Soju market fizzes with low alcohol

The soju market is embroiled in a war for dominance to attract the youth who prefer softer liquor.

The race for milder soju has finally pulled down the alcohol content of the Korean liquor distilled from a number of grains including rice and potato to below 20 percent.

Jinro Ltd., Korea`s No. 1 soju maker, said yesterday it has unveiled a low-alcohol soju in an apparent bid to better compete with its closest rival Doosan Corp.

Typically, soju has alcohol content of around 25 percent, but consumers increasingly prefer Doosan`s new brand which has 20 percent alcohol by volume, thanks to growing health awareness.

<**1>Doosan`s soju market share doubled from last year to 10 percent in July through strong sales of its low-alcohol "Cheoumcheoreom," which means "like the first time" in Korean. "Cheoumcheoreom" set a record by selling over 10 million bottles in just 17 days after its market debut in February. In Seoul`s booze market, Doosan said it had attained a share of 22.5 percent.

The new soju of Jinro, owned by Hite Brewery Ltd, the nation`s top beer maker, has an alcohol content of 19.8 percent. The "Chamisul Fresh" is sold for 800 won for a 360-milliliter bottle, Jinro said. "Chamisul" means "real dew" in Korean. Rival low-alcohol soju of Doosan is tagged 730 won at delivery from the distiller.

"Both Jinro and Doosan will increase spending for marketing as their priority at the moment lies in sales rather than profits," said Goodmorning Shinhan Securities Co. analyst Song Ji-hyun who watches liquor companies.

"Smaller makers of rice wine or medicinal wine such as Baekseju are also likely to join the marketing spree since the distinction with soju is blurred in terms of proof levels."

Song maintained a "buy" for both Doosan and Hite Brewery (owner of Jinro) shares, with target prices of 44,000 won per share for Doosan and 131,000 won for Hite. Shares of Doosan and Hite closed at 34,050 won and 100,000 won yesterday on the local bourse.

More than half of the soju consumed across the nation are manufactured by Jinro. Other makes such as Charmsoju of Kumbokju Co., C1 of Daesun Co. and White of Muhak Co. are popular in the southern provinces. Daesun, for example, controls 90 percent of the soju market in Busan.

Although it remains to be seen whether the low-alcohol rivalry between Jinro and Doosan would affect the local barons, industry observers say they might not have much choice.

An industry estimate showed that more than 3 billion bottles of soju were sold in Korea last year. Per capita consumption of soju was 25.6 liters last year, the National Statistical Office said on its Web site.

As the domestic soju market, estimated at some 1.2 trillion won, grows about 4 to 5 percent every year, even whiskey makers are eying to enter the buzz.

U.K.-based liquor giant Diageo, which sells the Johnnie Walker whiskey, said on Wednesday that it will introduce a "premium distilled sprit" with about 20 percent alcohol content in Korea. Technically, Diageo`s new product cannot be classified as soju under the Korean liquor tax rules because it does not have the license to distill soju. But even Doosan`s San soju was registered as "general distilled liquor" instead of soju because it contained green tea which cannot be used to make soju under related law.

"We plan to unveil the trial product in mid-September," said a spokesman of Diageo Korea. "We will decide on mass production after test-marketing."

The new liquor employs the same production methods used to produce vodka but has a lower alcohol level, according to the company.

"The taste might be similar to vodka or soju," a Diageo spokesman said. "But it won`t be competing directly with soju because it will be much highly priced."

The new liquor will be entirely produced in Diageo`s Icheon plant in Gyeonggi Province. The distiller scouted a former Jinro employee to develop the new booze. Diageo currently sells whiskey brands Johnnie Walker, Windsor and Dimple as well as Smirnoff vodka, Baileys liqueur and Gordon`s jin.

(sophie@heraldm.com)



By Kim So-hyun