Overview of the Korean alcoholic drink market - focusing on
Spirits
January, 2011
Agricultural office, Seoul
1. Market background
1) Legal drinking age
In South Korea the legal drinking age is 19-years-old, as stated by the Youth Protection Law. At this age,
South Koreans typically graduate from high school, while many go to university, and begin to adopt the habit
of drinking alcohol at social gatherings.
People under the age of 19 cannot legally enter bars or nightclubs or purchase alcoholic drinks. However,
the law is not always adhered to by bar, club or shop owners. Not only do they sometimes ignore the law for
the sake of sales, but many also fail to check the identification of each customer. Bar and club owners
caught by the police allowing people under the legal drinking age to enter their establishments, or shop
owners selling alcoholic drinks to underage customers, can receive prison sentences of up to two years or a
fine of up to Won10 million. Bar owners who fail to adhere to the law on underage drinking can also be
punished by having their business closed down for a period of up to six months. As such penalties result in
serious losses to bar, club and shop owners, most will ask customers suspected of being under the legal
drinking age to present proof of identity.
2) Drink driving
South Korea has a high level of drink driving incidents overall, as heavy drinking is common due to the
prevalent drinking culture at social events and gatherings. According to government regulations, driving with
a blood alcohol density of 0.05% or over is punishable as a driving offence, and the offender is liable for a
fine of up to Won 5 million or imprisonment of up to two years. A blood alcohol density of over 0.1% can
result in the loss of the offender’s driving licence, and they cannot take a driving test cannot for one year. If
no accident results from the drink driving offence, a fine without arrest is the normal procedure unless the
driver’s blood alcohol level exceeds 0.36%. However, for multiple drink driving offences within a specified
period, or accidents arising from drink driving, the penalty is much heavier, often including arrest.
As the accident rate caused by drink driving is increasing in South Korea, the government is strengthening
the law to combat the problem. This may be partly contributing to the trend towards lowering the alcohol
content of drinks.
3) Advertising
In South Korea, the advertising of alcoholic drinks is allowed under certain conditions. This is because
alcoholic drinks are designated as products that can harm the health of the general public. The advertising of
products with an alcohol content of 17% or over is forbidden and the advertising of products with less than a
17% content is restricted between certain hours. This means that wine and beer can be advertised on
television while spirits cannot. On television, advertising is forbidden between 07.00-22.00hrs. In addition,
the Public Health Enhancement Law and the Youth Protection Law each require the inclusion of a health
warning when advertising alcoholic drinks.
4) Opening hours
In South Korea only on-trade outlets with hostesses who serve alcoholic drinks to customers are subject to
regulations regarding opening hours. Such outlets are comprised of room-salons, as well as bars and clubs,
with hostesses. These outlets are obliged to close from 09.00-17.00hrs. Other on-trade outlets, such as
karaoke bars, and bars and nightclubs without hostesses, are not restricted in terms of opening hours.
2. License for marketing & distribution of alcoholic drinks
The specific structure and scheme of the marketing & distribution of alcoholic drinks in Korea are based on
the following regulations in Korea.
*A wholesaler of alcoholic drinks is not allowed to import alcoholic drinks.
*An importer of alcoholic drinks is not allowed to handle domestic alcoholic drinks.
*A producer of alcoholic drinks is not allowed to directly supply alcoholic drinks to supermarkets or
*department stores (only except a very special type of alcoholic drinks)
The above mentioned structure and scheme of alcoholic drinks sector shows that the people who have the
licenses for wholesale of alcoholic drinks have exclusive right to buy and sell all alcoholic drinks, and that it is
not allowed to import alcoholic drinks. This scheme does not give actual troubles to imports & sales of
Scotch whisky of which import volume is over US$ 190 million per year, because the large-scaled exporter of
Scotch whisky can have its own exclusive marketing & distribution channels in Korea, for instance, by taking
over the companies which have the licenses for wholesale and import. However, this could be a serious
trouble to an exporter of certain alcoholic drinks tying to start exporting of alcoholic drinks to Korea, because
the exporter is able to supply alcoholic drinks to major wholesalers only after selling them to a Korean
company who has a license for imports of alcoholic drinks. There is no difference in the type of business and
rights between a wholesaler and importer of alcoholic drinks. The only difference is that a wholesaler is
allowed to handle both domestic and imported alcoholic drinks while an importer is allowed to handle only
imported alcoholic drinks imported by that importer (not the alcoholic drinks imported by another importer)
It is strictly banned that restaurants & bars buy alcoholic drinks from supermarkets & stores. It is because the
NTS (National Tax service) checks sales amount of restaurants & bars on the basis of the sales amount of
alcoholic drinks between wholesalers and restaurants & bars. However, still a lot of restaurants & bars
illegally sell alcoholic drinks they bought in supermarkets to consumers.
3. Taxation, duty levies and margin
The alcoholic drinks tax law in South Korea regulates beer at the highest tax rate, followed by spirits and
wine. The country’s excise tax comprises liquor tax, education tax and VAT (value-added tax). Liquor tax is
calculated as a percentage of the net price. Education tax is a percentage of liquor tax. Value-added tax
within excise tax is different from VAT as a sales tax, which is added just before the formation of the retail
selling price (rsp). Value-added tax is defined as a percentage of the sum of the net price, liquor tax and
education tax. When the three taxes are added to the net price, this equates to the manufacturer’s selling
price (msp).
There have been ongoing changes made to the local tax structure for alcoholic drinks. *Soju, a popular
traditional local spirit, saw its liquor tax increase from 35% in 1999 to 72% in 2000. This was the result of
international disputes with the EU and the US regarding Soju’s favourable tax structure over imported spirits.
As the World Trade Organization sided with the EU and the US, the South Korean government levelled the
playing field for spirits by increasing the tax on Soju to 72% while cutting that of imported spirits from 100%
to 72% in the same year.
* Soju: the most popular traditional Korean liquor in the country. It was originally brewed from grains, but today it is mass
produced mainly from sweet potatoes;
On the other hand, beer is experiencing tax cuts. The tax on beer was reduced gradually, by 10% per year,
from 150% in 1996 to 80% in 2006. The high tax rate for beer is the subject of hot debate. Beer players claim
that the local tax structure is misleading, as alcoholic drinks with higher alcohol content than that of beer,
particularly spirits, are subject to a lower tax rate. This is contrary to the tax system in most other countries.
In order to remedy this situation and to relieve the customer’s burden on beer purchases, in 2007 the tax on
beer was reduced to 72%.
Table 1 Taxation and Duty Levies on Alcoholic Drinks 2009
% value/actual
Beer
Wine
*Takju
Spirits(+Soju)
Liquor tax
72.0
30.0
5.0
72.0
Education tax
30.0
10.0
-
30.0
Import tax
30.0
15.0
-
20.0
-
-
-
-
Import tax from ASEAN(FTA)
30.0
5.0
-
20.0
Import tax from Singapore(FTA)
19.1
9.5
-
12.7
Value-added tax (VAT)
10.0
10.0
10.0
10.0
Import tax from Chile(FTA)
* Takju: a traditional milky rice wine with a low alcohol content, made by steaming and drying glutinous and
non-glutinous rice, barley and flour, mixing the substance with leaven and water, fermenting it at a certain
temperature, and finally sifting and extracting.
Table 2 Import duty schedule of Alcoholic Drinks on the EU-Korea FTA
Present tariff (%)
Abolition of tariff
Wine
15
immediately
Beer
30
7 years
Scotch, Bourbon, Irish Whiskey
20
3 years
Tequila, vodka, brandy
20
5 years
Once the Free Trade Agreement between the EU and South Korea comes into effect from 2011, South
Korean consumers are expected to have more varieties of alcoholic drinks from European countries at lower
prices to choose from once the import tax of 15~30% is removed, as specified under the terms of the
agreement. Depending on kind of alcoholic drinks, the import tax will be lifted immediately or decline by a
certain percent every year from 2011 for 3~7 years.
Table 3 Selling Margin of a Typical Domestically Produced Beer Brand 2009 (% of retail value)
2009
VAT
Excise
Import tax
Retailer
Distributor
9.1
34.2
0
14.5
5.7
Manufacturer
36.5
TOTAL
100
Notes: Based on Hite, Won 1,570, 500ml at supermarkets/hypermarkets and 4.5% ab. Excise includes any
other tax as relevant
Table 4 Selling Margin of a Typical Domestically Produced Wine Brand 2009 (% of retail value)
2009
VAT
Excise
Import tax
Retailer
Distributor
9.1
17.6
0
14.5
5.7
Manufacturer
53.2
TOTAL
100
Notes: Based on Bekseju, Won4,100, 300ml at supermarkets/hypermarkets and 13% abv. Excise includes any other tax
as relevant
Table 5 Selling Margin of a Typical Imported Wine Brand 2009 (% of retail value)
2009
VAT
Excise
Import tax
Retailer
Distributor
9.1
16.1
6.4
17.6
8.4
Manufacturer
42.4
TOTAL
100
Notes: Based on Jacob's Creek, Won18,000, 750ml at specialists and 12% abv. Excise includes any other tax as
relevant
Table 6 Selling Margin of a Typical Domestically Produced Spirits Brand 2009 (% of retail value)
2009
VAT
Excise
Import tax
Retailer
9.1
35.6
0
11.9
Distributor
5.5
Manufacturer
38
TOTAL
100
Notes: Based on Chamjinisulro (Soju), Won 940, 360ml at supermarkets/hypermarkets and 20.1% abv. Excise includes
any other tax as relevant
Table 7 Selling Margin of a Typical Imported Spirits Brand 2009 (% of retail value)
2009
VAT
Excise
Import tax
9.1
30.5
5.4
Retailer
15.2
Distributor
12.6
Manufacturer
27.2
TOTAL
100
Notes: Based on Imperial Classic 12 YO, Won25,000, 350ml at supermarkets/hypermarkets and 40% abv. Excise
includes any other tax as relevant
4. Operating environment
a. Contraband/Parallel Trade
Alcoholic drinks are among the main contraband goods in South Korea, because of the high tax levied on
these products. Premium Western spirits like whisk(e)y and brandy and cognac account for the majority of
contraband alcoholic drinks sales in South Korea, as many global brands enjoy significant popularity in the
country. Global whisk(e)y manufacturers have worked hard to prevent the sale of contraband or counterfeit
products by introducing holograms and tin seals, but the sales of contraband alcoholic drinks are estimated
to be rising. Some contraband alcoholic drinks are being passed from US army base Post Exchanges (PXs)
into the local marketplace. However, as this is a sensitive issue concerning the relationship between South
Korea and the US army, it has been difficult for the government and the relevant authorities to regulate this
problem.
b. Duty Free
In South Korea duty free alcoholic drinks are only available to those travelling in or out of the country, and
for certain specific purposes. Duty free products are offered at licensed duty free shops in airports, and on
airlines and ocean liners. In addition, duty free alcoholic drinks are available in military PXs and these
products are strictly labelled as PXs duty free items on the packaging and cannot be distributed by retail
outlets or other duty free stores.
Generally, all imported alcoholic drinks have duty levied on them, except alcoholic drinks imported by
foreign diplomats, or for religious services or medical purposes. Travellers can purchase duty free alcoholic
drinks from airports. However, this is limited to one bottle of less than one litre, with the price ceiling set at
US$400.00.
One recent exception to the above regulations is alcoholic drinks sales through duty free shops, which first
opened in December 2002, on Cheju Island. Cheju Island is the most famous tourist attraction in the country,
and the government has ambitiously put forward plans to develop it as an ‘international free city’ by 2010, in
order to make it a world-renowned tourist destination. Duty free shops form part of the government’s plans,
to cater to domestic travellers visiting Cheju Island.
c. Cross-border/Private imports
In South Korea, the duty free allowance on alcoholic drinks for people travelling back to South Korea from
other countries is one litre per person. If one is caught trying to exceed the permitted alcohol limit, the liquor
is confiscated and can be redeemed only if the tax is paid within three months. In September 2006, Incheon
Airport Customs Office announced that it was to auction 1,414 bottles of confiscated alcoholic drinks; the
volume more than doubled in 2006 as more people in South Korea travel abroad.
5. Market data
Table 8 Retail Consumer Expenditure on Alcoholic Drinks 2004-2009 (Won million)
Total
2004
2005
2006
2007
2008
2009
6,229,413.70
7,096,091
7,571,216.90
8,058,315.10
8,481,763.80
8,559,547.80
Table 9 Domestic production and import of Alcoholic Drinks by Sector: Total Volume 2004-2009
(Million Litres)
2004
2005
2006
2007
2008
2009
Soju
domestically produced
928
930
960
962
1,004
975
Beer
domestically produced
1,992
1,819
1,880
1,948
2,016
1,956
imported
21
22
27
36
43
41
domestically produced
10
11
10
11
7
5
imported
20
21
20
23
21
21
Wine(grape)
imported
15
19
22
32
29
23
Takju
domestically produced
212
211
213
206
204
?
domestically produced
293
346
407
356
362
?
27
28
29
35
33
16
3,434
3,316
3,470
3,482
3,593
3,475
66
73
82
107
113
102
Whiskey
*Others
imported
domestically produced
Total
imported
* Others- Spirits (except for Soju and Whiskey), wines(except for grape wine), RTDs/High-Strength Premixes
Table 10 Sales of Spirits by Subsector: Total Volume 2004-2009 (1,000 Litres)
Whisk(e)y
- Single Malt Scotch Whisky
- Blended Scotch Whisky
- Bourbon/Other US Whiskey
- Canadian Whisky
- Irish Whiskey
- Japanese Whisky
- Other Whisk(e)y
Brandy and Cognac
- Brandy
- Cognac
White Spirits
- Gin
- Vodka
Rum
- White Rum
- Dark Rum
Tequila (and Mezcal)
Liqueurs
- Cream-based Liqueurs
- Bitters
- Other Liqueurs
Other Spirits
- * Maesilju
- * Soju
- Other Distilled Beverages
Spirits
2004
2005
2006
2007
2008
2009
23,667.3
191.9
23,017.1
458.2
469.3
129.0
340.3
1,145.6
358.8
786.8
296.2
245.6
50.6
197.9
298.5
298.5
1,089,696.7
7,949.1
1,059,592.7
22,154.9
1,115,771.3
22,778.1
219.1
22,116.4
442.6
413.9
124.2
289.8
1,129.4
359.1
770.3
314.0
259.6
54.4
215.3
275.1
275.1
1,090,166.8
7,275.8
1,061,270.0
21,621.0
1,115,292.5
22,859.8
252.6
22,165.4
441.8
397.6
120.6
277.0
1,148.5
359.9
788.6
321.2
265.8
55.4
262.0
288.7
288.7
1,125,344.7
6,989.5
1,097,001.9
21,353.3
1,150,622.5
22,993.6
292.7
22,258.9
442.0
383.9
117.6
266.2
1,172.9
361.7
811.2
325.7
269.5
56.2
327.5
300.2
300.2
1,154,701.8
6,849.7
1,126,733.9
21,118.3
1,180,205.6
20,512.5
336.1
19,723.4
453.0
330.0
101.9
228.1
1,207.7
357.3
850.3
287.3
240.6
46.7
415.9
306.2
306.2
1,199,738.5
6,838.2
1,172,140.6
20,759.7
1,222,798.1
19,568.5
375.7
18,780.5
412.3
280.5
87.3
193.1
1,235.1
352.2
882.9
252.9
212.4
40.6
458.6
309.3
309.3
1,231,888.9
6,804.0
1,204,864.5
20,220.3
1,253,993.8
* Maesilju: traditional liquor made by adding plum and sugar to Soju and brewing it
* Soju production in Table 9 and Soju sales in Table 10 is a little bit different by data source
Table 11 Sales of Spirits by Subsector: Total Value 2004-2009 (Won billion)
Whisk(e)y
- Single Malt Scotch Whisky
- Blended Scotch Whisky
- Bourbon/Other US Whiskey
- Canadian Whisky
- Irish Whiskey
- Japanese Whisky
- Other Whisk(e)y
Brandy and Cognac
- Brandy
- Cognac
White Spirits
- Gin
- Vodka
Rum
2004
2005
2006
2007
2008
2009
4,938.0
48.9
4,817.9
71.1
96.7
15.1
81.5
113.0
31.2
81.8
24.2
4,780.3
56.4
4,654.6
69.3
83.8
14.8
69.0
112.2
31.2
81.0
26.6
4,837.7
65.4
4,702.3
70.0
81.3
14.7
66.6
115.2
31.5
83.8
27.5
4,909.1
76.5
4,761.7
70.9
79.0
14.6
64.4
118.7
31.8
86.9
28.1
4,456.9
93.3
4,287.9
75.7
74.7
13.6
61.1
132.2
31.5
100.7
27.4
4,341.4
110.0
4,161.4
69.9
69.1
12.3
56.8
146.3
31.0
115.3
26.4
- White Rum
- Dark Rum
Tequila (and Mezcal)
Liqueurs
- Cream-based Liqueurs
- Bitters
- Other Liqueurs
Other Spirits
- Maesilju
- Soju
- Other Distilled Beverages
Spirits
2004
2005
2006
2007
2008
2009
19.8
4.4
43.1
17.9
17.9
4,520.3
145.3
4,266.2
108.8
9,753.2
21.1
5.5
47.3
16.5
16.5
4,524.4
134.0
4,283.3
107.1
9,591.1
21.8
5.8
57.7
17.5
17.5
4,672.2
130.3
4,435.2
106.7
9,809.2
22.2
6.0
73.3
18.4
18.4
4,815.1
129.2
4,579.9
106.0
10,041.7
21.9
5.5
95.2
20.4
20.4
5,155.4
128.9
4,920.9
105.7
9,962.3
21.3
5.1
106.7
22.2
22.2
5,413.9
128.2
5,181.7
104.0
10,126.0
Table 12 Sales of Blended Scotch whisky by Premium/Super-premium Split 2004-2009
(% total volume)
Super Premium
Premium
Standard
Economy
Total
2004
-
2005
-
2006
22.5
10.5
67.0
100.0
2007
24.0
10.0
66.0
100.0
2008
25.5
9.8
64.7
100.0
2009
26.5
9.2
64.3
100.0
Classification of spirits products is based purely on pricing, taking a typical brand, usually the leading brand
by volume, as the benchmark price, which is indexed as 100%. The benchmark brand will usually be a
standard-priced brand. There will be exceptions, however, whereby an economy brand (likely for vodka in
some countries in Eastern Europe) or a premium brand (typically the case for Scotch whisky in the US) is
used as the benchmark brand. Refer to the guidelines below for further detail.
Imperial Classic 12 YO, priced at Won 25,000 for a 500ml bottle in the off-trade, was positioned as a
standard blended Scotch whisky in South Korea in 2009. It competes with brands like Johnnie Walker Black
Label within the standard-priced segment. Super-premium-priced brands include Ballantine’s 17 YO and
Cutty Sark 18 YO.
Based on benchmark brand being standard:
- Super-premium: 30% or higher than price of the benchmark brand
- Premium: 10-29.99% higher price than benchmark brand
- Standard: Between 9.99% lower or 9.99% higher than benchmark brand
- Economy: At least 10% lower than the price of benchmark brand
Table 13 Sales of Gin by Premium/Super-premium Split 2004-2009 (% total volume)
Super Premium
Premium
Standard
Economy
Total
2004
2005
2006
2007
2008
2009
-
-
3.0
21.0
55.0
21.0
100.0
3.0
21.5
54.0
21.5
100.0
3.0
21.0
53.5
22.5
100.0
3.2
22.0
53.5
21.3
100.0
London Dry Gin was an economy brand of gin in South Korea in 2008, priced at Won 7,450 per 700ml in
the off-trade. London Dry Gin from Kooksoondang Brewery Co Ltd is mainly sold through on-trade outlets.
Table 14 Sales of Vodka by Premium/Super-premium Split 2004-2009 (% total volume)
Super Premium
Premium
Standard
Economy
Total
2005
-
2006
5.0
64.0
16.0
15.0
100.0
2007
5.0
64.0
16.0
15.0
100.0
2008
5.0
65.6
15.9
13.5
100.0
2009
4.9
65.5
17.3
12.3
100.0
Absolut is a standard-priced brand of vodka in South Korea, priced at around Won 36,000 per 700ml in
the off-trade in 2009. Other significant vodka brands like Belvedere and Smirnoff are positioned as superpremium products
Table 15 Sales of Flavored vs Non-flavored Vodka 2004-2009 (% total volume)
Flavored Vodka
Non-Flavored Vodka
Total
2004
30.0
70.0
100.0
2005
30.0
70.0
100.0
2006
31.0
69.0
100.0
2007
32.0
68.0
100.0
2008
34.0
66.0
100.0
2009
36.0
64.0
100.0
Table 16 Company Shares of Alcoholic Drinks 2005-2009 (% total volume company)
Hite Brewery Co Ltd
Oriental Brewery Co Ltd
2005
2006
2007
2008
2009
49.6
49.4
48.3
47.9
46.6
-
Lotte Chilsung Beverage Co Ltd
-
-
-
22.3
0
0
0
5.4
6.1
Kumbokju Co Ltd
3.2
3
3
2.8
2.9
Muhak Co Ltd
2.7
2.5
2.6
2.6
2.7
Daesun Distilling Co Ltd
2.7
2.6
2.7
2.6
2.6
Seoul Takju Association
2.1
2.1
2.1
2.1
2.1
2
1.9
2
2
2
1.4
1.3
1
1.2
1.2
21.7
0.6
Bohae Brewery Co Ltd
Kooksoondang Brewery Co Ltd
Anheuser-Busch InBev NV
-
-
-
Others
36.2
37.2
38.4
11.7
11
Total
100
100
100
100
100
Table 17 Company Shares of Spirits 2005-2009 (% total volume)
2005
2006
2007
2008
2009
52.1
48.7
46.7
47.2
46.4
-
-
-
14.9
15.1
Kumbokju Co Ltd
9.2
8.4
8.3
7.9
8.0
Muhak Co Ltd
7.8
7.1
7.3
7.1
7.5
Daesun Distilling Co Ltd
7.6
7.4
7.4
7.3
7.2
Bohae Brewery Co Ltd
5.6
5.3
5.5
5.5
5.5
Diageo Korea
0.7
0.7
0.7
0.7
0.7
Pernod Ricard Korea Ltd
0.1
0.0
0.0
0.6
0.5
Lotte Chilsung Beverage Co Ltd
0.4
0.3
0.4
0.3
0.2
Doosan Corp Ltd
6.8
14.0
15.4
0.2
0.2
Hiscot Co Ltd
0.1
0.1
0.1
0.1
0.0
Jinro Ballantine's Co Ltd
0.7
0.7
0.7
0.0
0.0
Doosan Seagram Co Ltd
-
-
-
-
-
Seagram Korea Co
-
-
-
-
-
9.0
7.3
7.5
8.3
8.6
100.0
100.0
100.0
100.0
100.0
Jinro Co Ltd
Lotte Liquor BG Co Ltd
Others
Total
Table 18 Off-trade Sales of Alcoholic Drinks by Distribution Format: % Value 2009 (% Off-Trade)
2009
Store-Based Retailing
100
Grocery Retailers
100
Supermarkets/Hypermarkets
52.8
Discounters
Small Grocery Retailers
45
Convenience Stores
12.9
Independent Small Grocers
30.7
Forecourt Retailers
1.4
Food/drink/tobacco specialists
2.2
Other Grocery Retailers
-
Non-Grocery Retailers
-
Non-Store Retailing
-
Vending
-
* Homeshopping
-
* Internet Retailing
-
Direct Selling
-
Total
100
* Homeshopping and internet retailing - according to the notification “2005-5” of Korea NTS(National Tax
Service) dated January 21, 2005, it is not allowed to sell or buy alcoholic drinks by on-line shopping.
5. Trade
Table 19 Imports of alcoholic drinks by year (Value: CIF USD1,000, Volume: 1,000 Litres)
category year
Wine
Beer
Vermouth
Other brewed
Cognac
Grape Brandy
Other Brandies
Whisky
Rum
Gin
Vodka
Liquor
Kaoliang Liquor
Tequila
Others
Total
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
2004
2005
2006
2007
2008
2009
57,980
14,974
14,848
21,334
112
41
2,243
1,028
9,772
1,070
3,220
880
42
17
213,683
19,957
564
350
223
130
857
393
5,434
2,968
1,091
2,103
1,197
202
734
1,005
312,000
66,452
67,654
18,570
16,532
22,828
169
68
2,361
970
12,406
893
3,640
1,097
92
28
228,914
20,893
660
416
266
157
956
447
6,274
3,153
1,304
2,323
1,480
261
951
871
343,659
72,974
88,607
21,864
20,506
26,912
209
90
3,256
1,305
11,500
684
3,443
746
240
64
225,997
20,371
804
445
289
135
1,340
541
7,500
4,016
1,607
2,743
1,825
333
1,009
1,273
368,132
81,523
150,365
32,154
30,579
35,816
79
31
4,621
1,813
13,335
736
3,479
804
1,026
129
270,295
23,176
862
469
403
170
1,641
654
8,411
4,335
1,607
2,847
2,331
420
3,235
3,272
492,269
106,828
166,512
28,770
39,373
43,196
77
25
7,190
2,442
8,241
443
2,915
667
260
44
259,182
23,321
934
440
377
151
2,299
764
11,265
5,521
2,051
3,881
2,349
515
3,349
2,368
506,374
112,550
112,451
23,009
37,156
41,492
75
28
10,543
3,233
6,873
480
1,159
281
230
59
194,812
21,243
1,015
488
452
172
2,477
958
10,103
4,647
1,928
3,844
2,187
520
2,992
1,418
384,453
101,872
Table 20 Spirits Imports by Country of Origin: Total Volume 2003-2008 (Thousand Litres)
Spirits – TOTAL
Spirits – United Kingdom
Spirits – China
Spirits – Australia
Spirits – New Zealand
Spirits – France
Spirits – United States
Spirits – Japan
Spirits – Mexico
Spirits – Netherlands
2003
38,292.0
26,653.4
4,055.4
110.8
2,122.6
3,381.5
631.0
100.9
181.7
372.3
2004
30,594.8
20,829.0
3,693.5
475.0
1,437.6
2,228.4
546.9
99.8
263.7
374.9
2005
31,928.0
21,508.4
3,631.7
607.1
1,554.1
2,402.0
698.0
119.6
307.6
325.0
2006
32,147.3
20,870.9
3,950.1
1,224.7
1,797.1
1,812.9
760.5
159.7
303.3
345.5
2007
37,765.1
23,336.3
4,186.5
1,644.9
1,739.5
1,978.7
1,484.2
1,696.5
349.5
349.7
2008
38,693.3
23,192.7
4,943.1
2,322.5
2,253.3
1,588.6
1,526.1
918.1
459.0
376.
In 2008, whisk(e)y from the UK accounted for 95% of total whisk(e)y import volumes. US whiskey accounted
for the second largest share at 4%. The annual import volume of US whiskey showed a 9% volume increase
in 2008 while UK whisk(e)y stagnated.
6. Market trend of alcoholic drinks (the whole market)
1) Overall alcoholic drinks market
a. Alcoholic drinks recover on the back of an improving economy
South Korea’s real GDP (Gross Domestic product) growth reached 5% in 2007 and real GNI (Gross national
Income) growth was slightly higher. At the same time, inflation has been stable at 2-2.5%. Private
consumption also recovered mainly through durable goods and infrastructure investment to post double-digit
growth. Strong exports have been maintained to China and Southeast Asia. This represented a key
difference, as economic growth did not directly lead to increase private consumption in 2006, while GDP
growth in 2007 is expected to create increased private consumption. The alcoholic drinks industry generally
showed positive growth rate in total volume terms during the review period.
b. New products offer health benefits
The health and wellness trend in South Korea has long been important and it remained so in 2007.
Manufacturers have actively introduced new alcoholic drinks products that offer value added functions. The
domestic beer industry witnessed new product launches during the review period. Beer manufacturers
introduced fortified, and reduced calorie beer to target health and diet conscious consumers. The low alcohol
range of Soju expanded from 2006 and manufacturers have introduced even lower alcohol content products
competitively during the review period. The leading Soju companies mainly produce 19.5% and 19.8% abv
Soju products, while small- and medium-size local Soju companies introduced 16% abv products.
c. Female drinkers emerge as a core consumer group
The increasing social and economic participation of women has created more drinking occasions for female
consumers. As female drinkers emerge as a powerful consumer group, manufacturers have developed new
products and more marketing activities focused on women. Volume sales of gin, rum and liqueurs grew as
the number of female drinkers increased. Sales of reduced alcohol content Soju increased as more female
drinkers moved to low alcohol (Fig.5) and smoother products. Beer manufacturers also introduced new
products targeting female drinkers and this strategy was reinforced by strong marketing activities.
d. Cultural marketing techniques attract higher-income consumers
Consumer tastes have changed rapidly and instead of direct product promotion, manufacturers have
introduced marketing programmes to position their products in consumers’ minds as a cultural or lifestyle
choices. The alcoholic drinks industry has reached maturity and the competitive landscape is fierce. To
differentiate their products, manufacturers have operated cultural marketing programmes to appeal to
consumers in terms of lifestyle and emotion. Whisky manufacturers and importers have used marketing
campaigns featuring golf to target mainly higher-income consumers who can afford premium products. These
manufacturers have sponsored professional golf tournaments and offered golf lessons to consumers.
Cultural marketing programmes will be diversified to include art and music in an effort to communicate with
diverse consumer groups.
e. The consumption of premium products increases
As the economy grows and people become more health conscious, consumers in South Korea are more
interested in better quality food and drink. The growing consumer interest in healthier lifestyles was
maintained during the review period and this trend has helped to change the drinking culture in the country.
The binge drinking population is decreasing and consumers are looking for reduced alcohol content but
better quality drinks. As consumers consider alcoholic drinks part of the wider food industry, sales of
premium products grew and manufacturers have introduced more high quality options. Premiumisation was
evident in most alcoholic drinks categories in South Korea and this trend is likely to continue over the
forecast period.
2) Spirits market (except for Soju)
a. Whisky
South Korean consumers tend to seek premium products in all categories within whisk(e)y, premium Western
products continued to see positive growth. Since the last quarter of 2008 when the economic downturn
worsened, premium products have posted negative performances along with standard products. Premium
and standard products lost share in the overall whisk(e)y category to super-premium and economy products
b. Single malt Scotch whisky
Single malt Scotch whisky achieved 12% growth in total volume terms in 2009. Single malt Scotch
consumers are willing to pay high prices for better quality and reputation. Therefore, manufacturers made
concerted efforts to position their products as luxurious and super-premium. They strengthened their product
line-ups by launching new products and limited edition variants, and then targeted high-end hotels and bars.
As single malt Scotch continued to see double-digit growth in South Korea, Edrington Group established
itself locally by buying Maxxium Korea Ltd, while William Grant & Sons set up a local office in 2009. Maxxium
Korea Ltd introduced Macallan 21 YO and a limited edition of Macallan Lankin. William Grant & Sons Korea
Ltd launched Balvenie 12 YO in addition to 15, 17 and 21 YO variants as well as Balvenie 1978. Moët
Hennessy Korea Ltd’s Glenmorangie also added new products in 2009 to strengthen its line-up.
c. White spirits
White spirits achieved a 2% increase in volume terms mainly due to these products being used as a base for
cocktails, which have steadily gained in popularity among younger consumers. These products are
consumed mainly in on-trade bars, clubs and pubs. As owners of on-trade outlets prefer lower-priced
products for their cocktail base, standard and economy products commanded a majority share in gin.
Kooksoondang Brewery’s London Dry Gin continued to gain share in the on-trade due to its low price.
However, gin posted a decline in 2009 as consumers tended to drink less during the economic downturn.
However, premium products continued to gain in vodka due to aggressive marketing activities. As
manufacturers invested heavily in brand positioning, vodka built up an image as a young and stylish drink.
Absolut Vodka maintained its strong leadership in the vodka category while Diageo Korea sought to increase
its share by launching new products like Smirnoff Flavour in 2008 and Smirnoff Mule and Ice in 2009. Thanks
to strong positioning and ongoing marketing initiatives, vodka extended its distribution in the off-trade. Young
Koreans’ active consumption of vodka contributed to the increase in sales and penetration in off-trade outlets.
In 2009 vodka achieved total volume growth of 4%.
c. Brandy and cognac
The brandy and cognac category posted a 15% total volume decline in 2009. Brandy recorded
a 14% decline and cognac a 15% drop. This dramatic contraction can be attributed to the
slowing economy and the drinks’ high-alcohol content. South Korean consumers spent less on
alcoholic drinks due to the recession and avoided high-alcohol content drinks due to increased
health awareness. In addition, brandy and cognac are both regarded as old-fashioned. They
used to be considered luxury gift items during the holiday season, but now seem to have been
replaced by single malt Scotch whisky
d. Tequila
Tequila posted healthy volume growth of 10% in 2009. Frequent trips abroad and cultural
exchanges on-line have driven sales of Western spirits like tequila among young people,
particularly in clubs and bars
e. Liqueurs
Liqueurs also continued to see positive growth in 2009 of 1% in total volume terms. Liqueurs
like Baileys and Kahlúa are used for various drinks other than alcoholic drinks. Products like
Baileys and Kahlúa appeal to female consumers who prefer sweet tastes. As more cocktail
recipes appear on the internet, off-trade sales of liqueurs have steadily increased.
7. Reference
- Euromonitor
- Korea National Tax Service
- Korea Alcohol & Liquor Industry Association
- Korean International Trade Association