HiteJinro Targets Home Market to Avoid Regulations on Entertainment Establishments

Ebest Investment & Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Ebest Investment & Securities predicted on the 7th that Hite Jinro will make equity investments and acquisitions to respond to the increased demand centered on the home market this year, expecting an improvement in operating profit.

Hite Jinro suffered damage last year due to restrictions on entertainment establishments caused by COVID-19. It was an unavoidable situation as the entire liquor market stagnated. Last year, the domestic beer market (excluding imports) shrank by 6%, the imported beer market shrank by 23%, and the overall beer market size is estimated to have decreased by 9%. The total soju market size is also expected to have decreased by 4% compared to the same period last year.

In particular, it is analyzed that there was a change in the liquor market itself starting last year. Analyst Shim Sim-hyun of Ebest Investment & Securities explained, “Traditionally, the share of entertainment channels and home channels in the liquor market was 1 to 1,” adding, “As the home market grew, the share of entertainment channels remained at about 37% for beer and 49% for soju.” The wine market achieved growth led by the popularization of ultra-low-priced products.

Accordingly, Hite Jinro’s plan is to target the home market. To respond to the future increase in demand for craft beer centered on the home market, they are actively considering equity investments and acquisitions. Analyst Shim forecasted, “Hite Jinro’s beer market share will increase by 2 to 3 percentage points this year, and soju by 1 to 2 percentage points,” adding, “The wine market will also continue to grow.”

Although a conservative approach is necessary until the first half of the year, profits are expected to increase as major markets recover from the second half. Analyst Shim said, “The first quarter of this year will inevitably be weak compared to the previous year, but from the third quarter, as the market recovers, sales guidance expects 10% growth in beer and 5% in soju,” and predicted, “Overall operating profit will increase by 10% compared to the same period last year.”

This content was produced with the assistance of AI translation services.