Whiskey’s heyday a thing of the past

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Whiskey’s heyday a thing of the past

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Korea was the world’s 10th largest whiskey consumer until 2011. In terms of whiskey at least 17 years old, it was No. 1.

Most consumption of whiskey was in hostess bars, also known as room salons, in Gangnam, southern Seoul, and other cities that catered to a prominent and influential clientele. With important associates and clients, drinking whiskey was a common business practice in Korea.

In addition, the strong liquor culture led people to drink until the second and third rounds and often mark the end of the night with the strongest liquor, whiskey or a whiskey bomb, mixing it with other kinds of alcohol.

However, such thriving whiskey consumption started shrinking in 2009, about 10.1 percent from a year earlier. It continued to decline for four consecutive years until 2012, posting a 4.8 percent drop in 2010, 11.6 percent in 2011 and 14.7 percent in 2012.

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When Korea was in its early stage of development, Koreans drank makgeolli, a traditional distilled rice wine, or soju. There were only two local beer brands: Oriental Brewery and Crown, which later became Hite.

All of these liquor products were cheap, and expensive premium whiskey was unheard of in the domestic market.

However, as the economy developed rapidly in the 1960’s and 1970’s, there was a need for upscale alcohol for hosting important guests and clients, and the demand for premium whiskey began to take off.

Importing whiskey was difficult, and the tariffs were so high that the liquor was considered for the upper class only.

Whether because of its scarcity, cost or quality, whiskey became de rigueur for concluding business contracts or wining and dining important guests.

Through economic and political liberalization in the 1980’s and globalization in 1990’s, Koreans’ economic power improved and whiskey began to attract a following among ordinary people as a drink for special occasions.

Nevertheless, whiskey continues to be served in secluded places for purposes irrelevant to the general public.

Shrinking consumption

Diageo Korea is the nation’s largest whiskey importer and its Windsor brand is the No. 1 whiskey, selling 800,750 boxes in the domestic market last year. A box contains 18 500-milliliter bottles. Pernod Ricard’s imported Imperial sold 750,920 boxes last year, followed by Lotte Chilsung Beverage’s Scotch Blue (327,549 boxes), Kingdom at (67,104) and Golden Blue (59,111).

Whiskey shipments peaked in 2008, then posted year-on-year declines of 10.1 percent in 2009, 1.4 percent in 2010 and 4.8 percent in 2011.

According to the Korea Alcohol and Liquor Industry Association (Kalia), whiskey shipments last year totaled 2,122,748 boxes, down 11.6 percent from 2011.

Whiskey shipments in January through March fell 11 percent to 450,309 boxes, from 506,449 during the same period last year.

Sales of Windsor last year declined 13.2 percent year-on-year and Imperial was down 6.7 percent, Scotch Blue 12.5 percent and Kingdom 30 percent.

Despite the overall whiskey market downturn, Single Malt bucked the trend for a while. The imported whiskey turned in consistent sales growth until 2011, when it too began to decline.

Opinions on why whiskey consumption has gone down are divided.

As the preferred drink for business entertainment, whiskey’s decline may simply reflect changes in Korea’s corporate culture and the persistent economic malaise.

“At a time of economic slowdown, fewer and fewer people drink expensive whiskey,whereas the trend of drinking poktanju, a bomb shot mix of soju and beer, is widespread,” said a sociology professor at Hanyang University. “In addition, people are seeking healthier, wholesome foods as well as enjoying mild alcoholic beverages instead of strong liquor.”

In fact, sales of less potent and inexpensive alcohol products such as beer and vodka have sharply increased lately.

Also, there is a wide variety of imported liquor used in an impressive array of cocktails that mean more drink choices when out on the town. Whiskey has become to be considered as a drink for older men.

“The spread of the nightclub culture among those in their 20’s and 30’s is also one of the factors that contributed to the growing popularity of vodka,” said a PR manager at Pernod Ricard Korea.

Vodka gains ground

At a small bar in Sinsa-dong that sells wine and cocktails, a group of office workers from a large company drank vodka with clients.

They had sake with dinner at an izakaya next door and moved to the bar for another round.

“Although it was common to go to karaoke bars or expensive hostess bars to drink whiskey and hard liquor after dinner, we recently started going to these kinds of cocktail bars to drink more vodka at cheaper prices,” said a worker surnamed Son. “The cost of drinking two or three bottles of vodka at a bar is almost half that of whiskey at karaoke bars.”

Traditionally, when office workers hosted clients, they went to room salons or expensive karaoke bars to drink whiskey and bomb shots - mixing whiskey with other liquors.

Vodka is much cheaper and also smoother, making it particularly popular with young people.

“Since vodka is not as strong as whiskey when mixed with nonalcoholic beverages, we don’t have to worry too much about working tomorrow,” said Son.

Vodka shipments from March 2012 through February surged by 76.3 percent from a year earlier, according to Kalia.

Although the sales volume is still less than that of whiskey, experts expect that to change in coming years.

While Vodka has an alcohol content of about 40 percent, similar to whiskey, it is much cheaper.

At Lotte Mart, 100 milliliters of Absolute Vodka is 4,106 won ($3.68) while Winsor whiskey goes for 6,544 won.

In response to whiskey’s decline, Diageo Korea and Pernod Ricard Korea plan to diversify their imports to include more vodka and beer. Pernod Ricard is particularly focused on vodka.

As vodka sales increase, Pernod Ricard is stepping up its marketing of Absolute at clubs and bars frequented by young people to establish it as a flagship brand.

Pernod Ricard has 40 percent of the domestic vodka market, shipping 67,751 boxes of Absolute Vodka during the March to February period.

The figure is higher than shipments of Johnny Walker, the leading whiskey of rival Diageo Korea, which totaled 61,768 boxes.

Diageo Korea reportedly is poised to pursue Pernod Ricard in the vodka market by importing the world’s No.1 brand, Smirnoff.

“We will increase investment in the non-whiskey sector, such as vodka and beer, while maintaining the luxury image of our whiskey brands,” said a spokesman for Diageo Korea.

With declining sales of whiskey, Lotte Liquor, the third largest whiskey distributor in the country with its flagship brand Scotch Blue, also jumped into the vodka market with the launch of Svedka last month.

The two largest whiskey importers also have recently strengthened their whiskey promotions with commercials featuring celebrities as models for flagship brands.

Diageo Korea recently signed actress Kim So-yeon as the model for Johnny Walker and posted a new commercial for Johnny Walker Paltinum on YouTube.

Following Diageo Korea’s move, Pernrd Ricard Korea teamed up with Jang Dong-gun to launch a 17-year-old Imperial limited edition named after the actor.

Beer, sake also rising

With the expansion of domestic nightclubs, sales of imported beer are also on the rise.

According to the Korea Customs Service (KCS), imported beer accounted for $68 million last year, up 26.6 percent from 2011.

In terms of volume, imported beer was 67 million liters, up 23.6 percent from a year earlier. The domestic market for imports was dominated by Japanese brands, according to data from KCS.

“The increasing number of people who travel abroad want a variety of taste in beer and the spread of the domestic club culture seems to have influenced the expansion of the imported beer market,” said a spokesman at KCS.

In addition, in stark contrast to whiskey, Japanese sake also has emerged as a new trend.

Sake, also known as refined rice wine and imported from Japan, saw its import volume surge last year by 70.2 percent to a record high of 41 million liters.

The value of sake imports stood at $14 million, up 8.8 percent from 2011, as the price declined 36.1 percent, from $5.38 per liter to $3.44 per liter.

“Young people, who are more open to Japanese culture, increasingly prefer sake and mild alcohol over whiskey,“ said Lee Sang-hun, director of Korea Venture Management Research Institute, or Icanbiz.

Not only the foreign brand beer and vodka, but also soju and makgeolli, which are tailored to Korean tastes, have seen growth in line with the Korean wave.

“Korean people used to blindly follow the imported liquors, but nowadays they also like to enjoy soju and makgeoli,” Lee added.


By Kim Jung-yoon [kjy@joongang.co.kr]

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