South Korea: Alcohol industry sees disappointing results in the second quarter

As domestic alcohol consumption decreases, the alcohol industry received disappointing results in the second quarter. HiteJinro and LOTTE Chilsung Beverage's institutional sector experienced declines in both sales and operating profit. Major companies believe that reviving domestic consumption will be difficult in the short term, focusing their efforts on diversifying product portfolios and entering overseas markets, ChosunBiz reported on August 19.

According to the Financial Supervisory Service's electronic disclosure system on the 19th, HiteJinro's sales in the second quarter were 646.6 billion won, and the operating profit was 64.4 billion won, marking decreases of 2.8% and 5.5%, respectively, compared to the same period last year. In particular, the sales of the soju institutional sector were 382.4 billion won, and the operating profit was 49.1 billion won, down 4.7% and 14.9%, respectively, from the previous year. Poor performance in the restaurant business and the record-breaking heat are cited as the main reasons for the decline in soju consumption.

The beer institutional sector reported sales of 208.2 billion won and an operating profit of 11.7 billion won, reflecting increases of 0.9% and 13%, respectively, compared to the previous year. However, analysts view the solid performance of the beer sector as largely due to potential price increases and preemptive demand. Kim Tae-hyun, a researcher at IBK Securities, noted, "The advance sale associated with competitor price increases and preemptive demand ahead of price hikes for major products like Terra and Kelly led to the observed sales."

LOTTE Chilsung Beverage's institutional sector also saw sales of 189.1 billion won and an operating profit of 2.9 billion won in the second quarter, down 6.5% and 9.4%, respectively, compared to the previous year. Specifically, sales of soju, beer, and wine decreased by 3.6%, 31.2%, and 7.3%, respectively. Jeong Han-sol, a researcher at DAISHIN SECURITIES, said, "Despite the contraction in the entertainment market and changes in alcohol trends, the sales of soju 'Saero' are estimated to have increased by 6% compared to the previous year, but 'Chuhumchum' declined, leading to a decrease in overall soju sales." He added, "The discontinuation of Cloud draft beer and poor sales of Crush had an impact."

The reasons for the stagnation in the domestic alcohol market include a prolonged contraction in the domestic economy, a decline in sales at major channels such as restaurants and entertainment venues, and the rise of non-drinking trends, such as the 'healthy pleasure' wave. According to the '2025 Second Quarter Small Business Trends' report from Korea Credit Data, average sales for small businesses in the second quarter were 45.07 million won, a decline of 0.8% compared to the same period last year. Among specific industries, the poor performance in the restaurant sector was most notable, with bar sales dropping 9.2% compared to the same period last year.

Korea Credit Data stated, "The contraction in consumption in the restaurant and leisure sectors signals changes in consumers' lifestyles and spending priorities beyond simple sales declines."

Under such circumstances of sustained domestic economic cold, major companies are seeking opportunities for rebound in overseas markets. Kim Jung-wook, a researcher at MERITZ Securities, said, "Amid ongoing challenges in the alcohol market, HiteJinro is expected to gradually replace its growth axis with the growth of exported soju." Jo Sang-hoon, a researcher at Shinhan Investment Corp., noted, "LOTTE Chilsung is expected to rebound its long-term corporate value through overseas expansion," adding, "Overseas performance continues to show an uptrend. Particularly in the Philippines and Myanmar, which recorded losses in the first quarter, profits significantly increased as issues related to factory relocation and customs clearance disruptions were resolved."

In fact, HiteJinro has created social media content pairing its Chamisul series with the popular Samyang Foods' Buldak-bokkeumyeon. On the 12th, a video featuring the message "Chamisul meets Buldak. This Buldak lasagna might test your limits. But fortunately, there’s Chamisul to cool you down" was posted on Chamisul's global Instagram account. The video introduced the recipe for making Buldak lasagna along with fruit soju 'Plum Aesul.'

HiteJinro is strengthening its focus on Southeast Asia, currently constructing a soju factory in Vietnam with an annual production capacity of 5 million boxes (approximately 150 million bottles). In February, the groundbreaking ceremony for the first overseas production factory was held in Green Eye Park Industrial Complex, Thai Binh Province, Vietnam, with a target completion date in 2026.

LOTTE Chilsung launched the fruit soju 'Saero Darae' in April, emphasizing a zero sugar concept. Additionally, they introduced products like Saero Apricot and Saero Lychee, particularly targeting overseas markets with Saero Lychee as an export-only product. They also plan to expand their overseas business targeting the imported soju market through the renewal of distilled soju 'Yeoul.'

OB is also recently challenging the soju market by launching an export-only brand 'Geonbae Jjan,' aiming to start exports this month beginning with Southeast Asia. It consists of base soju along with recently popular peach, grapefruit, yogurt, and green grape soju products in Southeast Asia. OB acquired Jeju Soju's production facility from Shinsegae L&B in December last year and renamed it OB Jeju Factory, where Geonbae Jjan will be produced.

An industry official said, "The domestic alcohol market faces difficulties in rebounding in the short term due to the dual impacts of the decline in the restaurant and entertainment sectors and the trend of avoiding alcohol among younger generations," adding, "However, with the increasing recognition of soju benefiting from the popularity of K-food overseas, success in targeting the global market will determine future performance."