South Korea: Hite-Jinro to slash workforce amid shrinking liquor market

South Korea’s Hite-Jinro will slash its workforce as part of cost-cutting to deal with the country's rapidly shrinking liquor market, the Korea Times reported on March 10.

But Oriental Brewery (OB) and Lotte Chilsung said they will not do the same. The two said they will launch aggressive marketing plans and introduce products to increase market share, and seek more business opportunities abroad.

On March 9, Hite-Jinro, whose flagship brands include Hite beer and Chamisul soju, started receiving applications from its 3,200 employees for voluntary retirement, the first since 2012 when about 100 workers were let go under the scheme.

The company also plans to take another 100 employees off its payroll.

Those who have worked more than 20 years will be given compensation of up to 30 months of wages, in addition to severance pay. Those quitting can also apply for low-interest loans and receive free consulting if they want to start their own businesses.

"As a pre-emptive measure to more effectively cope with Korea's declining beer and soju markets, we decided to carry out the voluntary retirement program," a Hite-Jinro official said. "The plan also aims to offer our employees opportunities for fresh starts. It is a win-win solution for everyone."

The company last year had 1.89 trillion won ($1.64 billion) in sales, down 0.9 percent from the previous year, with operating profit falling 7.45 percent to 124 billion won.

Hite-Jinro and other makers of beer, soju and other alcoholic beverages have been grappling with falling sales in recent years as Koreans drink less alcohol amid the increasing wellbeing trend.

An OB official said the trend will likely continue, adding that the brewer, which owns the nation's best-selling Cass brand, has been making efforts to maintain growth despite increasingly unfavorable market conditions.

"We have no plan to cut the size of our manpower," the official said. Last year, 138 OB employees left the company under a voluntary retirement program.

"In 2016, our sales grew by a single digit as we stole market share from our rivals," he said. "But things have become more difficult for us to conduct business as consumers drink less beer. Another problem is that a growing number of consumers, particularly those in their 20s and 30s, prefer imported beer over domestically produced beer. We will do whatever it takes to win them back and look for new business opportunities overseas."

Lotte Chilsung, famous for its beer brand Kloud, said it will not ask its workers to quit. The firm is also Korea's second-largest soju maker, owning the Cheom-Cheorum brand.

"We have never thought about carrying out a voluntary retirement program," a company official said. "Despite unfavorable business conditions, we have been able to sell everything we produce. After the company opens our second Kloud plant in June, it will be able to increase its market share."

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