Shinsegae to resume soju business targeting Southeast Asia

South Korea’s Shinsegae L&B Co. is set to resume its distilled spirit soju business as early as the end of May, aiming for exports to some Southeast Asian countries. The liquor and beverage unit of Shinsegae Group will reoperate its fruit-flavored soju manufacturing plant on Jeju Island, which has been suspended since March 2021.

Shinsegae Group, the retail giant in Korea, founded Shinsegae L&B in 2008 to enter the alcoholic beverage business. The liquor and beverage unit expanded sales from 100 billion in 2019 to 200 billion last year, boosted by increasing sales of imported wines.  

However, it didn’t succeed in the soju and beer pub businesses. Shinsegae Group’s supermarket chain E-Mart Inc. acquired local soju maker Jeju Soju for 19 billion won in 2016, but Jeju Soju’s operating loss increased from 1.9 billion in 2016 to 14.1 billion won in 2019. In 2020, the soju maker saw an 10.6 billion won operating loss and a 19.1 billion won net loss. Its soju production plant closed in March 2021, and Shinsegae L&B acquired the soju maker last August.  

Shinsegae L&B also entered the craft beer pub business in 2014 with its American-style gastropub Devil’s Door. Now, only three pubs in Seoul and on Jeju Island are in operation as the company has closed some branches due to sluggish sales.   

Shinsegae L&B has decided to resume the soju business as it has recently partnered with some Southeast Asian alcoholic beverage distributors. Targeting local consumers in Vietnam, Singapore and Thailand, Shinsegae L&B will produce fruit-flavored soju with 12% alcohol content, lower than the 19-20% average for other soju. The soju products will be for export only, and there is no plan for domestic sales yet, a Shinsegae L&B official said.  

According to Korea Customs Service, exports of Korean fruit-flavored soju soared fivefold from 19.5 billion won in 2017 to 99.3 billion won in 2021.

Thanks to the growing popularity of Korean pop culture, the import growth rate of the fruit-flavored soju over the last five years was 91% in nine Southeast Asian countries, including the Philippines, Vietnam and Thailand. That compares with a 27% import growth rate in other countries.

Korea’s leading soju maker HiteJinro Co. captivated China with its fruit-flavored soju, gaining much popularity among local millennials and Gen Zers who prefer flavored alcohol over hard liquor. Last September, HiteJinro said its exports of soju to China topped 1 million boxes in 2021, which equals around 30 million soju bottles. It was the second time that annual exports of soju to a single region surpassed 1 million boxes since exporting to Japan in 1994.

Write to Soo-Jung Ha at agatha77@hankyung.com
 
Jihyun Kim edited this article.