South Korea is a challenging market to operate in due to longterm macroeconomic factors, which are in turn playing into lower whiskey demand GlobalData. South Korea s whiskey market is expected to remain flat in volume terms between now and 2028, data shows. World whiskies like Japanese whisky are anticipated to see the fastest growth though from a smaller base than Scotch according to analysis from GlobalData, Just Drinks parent company. The gold standard of business intelligence. In value terms, meanwhile, Scotch whisky and other world whiskies are predicted to see slight increases. Last week, drinks majorDiageo revealed it wouldraise prices of several whisky SKUs by an average of 18 in South Korea, from 1 July. The changes impact Scotch brands Mortlach and Copper Dog, as well as Tequila brand Don Julio.Diageosaid the hikes were part of its regular portfolio reviews. In the six months to 31 December, Diageo s business in north Asia, comprising South Korea and Japan, saw net sales decline 6. At the time, the fall was attributed to falling sales of Scotch. Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge. Your download email will arrive shortly. We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form. In February, it emerged Diageo wasrolling out an early retirement programmefor its workers in South Korea amid falling whisky sales. GlobalData alcoholic beverages research director David Harris said growing competition from world whiskies in South Korea was damaging products from traditional regions like Scotch. Competing whiskies produced in India and China often copy Western brands but at a lower price point , he said. This has created noise in the market that many Western brands find it difficult to cut through. Copycat brands also have the potential to damage the brand equity of Western brands where they are explicitly copied by these new entrants but with a lower overall quality. . Longterm macroeconomic factors and demographic issues have also added to stagnating consumption of whiskey, Harris said. South Korea s birth rate is shockingly low, and where older consumers are cutting down on alcohol consumption due to health issues, they simply aren t being replaced by younger consumers. Furthermore, even if younger consumers would like to experiment with Diageo s premium whiskies, poor worklife balance, low salaries, somewhathigh taxes and extremely high accommodation costs all impact their affordability. . While at the time of the voluntary retirement scheme, a Diageo spokesperson toldJust DrinksSouth Korea was still a strategically important market , Harris said the company s focus will be on other, more lucrative markets. Indeed, for the group s wider Asia Pacific region, net sales grew 2 in the second half of 2023, driven by growth in China. Growth was partially offset by the sale of its South Korean whisky business, Windsor Global first announcedin 2022. South Korea simply isn t the most attractive market in Asia for Diageo to focus on, he said. While it is seeing modest growth, it is far outpaced by India which is a much larger market. China is a fairly small market though still larger than South Korea but has far more longterm potential and is seeing stronger growth. Thailand, too, is something of an opportunity market, with less domestic competition than either China or India and strong growth. . While Diageo said it remained fully committed to the Korean market , flat predictions for whiskey in the market suggest it may not be the top priority for the group in the years to come. There are far larger prizes which Diageo while be thinking represent a better potential return on investment, Harris added. Give your business an edge with our leading industry insights. The gold standard of business intelligence. Give your business an edge with our leading industry insights. Give your business an edge with our leading industry insights. . Just Drinks : Just Drinks Focus monthly. Thematic Take monthly. I consent to Verdict Media Limited collecting my details provided via this form in accordance withPrivacy Policy. View all newslettersfrom across the GlobalData Media network. Drinks  Beverage Industry News  Market Research  Just Drinks. Powered by. Verdict Media Limited 2024
South Korea's whiskey market faces challenges due to macroeconomic factors, resulting in lower demand. Japanese whiskey is expected to grow the fastest. Diageo raised whiskey prices in South Korea by 18%. Falling sales in north Asia impacted Diageo's business. Competition from world whiskies and demographic issues contribute to stagnating consumption. Diageo focuses on more lucrative markets in Asia, while South Korea remains a strategic but less attractive market.