[News Inside Companies] The Ill-Fated Jeju Soju, Will It Revive This Time?

The 'number one' beer company has acquired a soju company in Jeju Island. OB Beer is merging with Jeju Soju, operated by Shinsegae Group's liquor affiliate Shinsegae L&B. OB Beer is expected to take over Jeju Soju's production land, facilities, and groundwater usage rights.

Jeju Soju is a Jeju Island-based company established in 2011 with a capital of 2.5 billion KRW. In 2014, it launched soju products 'Gopdeullak' (20.1 degrees) and 'Sandorong' (18 degrees). However, it struggled against Jeju's representative soju brand 'Hallasan.' In 2015, it recorded sales of 140 million KRW and a net loss of 3.2 billion KRW. Even in its main market, Jeju, its market share was only 0.5%.

Shinsegae Emart stepped in as a savior for Jeju Soju, which was struggling financially. Emart acquired Jeju Soju for 19 billion KRW. The liquor industry paid close attention to what changes Emart's entry would bring to the soju market, where Hite Jinro (Chamisul) and Lotte Liquor (Chum Churum) hold about 80% market share. Some predicted that Emart, as the industry's number one large retailer, would exert strong influence in the home-use channel.

There was no miracle. In 2017, Emart renamed the product 'Pureunbam' and officially launched it. The alcohol content was divided into 16.9 degrees and 20.1 degrees, named 'Jjalbeunbam' and 'Ginbam,' respectively. Emart improved the previously criticized 'strong alcohol scent' and developed a new recipe using Jeju's clean water to present a completely different new taste. To ensure quality control, it also introduced specialized inspection equipment recognized in Germany and Japan. Emart believed that utilizing its existing large retail distribution network would give it a good chance of success. The initial response was positive. 'Pureunbam' sold over 3 million bottles within four months after the 'new product flash special.' However, it failed to win the loyalty of dedicated consumers. Emart invested 57 billion KRW in Jeju Soju over four years. Despite this, Jeju Soju continued to incur losses. The cumulative operating loss over four years reached 43.4 billion KRW. Emart eventually closed the business in 2021. Jeju Soju was absorbed and merged into Shinsegae L&B. Afterwards, Shinsegae L&B withdrew from the domestic soju market and focused on export-oriented soju manufacturing through Original Design Manufacturing (ODM). In June, Shinsegae L&B spun off Jeju Soju.

A second savior for Jeju Soju has appeared: OB Beer, a liquor company with a solid sales network. OB Beer plans to diversify its export product lineup through Jeju Soju alongside its number one domestic beer brand, Cass. Will OB Beer become the winning pitcher?