'Completely Changed' Cloud... Shin Dong-bin's Beer Starts to Break Out of Single-Digit Market Share

Kloud Undergoes Complete Recipe and Packaging Overhaul
Two-Track Strategy with Crush: Premium and MZ Generation Targeted
Weak Beer Business... Market Share and Sales Power Remain a Challenge

Lotte Chilsung Beverage has revamped the quality and packaging of its flagship beer brand 'Kloud' and is gearing up for the domestic beer market in the new year. Lotte Chilsung plans to attract demand for high-quality beer by strengthening Kloud's premium image. However, there are forecasts that a rebound will not be easy, given that its sales power lags behind competitors who have already secured the domestic beer market.

According to the liquor industry on the 16th, Lotte Chilsung Beverage is undertaking a comprehensive makeover of its beer brand Kloud. This makeover will apply not only to the external packaging but also to the recipe, resulting in changes to the beer's taste.

The most important change is in the ratio of hops. The previously used ratio of aroma hops to bitter hops, which was about 7 to 3, has been adjusted to 100% aroma hops. Hops act as a natural antimicrobial agent, enhancing the beer's preservation and distribution efficiency, and most importantly, play a crucial role in the taste and aroma during the brewing process. Through this recipe change, Lotte Chilsung has completely applied aroma hops, which enhance various fruit, floral, and spice aromas, excluding the bitter hops that produce bitterness. This is interpreted as a move to strengthen mass appeal in line with the preferences of domestic consumers who favor smooth drinkability.

However, the brand's essential characteristics, such as the 5% alcohol content and the '100% malt wort fermentation original liquid' produced by the original gravity method used since launch, as well as '100% malt' for a rich and full flavor, remain unchanged. In addition to taste, the appearance has also been altered. The can material was changed to a matte finish to emphasize a luxurious image, and the golden color of the existing label was deepened, while navy was added instead of white to intuitively express Kloud's renewed deep and rich aroma.

Launched in 2014, Kloud was Lotte Chilsung's first beer brand and was regarded as a flagship product of Lotte Group Chairman Shin Dong-bin, often called 'Shin Dong-bin's beer.' At launch, Kloud was praised as the beer with the richest flavor among domestic beers and gained popularity, but it struggled to expand market share as it was overshadowed by competing beers. Lotte Chilsung's market share in the beer sector is estimated to be below 5%.

Through this Kloud renewal, Lotte Chilsung aims to strengthen product competitiveness and, based on this, reinforce a two-track beer business strategy with Kloud and 'Crush.' Recently, major domestic beer manufacturers have been competing with a 'two-track strategy' that maintains existing loyal customers while attracting diverse consumers with new products. Representative examples are competitors OB Beer and Hite Jinro targeting the market with 'Cass' and 'Hanmac,' and 'Terra' and 'Kelly,' respectively.

A Lotte Chilsung official said, "We carried out the renewal to further strengthen the sophisticated and premium image that Kloud already had," adding, "We plan to focus on increasing sales volume and enhancing brand image by expanding consumer touchpoints through a two-track strategy: renewing the premium line Kloud and expanding the entertainment channel coverage of Crush targeting younger consumers."

Unlike the two competitors, Lotte Chilsung's differentiation lies in clearly positioning Kloud as a premium line. While the two competitors place their two-track products in essentially horizontal positions, Lotte Chilsung has set different target groups for the two products: Kloud absorbs the demand for high-quality beer, and Crush caters to consumers who prefer lighter beer. However, compared to the two companies, the relative lack of a solid loyal customer base and market share for its core brand is considered a weakness.

Moreover, the beer business must perform better to improve overall liquor business results. As of the third quarter, Lotte Chilsung's liquor business sales reached 621.2 billion KRW, a 2.3% increase compared to the same period last year. While it is encouraging that the growth trend, which had declined in 2023, has rebounded, much of the growth relies on the soju business. Although the fourth-quarter results are also expected to improve slightly, beer sales reportedly lagged somewhat, unlike the increased soju sales led by the 'Saero' brand.

However, the market environment Lotte Chilsung faces is challenging. First, with the continued slump in the dining-out market, it is difficult for liquor product sales to rebound in the short term. A Lotte Chilsung official said, "Last year was a year of adjustment due to domestic consumer sentiment contraction and economic recession," adding, "Market growth is expected to be limited this year due to negative economic forecasts, and fluctuations due to variables such as the economic situation are anticipated more than ever."

Above all, there are voices that it will not be easy for Lotte Chilsung, the third-largest player in the industry, to lead shelf expansion amid a negative market environment. In fact, major liquor companies are implementing two-track strategies not only for beer but also for soju, leading to saturation of limited restaurant and bar refrigerators. An industry insider said, "Regardless of product quality, the competitors' influence is so strong that, to maximize the effect of new products and two-track strategies, the only clear way is to aggressively boost awareness and buzz through sales and marketing efforts despite cost burdens."