The Korean middle class who loves face relies on Chinese liquor to "save face"

South Korea is China's largest exporter of liquor, with nearly one-third of its liquor exported to South Korea.

For face-loving Koreans, there are two things that China can do to help them hold up the façade: first, the Korean filial son sends his parents to Zhangjiajie for tourism; Second, it is very face-saving to bring Chinese liquor back to give gifts. 

In fact, if you check the relevant information, you will find that Moutai, Shuijingfang and other liquors have been "famous" in South Korea for a long time, and they frequently "appear" in Korean dramas and variety shows. When visiting the market, Jiu Zhouzhi noticed that Koreans drink Chinese liquor, which mostly appears in high-end business bureaus, and the main thing is to have face.

This phenomenon is vividly shown in Korean dramas. In "Long Time Haven't Done", which sparked heated discussions at the beginning of the year, the upper class represented by the prosecutor drank Shuijingfang, and the protagonist invited his family to drink Chinese liquor as soon as he became rich;

Why do Koreans like Chinese baijiu?

Chinese liquor, supporting the scene for Koreans

By visiting the market, Jiu Zhouzhi noticed that Koreans have obvious differences in the selection criteria of liquor in the business bureau and the ordinary liquor bureau: in the high-end business bureau, they mainly value the famous liquor brand, price and other factors, while ordinary families and friends choose cheap liquor more when they have dinners.

Jiu Zhouzhi communicated with relevant people who had worked in Hyundai Motor, Samsung and other Korean companies and learned that Koreans do not have enough perception of Chinese liquor culture, and generally drink liquor in business occasions, preferring sauce-flavored liquor, Moutai, Xijiu, Guotai, etc. are common brands on the wine table, and Wuliangye, Shuijingfang, Dream Blue and other strong aroma famous wines are also common. 

"Compared with Korean soju, Chinese liquor is defined as a high-end liquor by Koreans because of its high price, and it belongs to the level of supporting the scene in the high-end bureau," Zhang Qi, who was in charge of business reception at Hyundai Motor, told Jiu Zhouzhi. 

In Korean Chinese supermarkets and convenience stores, there are more local liquors in Shandong, Northeast China, such as Confucius, Yantai Ancient Liquor, Beidacang, as well as Niulanshan and Hongxing Erguotou in light bottles. 

Ms. Ding, who is engaged in the liquor trade business in South Korea, told Jiu Zhouzhi, "Chinese baijiu is commonly used in business receptions, and the locals still drink more soju because it is cheaper. ” 

In Wangjing, the Korean town of Beijing, this view is validated. A number of cigarette shop owners said that Koreans in the neighborhood buy baijiu frequently in the store, "because the taste is good and the price is cheaper than in Korea." The owner of a Korean restaurant owned by a Korean said that the Koreans who came to eat mainly focused on affordable products in the choice of drinks.

Linda, who previously worked at a Samsung-affiliated company, told Jiu Zhouzhi that when Korean colleagues go home for the New Year and holidays, baijiu can be said to be a Chinese specialty that they must bring, and they think it is very face-saving to bring it back and give it away. 

What is more interesting is that Shuijingfang has a high status in South Korea, especially the gifts that the middle class must bring to dinner, which is similar to the status of Moutai and Wuliangye in the mainland. In recent years, Yanghe has continued to increase its layout in the Korean market, and Dream Blue has also begun to show such a trend. 

Why do you prefer Chinese baijiu?

According to the data on the official website of the General Administration of Customs of China, South Korea is the largest exporter of liquor in China, and in 2021 and 2022, nearly one-third of China's liquor was exported to South Korea. 

First, the good quality of Chinese liquor is an important factor in the popularity of Koreans.

An industry insider told Jiu Zhouzhi that Korean soju mainly uses rice, cassava, molasses and other raw materials as brewing materials, and has a taste of alcohol mixed with water.

The relevant person in charge of Shandong Yiyang Liquor Industry said that domestic liquor is grain wine, which uses sorghum, wheat, corn and other grains as raw materials through fermentation, steaming and brewing processes, and it is not good to drink.

For Chinese liquor to be loved by Koreans, Yanghe also pointed out that Chinese liquor is different from Korean local soju, Chinese liquor brewing technology is more, high cost and good quality, which is one of the prerequisites for becoming a high-end product. "In addition, in recent years, as Chinese baijiu has collectively gone overseas and its popularity has opened, baijiu has become more and more recognized by Korean consumers. ”

When they go overseas to study, work and settle down, Erguotou also has a wide range of market demand in South Korea, which drives Niulanshan to be exported to South Korea, Japan and other countries", Jiu Zhouzhi learned from Niulanshan that as of 2021, Niulanshan has achieved an export value of 2.6 million US dollars and an export volume of 800,000 liters.

Second, South Korea has a mature spirits consumption market, which is similar to Chinese culture, and has the social and cultural identity and market foundation for drinking liquor.

Jiu Zhouzhi learned from Yanghe that the annual alcohol consumption of Koreans ranks first in Asia, and most of them are low-alcohol alcohol in the tens to thirties, and both men and women have the habit of drinking.

In addition, South Korea itself has a relatively mature spirits consumption market. South Korea's whisky imports in the first half of 2023 were 16,900 tons, up 50.9% year-on-year and the highest since 2000, according to data released by the Korea Customs Service (Customs).

Relying on the proximity of the food culture of China and South Korea, Chinese baijiu has an advantage in cultivating consumption habits of table wine. Ouyang Qianli, a researcher in the beverage industry, said that South Korea is deeply influenced by Chinese/Confucian culture, and the development of Chinese food in South Korea is in full swing, so there is a natural affinity for liquor produced in China.

Third, under the geographical advantage, it is conducive to the penetration of Chinese liquor culture into South Korea.

Korean companies have invested in the eastern coastal areas of the mainland, and many Koreans have done business here, which is conducive to the export of mainland liquor culture. Jiu Zhouzhi learned from Yiyang Liquor that there are many Korean companies in Weihai, and most of them will follow the local customs in terms of alcohol when they consume locally, and choose to drink the local Wendeng Liquor.

In this regard, wine analysts, Cai Xuefei, general manager of Zhiqu Marketing, said that there are three main reasons why Koreans like Chinese liquor: first, South Korea itself belongs to the same East Asian cultural circle as China, the workplace and family drinking culture are similar, the taste preferences are similar, and the acceptance of Chinese liquor is relatively high; second, South Korea and China are geographically close, and the cost of domestic liquor in South Korea is relatively high, while the cost of Chinese liquor is low, and Chinese liquor is more cost-effective; third, the Korean Peninsula and China's economic exchanges have been frequent in history, especially with the Northeast and Shandong, and the owners have strong eating habits and life commonality, which is conducive to the sales and consumption of liquor。

It is worth mentioning that the "super high appearance" of Chinese liquor with a sense of design is also a plus.

"Korean colleagues rank Chinese liquor as Shuijingfang, Moutai and Wuliangye, and choose Shuijingfang because the bottles are good-looking, and other brands are completely because of the big brand and high popularity. Linda said.

Go to South Korea and want to create a "middle stream"

With the blessing of many advantages, mainland liquor companies focus on the Asia-Pacific region, including the Korean market. 

In recent years, Yanghe has also become the "appearance king" of Korean dramas. Yanghe told Jiu Zhouzhi that the Korean market is one of Yanghe's key overseas markets, and in entering the Korean market, Yanghe not only cooperated with experienced spirits distributors and customers, but also promoted the brand through media publicity, tasting activities, consumer interaction, etc., and achieved good results. In addition, in the Korean market, Yanghe pays close attention to the consumer experience and actively creates scenes of interaction with consumers, so that more Korean locals can know and taste baijiu.

Backed by Diageo's largest dealer channel in the world and foreign executives to grasp the direction of operation, Shuijingfang has unique conditions to enter the Korean market. According to public information, Diageo previously said that it has deployed the Shuijingfang business in different countries around the world, including Europe, North America and other places, especially in the South Korean market. It is worth mentioning that Sujingfang is very popular in South Korea, and has appeared in major Korean dramas, movies and variety shows.

Wuliangye, the "second liquor leader", began to enter the Korean market as early as 1997, and by the early 2000s, many Chinese liquor brands had entered South Korea. In 2018, Wuliangye cooperated with Fidelis Catering Co., Ltd., a subsidiary of South Korea's Fidelis Group, to export a variety of products to South Korea, including Puwu, True Liquor, and Huobao, and expanded Wuliangye and its series products from duty-free shops to the domestic market in South Korea.

It is worth mentioning that South Korea is the first stop for the cutting-edge brand Jiang Xiaobai to go to sea. At present, in Lotte super and CU convenience stores in South Korea, Jiang Xiaobai can be seen everywhere. According to public information, Jiang Xiaobai will focus on a single country, take South Korea as a key market, and gradually enter more local supermarket channels.

In addition to developing sales channels, Jiang Xiaobai also customized paper sets for Korean consumers, designing 12 different paper sleeve quotations and mixed drink recipes. In the future, we will lay out the market with local culture, integrate the drinking scene of young people in Korea into product design, and develop liquor products that meet the needs of the Korean market.

"In addition to the performance of the cutting-edge brand Jiang Xiaobai in South Korea", Ouyang Qianli said with Zhou Zhi, "Shandong real estate liquor across the sea from South Korea, close to the water, first come, the first month, the Confucian liquor produced in Shandong is the 'premier' liquor brand in South Korea, and the low-cost Yantai ancient liquor also has good sales in South Korea." ”

The above-mentioned Yiyang liquor industry person said that Wendeng Liquor cooperated with local distributors in South Korea to lay out supermarkets, hotels and other channels, so that more Korean consumers can buy products, and at the same time, it also narrowed the distance with overseas consumers by holding tasting meetings and other activities.

A protracted battle that must be fought

It should not be overlooked that Chinese baijiu still faces many challenges if it wants to make a trend in South Korea. Customs data shows that the export volume, export value and average price of liquor sold from mainland China to South Korea fell three times last year, of which South Korea's liquor export value fell from third to seventh. 

What are the challenges encountered in the journey of exporting domestic liquor to South Korea?

Among them, heavy taxation is regarded by the industry as a major obstacle for liquor to enter the Korean market.

Feng Huaqing, senior consultant of Reece Strategic Positioning Consulting, said that there are two significant characteristics of the foreign spirits market, the first is parity, with an average market price of US$10/500ml, and the second is the bartending culture.

The above-mentioned Yanghe person told Jiu Zhouzhi that the biggest problem in Yanghe's journey to South Korea is that South Korea levies a high tax on spirits, which makes the market price of liquor at a high level, and there is a huge disadvantage compared with local competitors.

"When liquor is exported to South Korea, there are not only customs duties, but also the most expensive liquor tax, education tax, surtax, etc.," Ms. Ding added.

In Ouyang Qianli's view, South Korea's economic growth has slowed down and the profits of large enterprises have declined, resulting in pressure on the consumption of liquor (260%) with high tariffs in South Korea. At present, there is still a long way to go for liquor to be in line with the world, such as technical standards, policies and laws, cultural integration and other issues.

In addition, due to the differences in alcohol culture, for example, when Koreans have a meal and drink, there will be "three sessions" in order to have a good time. Therefore, Koreans are not the main consumers of liquor, but mostly beer and soju.

According to a survey conducted by Lotte Members at the end of June last year, beer (45.0%) is the most popular type of alcohol among Koreans recently, followed by soju (30.0%). "In South Korea, most of the people who drink baijiu are Chinese who live and work in South Korea. Ms. Ding said to Jiu Zhouzhi.

In fact, South Korea is just a microcosm of mainland liquor going overseas. "Alcohol consumption is a part of food culture, with the improvement of China's international influence, domestic consumption has entered the stock market, and the involution is serious, and the internationalization of China's famous wine to the sea is the inevitable result of market development," Cai Xuefei said.

It cannot be ignored that the current export of liquor is still in its infancy, and how to truly achieve international development has become a common problem for many liquor companies.

"At present, the brands represented by Moutai, Wuliangye, Luzhou Laojiao and Gujing are actively implementing internationalization, which requires improving the quality standards of the production area as soon as possible, and in line with international standards, with the help of new tools and new models such as experiential marketing and live broadcast e-commerce, to carry out a number of work to carry out related innovation work, and to enhance the charm and attractiveness of Chinese wine with the help of the promotion and popularization of soft culture such as oriental life art. ”

Cai Xuefei said that objectively, the internationalization of liquor is still in its infancy, and it is still dominated by Chinese consumption, and it is far from entering the mainstream foreign market, and there is a long way to go in terms of policy docking, cultural promotion and product education, which also requires interaction and exchanges between the government and the industry level, and innovative brand promotion forms, so as to help the international development of liquor.

At present, the mainland liquor industry still needs to face problems such as high channel inventory and poor terminal sales, and it is urgent for liquor companies to boost their product sales by opening up the international market, and it is urgent to explore the development path suitable for Chinese liquor to the world's liquor consumers.