HiteJinro's Soju Sales Up 6.0% in First Half... Beer Sales Increase Only 0.4%
Soju New Products Receive Positive Response Amid Economic Downturn
Soju sales, which had been struggling due to diversification of alcoholic beverage types after the COVID-19 pandemic, are rebounding. Recently, as consumer sentiment has weakened amid the economic downturn, more consumers are turning to soju, which is relatively inexpensive.
Soju is displayed on the liquor sales shelf at Hanaro Mart Yangjae Branch in Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@
According to the Financial Supervisory Service's electronic disclosure system (DART) on the 21st, HiteJinro's soju sales on a separate basis for the first half of this year amounted to 681.7 billion KRW, a 6.0% increase compared to the same period last year (643.3 billion KRW). Meanwhile, beer sales during this period were 351.2 billion KRW, showing only a 0.4% increase from 349.7 billion KRW in the previous year. With the strong performance of its core business, soju, HiteJinro's consolidated operating profit for the first half soared to 116.6 billion KRW, a 130.4% increase from 50.6 billion KRW in the same period last year.
The effect of new products launched to celebrate the 100th anniversary and the price increase of core products contributed to the recent turnaround in the soju business, which had seen some sales stagnation. In March, HiteJinro introduced 'Jinro Gold,' a zero-sugar soju with enhanced quality by adding distilled raw material, followed by the launch of the distilled soju 'Ilpum Jinro Oak 25' in May, focusing on strengthening its soju lineup. Additionally, the price increase of core products also supported sales growth.
On the other hand, the beer business successfully achieved a smooth market landing last year by launching the new product 'Kelly' in April and adopting an aggressive sales strategy. However, this raised expectations that have been difficult to meet this year due to the downturn in the entertainment market. Furthermore, in May, some cans of the sparkling beer 'Filite Fresh' experienced off-flavors and turbidity, leading to a recall of certain products, which also had a negative impact.
Lotte Chilsung Beverage also recorded soju sales of 219.4 billion KRW in the first half of this year, a 7.3% increase from 204.5 billion KRW in the same period last year. Since the launch of the zero-sugar soju 'Saero' in September 2022, it has continued to perform well and established itself as a core product. In April, Lotte Chilsung introduced 'Saero Salgu' to expand its consumer base. Saero Salgu is a general distilled liquor with 12% alcohol content, made by adding apricot juice to Saero, reducing the characteristic bitterness of soju and adding a refreshing taste, with less sweetness than existing fruit wines.
Lotte Chilsung Beverage 'Saero Salgu'
Since the COVID-19 pandemic, the domestic alcoholic beverage market has shifted from being soju-centric to diversifying into wine, whiskey, and recently highballs, causing the domestic soju market to gradually shrink. According to the National Tax Service, the domestic diluted soju shipment volume has steadily decreased from 915,596 kiloliters in 2019 to 844,250 kiloliters last year. However, amid the economic downturn and overall weakened consumer sentiment, demand for relatively inexpensive soju has increased again.
Moreover, the frequent appearance of soju in Korean Wave content such as movies and dramas has steadily boosted exports, positively affecting soju sales. According to the Korea Customs Service, cumulative soju export value up to July this year was 57.74 million USD (approximately 77 billion KRW), a 4.0% increase compared to 55.5 million USD in the same period last year. As of July, soju export value has steadily increased every year since recording 46.07 million USD (about 61 billion KRW) in 2020, growing 25.3% over four years through this year.
However, the rebound in soju sales is concentrated mainly in the two nationwide soju companies, HiteJinro and Lotte Chilsung, while regional soju brands remain stagnant and continue to show deteriorated performance. Bohae Brewery, a Honam region soju company producing 'Ipsaeju,' recorded soju sales of 13.5 billion KRW in the first half of this year, a 16.1% decrease from 16.1 billion KRW last year, and a 26.6% decline compared to two years ago, continuing its slump. Muhak, a Yeongnam region soju company producing 'Good Day,' also showed no significant growth with first-half sales of 76.5 billion KRW, similar to 75.1 billion KRW two years ago.
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