HiteJinro Co., South Korea’s largest soju maker, will raise the price of its soju and beer products by about 7% next month to reflect higher costs from inflation, a move that could further fuel inflation in Asia’s fourth-largest economy.
The company announced on Tuesday that the factory price of Chamisul Fresh Soju and Chamisul Original Soju will go up 6.9% from their current price starting Nov. 9, while Jinro Soju’s price will climb 9.2%.
The price of its Terra and Kelly beers will also go up, by an average of 6.8%.
Under the new pricing table, the factory cost of a 360-milliliter bottle of Chamisul and Jinro sojus will increase to 1,247.7 won ($1) and 1,197.9 won, respectively.
The company attributed the latest price hike to a surge in the costs of key ingredients, raw materials and logistics. These include a 10.6% rise in ethanol and a 21.6% jump in bottle costs. Soju is made of ethanol, water and sweetener.
HiteJinro has, however, minimized the price hike this time to ease the burden on consumers, in line with the Korean government’s policy to stabilize inflation, the company official said.
HiteJinro's Chamisul and Jinro Soju GOVERNMENT’S PRESSURE ON PRICE HIKES
In February, the soju industry planned to increase soju prices to reflect already higher raw materials and ingredient costs amid untamed inflation but postponed the plan at the government’s request.
The last time it raised soju prices was February last year.
But the Korean soju sector has no time to waste as soju producers have seen their earnings shrink amid rising costs. HiteJinro reported 50.6 billion won ($37.4 million) in operating profit in the first six months of this year, down 58% from the same period last year.
Its crosstown rival Oriental Brewery Co. already raised its popular beers’ factory price by 6.9% on Oct. 11, citing higher raw materials and logistics costs.
HiteJinro's Terra and Kelly beers Lotte Chilsung Beverage, another major Korean soju producer, said it has no plan to jack up the price of Chum Churum Soju for now. But the latest price hike by the country’s No. 1 soju supplier with a 60% market share is expected to trigger a domino effect in price hikes by other soju brands, including Lotte Chilsung.
NOT CHEAP ANYMORE
A series of price hikes of Koreans’ favorite alcoholic beverages is expected to confront a consumer backlash at a time when the country’s headline inflation shows no sign of easing anytime soon.
An alcoholic drinks menu at a restaurant In particular, given that soju is one of the country’s most-consumed alcoholic beverages thanks largely to its cheap price, consumer resistance to their price hike will likely be vehement.
Soju, a clear distilled alcoholic drink, is often called a working-class or national drink in Korea.
The traditional main ingredient of soju is rice or other fermented grains, but cheaper starches like sweet potato or tapioca are widely used to make highly distilled ethanol, soju's key ingredient, making soju an affordable spirit.
With the latest price hike, however, soju would not be considered a cheap alcoholic drink anymore.
In 2015, soju sold for 3,000 won to 4,000 won per bottle at restaurants. They are now priced at between 5,000 won to 6,000 won following an 85-won hike in February last year.
Following the latest price increase, soju prices at restaurants are projected to hit 7,000 won per bottle.
The higher soju price is forecast to increase overall dining-out costs, market experts say.
According to data from Korea’s National Tax Service released in June, national shipments of distilled soju amounted to 862,000 kiloliters in 2022, accounting for 26.3% of the nation's alcoholic beverage shipments and making it the second most-consumed alcoholic drink.
Beer commanded the largest proportion at 51.9%, with shipments of 1,698,000 kiloliters.
Write to Hun-Hyoung Ha at hhh@hankyung.com Sookyung Seo edited this article.
