Domestic brands attempt to battle Coke, Pepsi in cola war

Coca-Cola and Pepsi, both U.S-made cola brands, dominate 99 percent of the market in Korea. Only 1 percent of the market share is allotted for homegrown brands.

Against all odds, however, domestic beverage manufacturers are continuously attempting to expand their shares of the pie, with cheaper prices and distinctive flavors that differentiate themselves from the others.

Woongjin Foods relaunched its cola brand 815 Cola this month, just in time for National Liberation Day on Aug. 15. E-Mart, Korea’s leading discount chain, introduced an in-house version of the fizzy drink in April.

The domestic cola market reached about 900 billion won in 2015, according to an industry report. Coca-Cola dominated the market with a 75 percent share followed by Pepsi. Domestic household company LG Household & Home Care bottles Coca-Cola in Korea while Lotte Chilsung does the job for Pepsi.

Mysterious fizzy drinks first appeared in Korea in the 1950s when they were secretly delivered to American soldiers dispatched to the country. Before Coca-Cola was officially distributed, Dongbang Beverage which is now Lotte Chilsung Beverage launched Korea’s first homegrown cola in 1961 under the name Speci Cola. It later changed its name to Chilsung Cola to match the name of its better-off sister product Chilsung Cider, which is still in production.

In June 1968, Coca-Cola finally officially launched in Korea, and Pepsi followed the next year. The drinks immediately shot to stardom. Korea was still recovering from the debris of war and the imported colas were considered “rich drinks” that could be enjoyed only by those in the upper social tier.

Later, in the 1990s, domestic beverage manufacturers really tried to take down the “Goliath” of the cola. Haitai Beverage launched Combi Cola in 1996, with the extract imported from the U.S., but the response was tepid. Then the first version of 815 Cola was introduced in 1998 by food manufacturing company Bumyang, which has since merged with Woongjin Foods.

Bumyang was originally in charge of bottling Coca-Cola. However, when Coca-Cola tried to acquire the small company in 1995, Bumyang struck out on its own to develop its own cola. It smartly capitalized on the patriotism sentiment pervasive in the financial crisis-struck country at the moment and in 1999, Bumyang was able to take up 13.7 percent of Korea’s cola market, grossing 50 billion won. Excessive marketing fees, however, later led the company to halt production.

Other domestic brands introduced spinoff versions, rather than trying to imitate the original. For example, Yakult Korea in 1998, launched Korea Cola Tocsi which tasted like sujeonggwa, a traditional Korean fruit punch that has a cinnamon flavor. CJ Cheiljedang launched a coffee-flavored cola around the same time.

String of retailers introduced in-house brands in the 2000s. Home Plus, Korea’s discount franchise, launched its own cola in 2007. As of July, it has sold 7 million units and accounts for 20 percent of cola sales in Home Plus stores. House brand products have been somewhat successful because of its competitive pricing. Home Plus’ own cola is 990 won for 1.5 liters, 65 percent cheaper than Coca-Cola, which costs 2,180 won for the same amount.

E-Mart also launched a private brand in 2007. It was renewed and re-released in June. The latest version has so far sold some 400,000 units and ranks in the third place among colas.

“When we did blind-tasting in 2000, almost nobody could tell the difference between our product and imported ones,” said a Woongjin Foods spokesperson.

“In order to cater to Korean’s appetite which prefers sweetness in drinks, we enhanced the sweet flavor along with fizziness in the newest versions.”

BY CHOI HYUN-JOO [jin.eunsoo@joongang.co.kr]