Samil PwC "Changing Drinking Culture... Alcohol Industry Must Respond with M&A and Portfolio Diversification"

Double Burden for the Liquor Industry Amid Stagnant Dining-Out Market
Portfolio Diversification and M&A Expansion Urged as Light Drinking Culture Spreads Among Generation Z

As the light drinking culture centered on Generation Z (those born from the mid-1990s to the early 2010s) spreads and the dining-out market stagnates, the liquor industry is facing a double burden, leading to calls for portfolio diversification and scale expansion through mergers and acquisitions (M&A).

On the 7th, Samil PwC announced the publication of the "Liquor Industry Report: An Era of Enjoying Alcohol," which contains these insights. According to the report, the global liquor market size is approximately $1.6 trillion (based on sales), with an expected average annual growth rate of 3% until 2029. The domestic liquor market is also expected to maintain a steady state at a level similar to the domestic growth rate after reaching 10 trillion KRW in shipment value. The report explained, "Recently, the liquor industry has attempted price increases due to rising raw material and component costs, but the government is encouraging price reductions by adjusting the liquor tax base, making it difficult for the domestic market growth rate to expand rapidly."

Regarding recent liquor consumption trends, the report stated, "The trend is rapidly shifting from wine and whiskey to tequila and sake, with preferences for non-alcoholic beverages, ready-to-drink (RTD) alcoholic beverages, and cost-effective whiskey increasing, along with growing interest in Japanese liquors." It also forecasted, "Especially among younger generations, the 'sober life'?which pursues light drinking instead of excessive alcohol consumption?is spreading, leading to increased sales of non-alcoholic and alcohol-free beverages."

In response, Seunghoon Lee, Partner of Samil PwC’s F&B Industry Specialization Team, advised, "The liquor industry is difficult for new entrants due to complex licensing stages and the formation of an oligopoly market. Existing companies should actively respond to changing trends by expanding through M&A and building diverse portfolios."

According to the report, soju is expected to see short-term profitability improvement as the selling price rises due to increased alcohol base costs, but the monopoly of the nationwide soju industry is expected to deepen. For beer, the stabilization of imported malt and hop prices is expected to ease cost burdens, while wine is anticipated to enter a price stabilization phase after a period of growth. Whiskey prices are also analyzed to gradually stabilize following a decline in demand for high-end products.

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