[Exclusive] Hyundai Glovis Enters Alcoholic Beverage Logistics... A Catalyst for Modernizing Outdated Distribution Structure

Hyundai Glovis Participates in Alcoholic Beverage Transportation Bidding
Preparing a 33,000-square-meter Logistics Base in Anseong, Gyeonggi Province
"Large-scale Expansion Expected After Acquiring Liquor Wholesale License"

Hyundai Glovis will enter the alcoholic beverage logistics business within this year.

According to industry sources on July 31, Hyundai Glovis has participated in a competitive bidding process for alcoholic beverage transportation and storage services initiated by a liquor company. To this end, the company is reportedly preparing a logistics base of approximately 33,000 square meters in Anseong, Gyeonggi Province. A Hyundai Glovis representative stated, "We are currently participating in a competitive bidding process for the alcoholic beverage transportation and storage business of a company that could become a future client."

Hyundai Glovis's entry into the alcoholic beverage logistics business is seen as part of its plan to expand its domestic logistics operations. Hyundai Glovis is also reportedly considering expanding its domestic logistics business to include a variety of products, such as cosmetics, in addition to alcoholic beverages. The decision to target the alcoholic beverage market first stems from the fact that the domestic liquor logistics sector is considered relatively underdeveloped.

The domestic alcoholic beverage market operates under a licensing system at each stage of sales, following a distribution process of 'manufacturing → wholesale → retail → consumer.' Liquor logistics companies are responsible for transporting goods from manufacturers to wholesalers, while wholesalers use their own vehicles and personnel to deliver products to individual retailers such as bars and restaurants.

According to the 'Liquor License Act,' alcoholic beverage manufacturers, except for traditional liquors such as Takju (Makgeolli), are not allowed to sell directly to retailers, entertainment food service businesses, or end consumers. They can only sell to businesses that have obtained a liquor wholesale license. Compared to consumer goods distributors like Coupang, which purchase products directly from manufacturers and deliver them to consumers through their own logistics networks, the liquor distribution process has an additional intermediary stage.

In addition, a dual structure has developed, consisting of primary logistics handled by specialized logistics companies and secondary logistics managed by wholesalers using their own logistics networks. Recently, the boundaries between regions for wholesalers have become blurred, leading to increased fragmentation. Currently, there are about 200 businesses in Seoul alone that have obtained liquor wholesale licenses, and they operate without regional restrictions. For example, in Gangnam-gu, approximately 200 wholesalers all conduct business in the area, delivering to each client individually.

This situation is the same nationwide. It is common for wholesalers in Seoul to supply retail stores in Cheonan, South Chungcheong Province, and vice versa. Such inefficiencies increase overall distribution costs for alcoholic beverages, which in turn affects the final retail price of these products.

For this reason, there are expectations that Hyundai Glovis, by leveraging the expertise and systems it has accumulated through its domestic and international logistics operations, will help modernize the alcoholic beverage distribution market. It is unlikely that Hyundai Glovis, as a major logistics company, has entered the market simply to take a share of the already saturated logistics business for liquor manufacturers.

An industry insider stated, "Even if Hyundai Glovis initially focuses on wholesale transportation for manufacturers, once it establishes a foothold, it could also take on the role of a wholesaler. In fact, in Japan, specialized liquor logistics companies already act as wholesalers, and this has led to the consolidation of logistics firms." He added, "Acquiring the licenses of regional liquor wholesalers may not be a difficult task for a company of Hyundai Glovis's scale."

The National Tax Service reviews the number of comprehensive liquor wholesale businesses, closures, and sales revenue by regional tax office between April and May each year, and selects new permitted regions and the number of businesses in June. This year, as was the case last year, no new licenses have been granted.

However, resistance from more than 1,200 liquor wholesalers nationwide is expected. If Hyundai Glovis expands its business using its capital strength and advanced procurement systems, small and medium-sized wholesalers will inevitably lose clients. In this case, there is a possibility that liquor wholesalers may collectively refuse to purchase products from certain manufacturers to block Hyundai Glovis's business expansion. A logistics industry official said, "If Hyundai Glovis enters the market, it will mean the addition of a strong competitor, which is not a welcome development. The biggest concern is that they may aggressively bid at the lowest prices to secure clients, even if it means reducing their margins in the short term."

Currently, domestic alcoholic beverage logistics services are mainly handled by about 10 companies, including CJ Logistics, Lotte Global Logistics, KCTC, Hermes Logistics, Star Logistics, Hanix, and Nara Logistics. Among these, except for CJ Logistics and Lotte Global Logistics, which have internal demand for food and beverage logistics within their respective groups, most companies focus primarily on liquor logistics.

Meanwhile, a Hyundai Glovis representative stated, "We have never considered acquiring a liquor wholesale license, nor do we have any plans to do so in the future."