South Korea: AB InBev said to sell Oriental Brewery

AB InBev may soon be selling its South Korean unit Oriental Brewery, the largest brewery in the country. Shinsegae Group, Korea's largest and oldest department store chain which also owns Shinsegae L&B, the No. 1 company in the domestic wine market, and Jeju Soju, a producer of “soju”, is said to be interested in buying the brewery. According to a report in Business Korea, Shinsegae is already actively recruiting people namely from  Lotte Liquor Co., which successfully started brewing its Kloud beer in October 2013 and which has since then taken the Korean beer market by storm.

Oriental produces several of Korea's most popular beverages including the OB, Cass and Cafri lager brands

Shinsegae’s nationwide distribution networks is intended to boost sales of the ailing brewery, which suffers like the country’s second-biggest brewery Hite Jinro, from the rise of Lotte’s beer venture and the growth of imported beers, which have already gained a market share in South Korea of more than 10 percent in value and 5 percent in volume.

Two years ago Oriental Brewery, already laid off 138 people under a voluntary retirement program. One year later Hite Jinro did the same with 100 of its 3,200 employees. (, 10.3.2017)

But Shinsegae does not only hope to support the sale of Oriental beers through its own retail distribution network but also wants to push its liquors and soju in restaurants and bars where Oriental has traditionally strong ties. Thus, the alleged takeover could be a win-win situation for both sides.

AB InBev itself could also be interested to load off the Korean unit and focus on an import or license production of its international beer brands as a recovery of the domestic Korean business is not foreseeable in the near future and the world’s leading brewer is still burdened with a heavy debt service from its 2016 purchase of SABMiller. Last week the company had to announce a dividend cut after leading executives had to admit that the executed cost cuts were not sufficient to secure the repayment of the $108bn in debt stemming from the acquisition. (, 25.10.2018)

It would not be the first time that AB InBev is selling Oriental. In 2009 the beer behemoth already sold its South Korean unit for $1.8 billion to private equity firm KKR as part of InBev’s efforts to raise money to ease the debt burden from its acquisition of U.S. beer maker Anheuser-Busch a year earlier. In January 2014 the brewery was bought back by AB InBev for a sum of $5.8 billion.

Shinsegae was acquired in 1963 by Samsung Group  but was separated again in 1991. In 1993 the company opened its first discount store named e-mart. Four year laters the first e-mart store outside of Korea was opened in Shanghai, China. In 2016 the company owned 15 Shinsegae department stores and 160 e-mart discount stores in South Korea.

The chairwoman Lee Myung-hee is the daughter of Samsung founder Lee Byung-chull and younger sister of the chairman of Samsung Electronics Lee Kun-hee. CEO and vice-president of the company is her son Chung Yong-jin.

Share this article: