Visitors look at alcohol products displayed inside a retail market in Seoul on June 2.YONHAP
As younger people increasingly turn away from alcohol to relieve stress from social and professional life, Korea’s struggling alcoholic beverage industry is pursuing a range of survival strategies in hopes of turning the tide.
Korea’s alcohol consumption per capita among people aged 15 and older fell from 8.98 liters (2.37 gallons) in 2012 to 7.74 liters in 2018 and 7.13 liters last year, according to the World Health Organization (WHO) and other sources. Domestic alcoholic beverage shipments totaled 3.15 million kiloliters (832.4 million gallons) in 2024, down 17.3 percent from 3.808 million kiloliters in 2014, according to the National Tax Service.
Peer pressure to drink has diminished compared to the past, while the myriad fun content offered by the world — both online and offline — has made drinking optional and unnecessary to many.
“The healthy living trend that took off in the 2000s, mainly among middle-aged and older people, spread in the 2010s to younger people, the core consumers of alcoholic beverages, which has led to a decline in alcohol consumption,” said Lee Eun-hee, a professor of consumer science at Inha University.
YUN YOUNG
The sharp decline in drinking gatherings such as company dinners after social distancing became the norm in the wake of the Covid-19 pandemic in 2020 is also seen as a contributing factor.
“There are so many things to enjoy other than drinking, just as it has become easy to join hobby groups through smartphones, so I don’t obsess over going out for drinks,” said 37-year-old office worker Choi Seong-ju.
Healthy people, sad breweries
While the trend is considered desirable from a public health perspective, it has put the alcoholic beverage industry — which generates revenue and jobs — under mounting pressure.
The annual revenue of Kospi-listed Hitejinro has largely stagnated, remaining between 2.4 trillion won and 2.5 trillion won($1.7 billion and $1.8 billion) from 2022 through last year. Its operating profit fell from 208.1 billion won in 2024 to 172.3 billion won last year. Kosdaq-listed Kooksoondang saw revenue decline for three consecutive years, from 74.6 billion won in 2022 to 67.5 billion won last year, and posted operating losses in both 2024 and last year. Muhak, Bohae Brewery and Changhae Ethanol face similar circumstances.
“The domestic alcoholic beverage market is estimated to have contracted by more than 5 percent last year compared to the previous year,” said Cho Sang-hoon, a senior analyst at Shinhan Securities. “Sales were sluggish in both the household and restaurant markets.”
The industry is pursuing three broad strategies that have recently begun to win over consumers: lower alcohol levels, premium models for older consumers' deeper pockets and overseas markets for K-culture fans.
Visitors look at alcoholic beverages with low alcohol level displayed inside a retail market in Seoul on Jan.1 16.YONHAP
Going, going, gone to zero
Lower-alcohol drinks are primarily aimed at appealing to younger consumers who have become less enthusiastic about drinking.
Lotte Chilsung Beverage's Soonhari Jin fruit-flavored soju brand, which offers milder and more varied alcohol levels of 4.5 percent, 7 percent and 9 percent, generated 17 billion won in sales in the first half of this year, surpassing its full-year sales of 16.2 billion won last year. The products use a process in which whole lemons, grapefruits and yuja are steeped and frozen to extract their flavors and aromas, while three lower-alcohol varieties give consumers a wider range of choices.
“Unlike consumers in the past, younger generations often drink to enjoy alcohol in moderation rather than to get drunk,” a Lotte Chilsung Beverage representative said.
Alcohol-free drinks and drinks containing less than 1 percent are also gaining popularity.
Hitejinro sold out the initial shipment of 900,000 bottles of its Terra Zero bottled beer within 10 days of its launch in June. Terra Zero, launched earlier in March, reached cumulative sales of four million cans in 100 days. The drink contains no alcohol but uses Australian malt extract to retain beer’s characteristic flavor and carbonation.
In fact, Korea’s nonalcoholic beer market grew from 15.3 billion won in 2019 to 41.5 billion won in 2021 and 64.4 billion won in 2023, according to market researcher Euromonitor. The market is projected to reach 94.6 billion won next year, up 46.9 percent from 2023.
Targeting premium and overseas markets
The industry is also expanding its premium alcoholic beverage business to target middle-aged and older consumers with greater purchasing power.
Concluding that the old strategy of selling large volumes at low margins is unlikely to improve earnings in the stagnant domestic market, companies are targeting drinkers with more expensive, higher-margin products.
CJ CheilJedang launched the premium distilled liquor brand jari last month, with an alcohol content of 24 percent. It collaborated with traditional liquor producers Moonbaesool Brewery and Danong Bio to leverage their brewing expertise, building a dedicated aging facility in Nonsan, South Chungcheong, to maintain quality for mass production. CJ CheilJedang plans to expand its distribution network and promote the brand to fine-dining customers, focusing on premium retail channels, including popular restaurants.
Companies are also looking overseas, namely North America, Japan and Southeast Asia. Fruit-flavored soju in particular is finding a receptive audience as global demand rises amid the popularity of K-content, especially Korean dramas.
Exports of fruit-flavored soju reached $100.42 million and surpassed $100 million for the first time last year, according to the Korea Customs Service. The figure was up 4.3 percent from $96.27 million in 2024 and 3.5 times the $28.44 million recorded in 2019.
“Fruit-flavored soju is popular among younger consumers overseas because it is milder and sweeter than regular soju,” an industry source said. “Its popularity also comes from the fact that foreigners who became interested in soju after watching Korean dramas but found it difficult to try can enjoy it without feeling intimidated.”
Visitors try sweet alcoholic beverages at the liquor and and wine fair held at Coex, southern Seoul, on June 18.NEWS1
Make it likable, make it unique
Industry observers expect growing exports, alongside efforts to capture Korea’s lower-alcohol and premium alcoholic beverage markets, to be key to improving earnings. Challenges remain, however.
“Global demand is expanding, led by fruit-flavored soju, making it increasingly important for companies to strengthen their ability to meet demand through overseas production facilities and other means,” said Cho Se-eun, an analyst at Mirae Asset Securities.
Soju has carved out a niche overseas amid the K-content boom but still trails competitors such as Japanese sake and Mexican tequila in consumer preference.
“To strengthen the global competitiveness of Korean alcoholic beverages, the industry needs to make active use of regional specialties to target diverse premium demand,” said Oh Se-yong, CEO of Smart Brewery. “Korea also needs to foster large breweries and reform its tax system.”
The government changed the taxation system for beer in 2020 from an ad valorem tax based on price to a specific tax based on shipment volume. Distilled liquors such as soju, however, remain subject to an ad valorem tax that favors cheaper products over premium ones.
The industry argues that switching distilled liquor to a volume-based tax system, as with beer, would ease the tax burden on companies and breweries producing and selling premium alcoholic beverages and provide momentum for quality improvements needed to gain broader recognition overseas.
BY LEE CHANG-KYUN [yoon.soyeon@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
