Big names in beer see Klouds on the horizon

More than a month has passed since Lotte Liquor joined the competition in the local beer industry by releasing Kloud, and sales figures show the newcomer latecomer is off to a good start and bringing some changes to a market that has been dominated by Oriental Brewery and Hite-Jinro.

According to Lotte Mart, Kloud grabbed a market share of 13.9 percent by the end of May, after the large discount store chain started selling it on April 23. The market share of OB fell from 65.2 percent to 56.3 percent, and Hite-Jinro dropped from 34.8 percent to 29.8 percent.

Homeplus started selling Kloud on April 25, and by May 25 it accounted for 5.5 percent of beer sales.

“Sales are gradually increasing,” says Kang Bong-sung, a liquor buyer at Homeplus.

Cho Jin-bae, a liquor manager at Ministop, a convenience store, also says Kloud has gained a significant footprint quickly. “Usually when a new beer is launched, only 20 percent to 30 percent of [convenience store owners] are selling it a month after its release,” says Cho. “As for Kloud, more than 60 percent want it in their stores.”

Cho’s job involves supplying nationwide Ministop stores. “Store owners are very interested in Kloud,” he says.

Interest among consumers that eventually leads them to buy and taste the new beer comes even though Lotte Liquor refrained from aggressive marketing activities upon Kloud’s release in the aftermath of the tragic Sewol ferry sinking on April 16.

Although the product went on sale as planned in April, it was only late last month that the company unveiled its advertising campaign featuring Jun Ji-hyun. The 33-year-old actress recently starred in the hit drama “My Love From the Star (SBS).”

At first, Lotte Liquor planned to release the ad when Kloud hit the stores, and industry sources say more than 20 billion won had been earmarked by the company on marketing.

When Lotte Liquor launched Kloud, the company emphasized it uses the gravity method of brewing, which is popular in Germany, for the first time in Korea. The method does not add water to the fermented solution of raw materials, which results in a richer foam and taste. Kloud - which refers to Korea and a rich, cloudlike foam - is a lager like Cass and Hite that gives a sense of refreshment and at the same time has the deep aroma and hoppy taste of ale.

“Even though we weren’t able to promote Kloud aggressively because of the Sewol ferry accident, we believe many people are aware of the brand,” says Woo Chang-kyun, director of marketing at Lotte Liquor.

On the other hand, some industry people say it is too early to draw any conclusions about the long-term success of Kloud.

“Consumers tend to buy items when they are first out, oftentimes, just out of curiosity,” says Lee Kyung-joo, a researcher at Korea Investment and Securities. “These purchases are made regardless of how good or bad the taste is.”

What is most important is if those consumers buy Kloud again. “At least three months should pass to analyze whether or not there are repurchases,” Lee says.

Industry competition, meanwhile, is expected to be heated. After Lotte Liquor released its Jun Ji-hyun advertisement, OB and Hite-Jinro became more aggressive in their marketing activities.

Earlier this month, OB unveiled a new advertisement for Cass Fresh, referring it to as the official beer of the Brazil World Cup.

“After the World Cup, we will promote summer marketing activities, mainly at beaches, and solidify our position as the country’s No. 1 beer company,” says Byun Hyung-seop, director at OB.

Hite-Jinro released a limited edition of Max called the “Max Czech Special Hop” and is holding a special lottery event to give away gold medals. It also released special new Hite packaging that has photos of three national team football players - Son Heung-min, Lee Chung-yong and Ki Sung-yeung.

BY MOON BYUNG-JOO, LEE EUN-JOO [angie@joongang.co.kr]