Makgeolli gets a modern sales pitch

Industry

Published: 12 Nov. 2009, 22:13

Makgeolli gets a modern sales pitch

It is no secret that the nation is now in love with makgeolli, or traditional rice liquor, which was once disregarded as little more than a cheap drink. In the 1960s and 1970s, the beverage took up more than 80 percent of Korea’s alcohol consumption total but due to the influx of Western liquor and tightened restrictions in the local liquor industry, its market share dropped to as low as 3 percent in 2005.

These days, however, as more consumers want their alcoholic beverage to be both healthy and refreshing, sales of makgeolli have risen, particularly in recent months.

Local department stores that tend to sell luxury imported goods have started to stock their shelves with the beverage, some hotels have added it to their drink menus, and Asiana Airlines has started to offer it to passengers traveling between Korea and Japan.

That’s good news to Bae Jung-ho, chief executive of Kook Soon Dang, the nation’s leading producer of traditional beverages, including makgeolli. The company has been doing research and investing in traditional wine products such as baekseju rice wine and makgeolli

In a recent interview, Bae said that makgeolli and other traditional alcohol beverages have the potential to penetrate the local liquor market, which he says could use the competition.

“What the market needs is competition,” Bae said. “Modern branding that is pleasing to today’s consumer would also help to bring traditional liquor to the public.”

Bae also noted that the current laws on the liquor industry are too restrictive and that the regulations should be eased.

Following are excerpts from the interview with Bae.

Q. You must be pleased with the sales increase that has accompanied the makgeolli boom.

A. Yes. Our sales of makgeolli have increased almost 15 times year-on-year. From the larger industry perspective, the market share of makgeolli, which is currently 3.5 percent, is also increasing gradually. That figure is very low considering that in the 1970s the beverage made up 70 percent of local alcoholic beverage consumption. The figure fell further to 50 percent in the 1980s.

Our goal is to increase that market share to at least 20 percent in the coming years. As of now, despite the boom, it would still be difficult to say that makgeolli is the representative traditional liquor of Korea.

What is the reason for the boom?

There are many factors, including improved branding, which has increased our competitiveness, and liquor regulations that are more relaxed than in the past. Up until 2000, makgeolli could only be sold in the regions where it was produced. This gave certain regions a monopoly, so there was no development in the market. But since the regulation was lifted, producers have had the right to market their products to consumers around the country, which has brought greater diversity to the market.

Recently, Asiana Airlines started serving Kook Soon Dang makgeolli to passengers flying from cities in Korea to Japan. Was that your idea?

Yes. In fact, I proposed the idea several years ago when the recognition of makgeolli wasn’t as positive as it is today. It was only recently that my idea was accepted. If you think about it, it’s natural to serve traditional liquor on one of the country’s airline carriers. It’s an opportunity to promote the country and its culture. Serving makgeolli on flights is like serving passengers our culture, since a nation’s culture is made up of literature, language and liquor.

What is your business philosophy?

I stick to my principles. My principle in business management is to stick with the basics. That is, I think about what is best for the convenience of our consumers and the benefits of the whole. I often tell my staff what they are making and for whom they are making it. It is important to never forget that.

You said that liquor regulations for retailers are still strict. What did you mean by that?

In any country, regulations on liquor are strict, and I understand that, because alcoholic beverages can be harmful to consumers. But if liquor producers are making fine beverages with quality ingredients and a transparent production process, the regulations should be more relaxed.

In addition, the regulations should change so that the companies that make alcoholic beverages with higher alcohol percentages should pay higher taxes than those making beverages with lower alcohol percentages. Also, alcoholic beverages should be allowed to be sold online.

By Lee Eun-joo [angie@joongang.co.kr]