Diageo to shut whiskey factory in Gyeonggi

Diageo Korea, known for its imported Johnnie Walker line, is closing down its whisky factory in Icheon, Gyeonggi.

It was the only production facility Diageo ran in Korea.

The company confirmed Wednesday that the plant will halt operations in June 2020.

Industry analysts explained that the whiskey market in Korea is stagnant, which resulted in the company’s decision.

The whiskey industry has suffered from the implementation of an anti-graft law, the so-called Kim Yong-ran Act, since 2016. A recent decision to change taxation to be based on alcoholic content and quantity instead of price has also had an impact.

The company cited a changing business environment in export markets, a low factory operation rate and a weaker currency as reasons behind the decision.

“We decided to shut down the factory in Icheon after long consideration,” said a spokesperson for Diageo Korea. “The change in corporate structure of our exporting countries, low rate of factory operation and [loss of] cost competitiveness resulted in such a decision.”

Korea once had one of the largest whiskey markets in Asia. But amid a sluggish economy and changing work culture, whiskey sales recently plummeted compared to a decade ago.

Diageo’s Icheon factory currently has around 29 staff and 90 or so contract workers. They were informed of the decision beforehand, the company spokesperson said.

The 64,000 square meter (5,945 square feet) factory produced Smirnoff vodka for export to Asian countries like Vietnam and China, and Windsor whiskey for military personnel in Korea.

BY SONG KYOUNG-SON, JIN MIN-JI [song.kyoungson@joongang.co.kr]