South Korea: HiteJinro drops plan to sell Masan brewery

HiteJinro, second largest brewing company in South Korea and one of the country’s largest distillers has dropped its plans to sell its brewery in Masan and will instead renovate it to distill soju, the traditional best-selling Korean spirit.

In December 2017, HiteJinro announced to cut its workforce by more than 3% in order to fight declining sales in a demanding market environment. (inside.beer, 10.3.2017) Last September the company went a step further and said in a regulatory filing that it is considering selling one of its three breweries to increase efficiency in beer production. (inside.beer, 29.9.2017)

Reasons were said to be losses from beer business, which accumulated to nearly 100 billion won ($93.5 million) over the past four years, and the fact that its breweries ran only 44 percent of their capacity in 2017. The brewery in Masan brewery, which will nowcease to produce beer, has an annual beer production capacity of 3.3 million hectoliters, which is about half of HiteJinro’s yearly production of 6.62 million hectoliters of beer in 2016.

The other two remaining breweries in Gangwon and  Jeonju have a remaining combined capacity of 8.5 million hectoliters, which is still sufficient to produce all beer of the group.

After carefully evaluating all options, the company said Wednesday that it will not sell the brewery but produce the local distilled liquor soju instead at the facility. “We cannot ignore urges from Masan resident to keep the factory open. We will instead run the facility as soju distiller,” stated the company.

Currently, the company operates three soju distilleries in the central and northern part of the country. Masan, located in the South will help to branch out production and attract people in this part of the country, where people usually prefer local brands.

Soju, a distilled beverage with 18% to 45% alcohol by volume containing ethanol and water, is very popular in South Korea and was long considered a “national drink,” before consumer tastes leaned toward low-alcoholic drinks like beer.

The Masan brewing equipment will be moved to the brewery in Jeonju, the company said.

 

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