Lotte Chilsung Launches New Distilled Soju 'Yeoul'
Reenters Distilled Soju Market After 3 Years Amid Rapid Growth
Differentiation from Ilpum Jinro and Hwayo Key to Success
Riding the wave of premiumization sweeping the recent alcoholic beverage market, the demand for so-called 'premium soju'?distilled soju?has noticeably increased, prompting Lotte Chilsung Beverage, which had withdrawn from the related market, to make a comeback after three years. With Lotte Chilsung returning to the market ahead of the busy Lunar New Year holiday, the distilled soju market is expected to become even more competitive this year.
"This time it's different" Lotte Chilsung launches distilled soju 'Yeoul' after 3 years
On the 25th, Lotte Chilsung Beverage launched a new distilled soju product called ‘Yeoul.’ Produced at the Gunsan plant equipped with distillation and fermentation facilities, Yeoul is a vacuum-distilled liquor with an alcohol content of 25%, made from 100% domestic rice. It is released in 375ml glass bottles, with a retail price set at just over 10,000 KRW at large supermarkets.
Yeoul marks Lotte Chilsung’s return to the distilled soju market after three years. Previously, in May 2016, Lotte Chilsung introduced the distilled soju brand 'Daejangbu' and launched ‘Daejangbu 25’ with 25% alcohol content. Later that year, in November, they released a budget-friendly product ‘Daejangbu 21 (21%)’ using a shared bottle to lower the price, and in 2020, added ‘Daejangbu 23 (23%)’ to actively expand the lineup. However, facing stiff competition from HiteJinro’s 'Ilpum Jinro' and Gwangjuyo Group’s 'Hwayo,' the brand failed to achieve significant success and was discontinued in 2021, five years after its launch.
Lotte Chilsung’s decision to re-enter the distilled soju market after three years is due to the clear growth trend in recent years. According to the National Tax Service, the shipment value of distilled soju in 2022 was 141.2 billion KRW, more than ten times the 11.5 billion KRW recorded in 2013. Particularly, the average annual growth rate over five years since 2018 was 43.5%, an overwhelming growth compared to other traditional liquors such as cheongju (3.5%), takju (3.1%), and diluted soju (2.4%).
A Lotte Chilsung official explained, “Consumer interest in distilled liquors such as whiskey and distilled soju is increasing, so we launched Yeoul, a distilled soju that can be enjoyed directly or used in cocktails and other various ways. With Yeoul’s launch, we have expanded our product range from diluted soju to distilled soju, enabling us to better meet diverse consumer preferences.”
Besides the expansion of the distilled soju market, the success of the diluted soju ‘Saero’ is also cited as a reason for Lotte Chilsung’s confidence in making a comeback. In September 2022, Lotte Chilsung launched Saero, its first new soju product in 16 years since ‘Chum Churum.’ Saero smoothly entered the market, raising the retail market share of soju from about 14.5% before its launch to 18.3% in just one year and two months. As Saero’s recognition and sales rapidly increased, Lotte Chilsung decided at the end of last year to drop ‘Chum Churum’ from the product name and develop Saero as an independent brand.
The success of Yeoul will hinge on how well it can differentiate itself from existing market leaders. However, the fact that Yeoul, like Ilpum Jinro and Hwayo, is a vacuum-distilled liquor raises concerns. Vacuum distillation, which occurs under low pressure, is characterized by distillation at low temperatures, resulting in a smooth taste. It allows for rapid product development and is suitable for mass production, but it is difficult to create significant differences between products. In contrast, atmospheric distillation, which takes place at normal pressure (1 atm), distills various aromatic compounds together, offering rich aroma and unique flavor. However, it requires aging time to mellow the harshness of alcohol, which is considered a drawback in the production process.
Distilled soju market reignites ahead of Lunar New Year peak season
With Lotte Chilsung re-entering the distilled soju market, the market is expected to heat up further ahead of the Lunar New Year peak season early this year. As drinking culture rapidly shifts toward enjoying quality liquor following the pandemic, the demand for distilled soju is expected to continue rising, despite its relatively higher price, as more consumers seek to enjoy the original taste and flavor of ingredients. An industry insider said, “The distilled soju market is still relatively small compared to diluted soju, so we expect various new distilled liquor products to be launched this year as well. With rising income levels and more personalized consumption, the distilled soju market will expand more than before.”
Currently, the domestic premium distilled soju market is led by Ilpum Jinro and Hwayo. Ilpum Jinro is a distilled soju first introduced in 2007 by HiteJinro, utilizing long-aged base liquor stored in thousands of oak barrels left over from the Jinro acquisition in 2005. Due to rapid sales and depletion of the base liquor stock, in 2018, they launched ‘Ilpum Jinro 1924,’ a more accessible product using base liquor aged for six months, which was renewed as Ilpum Jinro in 2021.
Besides the regular Ilpum Jinro product, HiteJinro has released limited editions annually since 2018, starting with ‘Ilpum Jinro 18 Years’ and up to last year’s ‘Ilpum Jinro 23 Years.’ In August 2022, they also introduced ‘Jinro 1924 Heritage,’ a premium product distilled three times. By steadily expanding the brand lineup, Ilpum Jinro recorded an average annual sales growth rate of 48% over the past three years, maintaining its growth momentum. A HiteJinro official said, “We are continuously conducting research and development to meet the diverse needs of distilled liquor consumers. This year, we will lead the distilled liquor market through various activities that strengthen the heritage value.”
Hwayo is also rapidly establishing itself as a nationwide distilled soju brand. Hwayo’s sales increased about threefold from approximately 11.1 billion KRW in 2019 to 30.3 billion KRW in 2022, and reportedly continued to grow by over 20% last year. Last month, Hwayo completed and began full operation of its second factory in Yeoju, Gyeonggi Province. To celebrate its 20th anniversary, it launched a limited edition soju ‘Hwayo 20th Anniversary Gyesok’ and a pop-up store ‘Hwayo Dinner,’ seizing the momentum.
Hwayo plans to focus on research and development of new products aligned with this year’s market trends, as well as the globalization of K-liquor targeting both domestic and global markets. A Hwayo representative stated, “We will accelerate quality maintenance of existing products and new product development. Additionally, we currently export to 28 countries and plan to expand export distribution networks further this year, focusing on North America and Asian markets.”
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