the previous year (74.86 million USD). Compared to pre-COVID 2019 (58.62 million USD), it has roughly doubled. HiteJinro exports beer, soju, and other alcoholic beverages to over 80 countries. The company plans to gradually expand soju consumption from primarily Korean expatriates to local markets. To this end, it is pursuing differentiated strategies by country, continuing marketing and promotions tailored to the characteristics of each export market. In particular, it plans to continuously expand local distribution networks by introducing Chamisul and fruit liqueurs represented by 'OOe Isul' mainly in Southeast Asia. Lotte Chilsung Beverage's liquor division also exports soju to over 50 countries. Lotte Liquor's soju export value last year was 55.5 billion KRW. Lotte Liquor is also targeting the Southeast Asian market with brands like Chum-Churum and fruit soju Soonhari. This year, they plan to increase exports by more than 50%.

In the case of beer, until 2019, it held the top export value position at 145.93 million USD, but it sharply dropped to 68.53 million USD in 2020, more than halving, and has been on a downward trend since. The liquor industry views its competitiveness in overseas markets as weak and is gradually reducing export volumes. Among beer companies, OB Beer is the top exporter, exporting about 20 types of beer to over 30 countries worldwide. As of last year, it accounted for more than 70% of Korean beer exports.

Traditional liquors are also gradually increasing their market share overseas. Among export items, except for liqueur (62.2%), the highest growth rates compared to the previous year were fruit wine (43%), medicinal wine (29.2%), cheongju (refined rice wine) (27.5%), and takju (unfiltered rice wine) (26.8%), many of which fall under the category of traditional liquors. In fact, traditional liquors exported overseas last year amounted to 17,704 tons, valued at about 23 million USD. This represents a 29.1% increase compared to 18.22 million USD the previous year.

Despite an overall decline in export values for most types of alcoholic beverages due to COVID-19 and other factors, experts emphasize that continuous promotional activities through cultural content are crucial to strengthening the export competitiveness of Korean alcoholic beverages. In the long term, there is also an opinion that efforts are needed over a long period to improve quality and establish identity so that Korean alcohol can evolve beyond simple consumer goods to hobbies, collectibles, and even investment assets. Examples include Japanese whiskey and China's 'Maotai.'

Myeong Wook, a liquor expert and adjunct professor in the Barista & Sommelier Department at Sejong Cyber University, advised, "We are now in an era where content creates value, so it is necessary to consider how Korean alcohol can globalize through cultural content." He added, "The liquor industry should also take a long-term perspective, prioritizing creating philosophy and clear identity in the alcohol rather than short-term performance."