Liquor shelves are seen at a supermarket in central Seoul on June 2.YONHAP
K-food is having a moment the world over, but Korea's soju and beer makers remain stuck in a slump.
A prolonged slide in domestic demand and rising costs tied to the Iran War have squeezed producers. A new rule going into effect in November that will require drunk driving warnings on every alcohol container threatens to add to the strain.
Soju production edged down last year to 836,855 kiloliters (221 million gallons) from 844,022 kiloliters in 2024, Hitejinro said in its 2026 sustainability report, released Friday. Beer production, the company's mainstay, slid about 18 percent to 473,281 kiloliters from 578,701 kiloliters in 2023.
Lotte Chilsung Beverage, maker of the Kloud and Krush beer brands, is pushing to streamline. Its work force has shrunk to 5,224 from 5,773 over the past three years, and last year it offered voluntary retirement for the first time in its history. Late last year, it also pared back its beer lineup by halting production of 20-liter (5-gallon) draft beer kegs of Kloud and Krush supplied to bars and restaurants.
Both companies are pushing exports and new markets, but overseas sales remain a small slice of the business. Lotte Chilsung's global revenue rose 9.5 percent last year to 1.53 trillion won ($1.01 billion), yet that was just 37 percent of its total. At Hitejinro, overseas sales came to 192 billion won, or 8.6 percent of the 2.2 trillion won it booked on a consolidated basis.
Costs are climbing on top of weak sales. Higher oil prices and a weaker won in the wake of the war in Iran have pushed up the price of packaging such as cans and plastic bottles, along with logistics costs. Lotte Chilsung's operating profit for the second quarter will come to 62.2 billion won, down 0.3 percent from a year earlier, and Hitejinro's will fall 6.7 percent to 60.1 billion won, according to consensus from financial data provider FnGuide.
Liquor shelves are seen at a supermarket in central Seoul on June 2.YONHAP
The squeeze stems largely from forces outside the companies' control, and easing it may require a harder push abroad.
"Oil prices and the dollar-won exchange rate have climbed because of the war in the Middle East, and that has pushed up cost burdens such as logistics and packaging," Lee Hong-joo, a professor in the Department of Consumer Economics at Sookmyung Women's University, said.
"This will be reflected in second quarter results. With the domestic slump dragging on, companies need to expand their share of overseas markets and rework their distribution strategies."
The industry expects the pressure to intensify in the second half. Revisions to the enforcement rule and public notice under the National Health Promotion Act, drawn up by the Ministry of Health and Welfare and the Korea Health Promotion Institute, take effect on Nov. 9. Under the changes, every alcohol container must carry a warning against drunk driving, either as text or as an image.
Producers worry about the cost of the switch and a hit to demand at the same time. Labels must be redesigned for each container type, from cans to glass bottles, and drawing down stocks of existing packaging could add further expense.
Jensen Huang, CEO of Nvidia, drinks a cup of beer while watching the game between the Kiwoom Heroes and the Doosan Bears at Jamsil Baseball Stadium in Seoul on June 7.YONHAP
"Applying new labels for each type of container will inevitably add to costs," an industry source said. "If the mandatory warnings deepen negative perceptions of alcohol, a slump in consumer sentiment could push back any earnings rebound even further."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
