Has the 'Mixology' Craze Faded? 'Jinro Tonic' Fails to Benefit from Highball Boom

Jinro Tonic Water Loses Momentum Amid Highball Trend
RTD Highball Products Emerge as Game Changer,
Operating Profit Drops 38%

Jinro Tonic Water, the number one brand in the domestic tonic water market, failed to benefit from the highball trend last year. The fierce competition intensified as various manufacturers continuously launched tonic water and sparkling water to capture highball demand, and the increase in Ready to Drink (RTD) products that can be enjoyed conveniently had a direct impact.

According to the Financial Supervisory Service's electronic disclosure system on the 3rd, Hite Jinro Beverage's sales last year amounted to 153.9 billion KRW, a 0.6% decrease from the previous year (154.9 billion KRW). During the COVID-19 pandemic, the home drinking and solo drinking craze helped Hite Jinro Beverage surpass 100 billion KRW in sales for the first time in 2020. Since then, it steadily grew, exceeding the 150 billion KRW mark in 2023.

However, last year saw a slight decline in sales for the first time in seven years since 2017, effectively stagnating and only maintaining sales in the 150 billion KRW range. Profitability also deteriorated. Operating profit last year was 9 billion KRW, down 37.5% from 14.4 billion KRW a year earlier, marking a setback after three years.

In recent years, Hite Jinro Beverage's strong growth was driven by the tonic water brand 'Jinro Tonic Water.' During the COVID-19 pandemic, the most notable drinking method in the domestic liquor market was the 'highball.' The highball, which mixes high-proof liquor with tonic water or sparkling water, expanded its consumer base to those who usually found high-proof liquor burdensome, leading to high demand for Jinro Tonic Water. As a result, the business portfolio, which had a large share of bottled water, shifted its focus to the non-alcoholic beverage sector by 2023. As of last year, the sales proportion by business division was 52.7% for non-alcoholic beverages, including tonic water, and 46.8% for bottled water.

However, as the tonic water market slowed last year, Hite Jinro Beverage's growth also stalled. Amid the market's deceleration, various manufacturers entered the tonic water and sparkling water markets, intensifying competition and causing a decline in performance. Industry insiders estimate that the domestic tonic water market size exceeded 60 billion KRW in 2021 and 100 billion KRW in 2022, peaked in 2023, and has entered a stabilization phase since last year.

Most importantly, the expansion of RTD highball products was decisive. The highball market shifted its focus from mixology, where drinks were mixed directly with liquor, to RTD products that are pre-mixed and brewed, allowing consumers to enjoy them conveniently like canned beer. Because of this, Hite Jinro failed to translate the highball market's growth into increased sales of its main products. Sales in Hite Jinro Beverage's non-alcoholic beverage business rose 111.1% over three years, from 38.9 billion KRW in 2020 to 82.1 billion KRW in 2023, but slightly decreased to 81.1 billion KRW last year.

The industry expects limited growth in the tonic water market going forward. RTD products are steadily establishing themselves as a stable category within alcoholic beverages, and there are many alternatives that can be used as mixers besides tonic water. An industry insider commented, "At the beginning of the highball trend, there were few products suitable as mixers domestically, so demand concentrated on Jinro Tonic Water, but as related products rapidly increased over the years, it lost its previous momentum." However, they added, "The highball trend is expected to continue steadily, so the related demand itself will not shrink."

The company's outlook has also become somewhat conservative. In 2023, Hite Jinro Beverage evaluated that "if tonic water increases its presence in restaurants where representative domestic liquors like soju and popularizing whiskey are sold, and the menu becomes standardized, a market size of 1 trillion KRW could be possible in the future." However, this year, they stated, "The culture of enjoying low-alcohol drinks such as highballs and SoTonic (soju + tonic water) is expected to gradually stabilize downward along with the trend decline."

Nonetheless, the company plans to continue expanding its product lineup and promotions linked to its parent company Hite Jinro's soju, expecting the market itself to keep growing. A Hite Jinro Beverage official said, "As the culture of enjoying low-alcohol drinks like SoTonic stabilizes as a mainstream drinking culture, products that can be used as mixers, including tonic water, are expected to reorganize the market with originality. We plan to continuously develop new products that pair well with various liquors and establish a more familiar brand through collaboration and promotions across different industries."

Meanwhile, while the once dominant tonic water has faltered, the bottled water division, another pillar of the portfolio, is also showing signs of stagnation. The domestic bottled water market is growing every year. According to market research firm Euromonitor, the domestic bottled water market, which was 1.77 trillion KRW in 2020, is estimated to have grown to about 3.17 trillion KRW last year. Demand is expected to expand for the time being due to online sales and the increase in single-person households.

However, Hite Jinro Beverage's 'Seoksu' saw sales decline for the second consecutive year, with sales of 72 billion KRW last year compared to 72.2 billion KRW the previous year. Having remained at the 60 to 70 billion KRW level for several years, the company launched a new bottled water brand, 'Joy Water,' last month in an attempt to bring change.

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