BEFORE A MAN in dark glasses trotted into the world’s consciousness, lassoing 1.7 billion You Tube viewers and making fools of dads at weddings, the concept of a Korean icon was not altogether familiar.
In Psy the world has one. In the soju brand Jinro it could one day have another. At 65 million 9-litre cases, the word’s largest brand is big but, like its endorser, is thinking even bigger: it wants to breach 100 million cases in under 10 years.
How, you might ask? The South Korean soju market, of which Jinro represents a half, is saturated. It amounts to about 40% of all alcoholic drinks consumed in South Korea and 97% of spirits – so not a lot of leg room there. No, if Jinro wants to do it Gangnam style, it will need more space.
International expansion might require a helping hand – production capacity is one thing, distribution is another.
Might Diageo be eyeing another acquisition? Jinro certainly has the domestic network to tickle Diageo’s fancy and, according to Euromonitor International, the soju category is set to rise 8% to 146 million cases between 2012 and 2017.
“I’m actually surprised they have not contacted me,” quips Yang Yin Jip, Hite-Jinro co-president and CEO of its international business. “It could be a consideration for both Diageo and Jinro to talk about it – business is business. Some investment from Diageo could mean we accelerate sales volume. With its power in other countries Diageo could be a great partner.”
But Jinro has more than just local connectivity to offer. One third of its 65 million cases output is outside of South Korea. “Hite-Jinro’s Japanese subsidiary is the only foreign company whose volume is in the top 10 list [of alcohol companies] – Diageo, Heineken and Budweiser are not in the top 10 list,” says Yang Yin Jip.
Diageo may want to hurry up as Hite-Jinro is marching west towards India, Diageo’s latest project. Hite-Jinro says it is about to ship in bulk and bottle in the country. “India has potential, there is a spirits market there. We can expand in India and into the Middle East and Africa. Logistically that will be a plus – it will be much more cost effective than from Korea.
“There are only 11 countries with populations of more than 100 million – Nigeria is also one. Per capita it is not that big but it is a growing market. They would drink soju by shot.” Hite-Jinro continues to target China, the US and Russia – while Vietnam’s growth is so strong a further production plant may be built in the country.
Two million Korean diasporas in the US is enough to require a Stateside Jinro subsidiary, but other US spirits-consuming ethnic groups, such as Hispanics, are now on the radar. In the US soju has an advantage over other world spirits, such as vodka. Its 24% abv only requires a beer and wine licence, despite it being a distilled spirit.