HiteJinro to open beer plant in Vietnam

HiteJinro is looking to build a beer plant in either Vietnam or the Dominican Republic to seek more resilient growth, a company executive said in a recent interview.

“If we decide to build a plant outside Korea, it will be in Vietnam. The Dominican Republic could be another option depending on demand,” Lim Kyu-hun, director of HiteJinro’s overseas business head office, told The Korea Times last week.

The liquor market in Vietnam has grown 10 percent annually in recent years. And high productivity and low labor costs make the country more attractive than advanced countries, Lim said.

“A plant in Vietnam could help meet a burgeoning demand for beer not only in the Southeast Asian country but also in other markets such as China, Taiwan and Hong Kong,” he said.

Building a plant in Latin America mostly depends on local demand. If this reaches at least 50 million liters a year, it is worth having a factory in the Dominican Republic, he explained.

Early in April, HiteJinro signed a deal to produce beer under the brand name “Barcelo” in an original development manufacturing deal with Group Barcelo, a major company in the Dominican Republic.

Shipments from Korea began in January to the Central American country where the state-run Cerveceria Nacional Dominicana controls over 95 percent of the local beer market.

From the Dominican Republic, HiteJinro plans to make inroads into neighboring countries in North America and South America. But he didn’t provide any timeframe or details.

In its expansion drive, HiteJinro aims to achieve $300 million in exports by 2017 from this year’s target of $155 million.

It is also aiming to earn more than 18 percent of overall sales from overseas markets, double this year’s 9 percent target, the director said.

HiteJinro’s outbound push was triggered by saturation in the domestic and advanced markets. No new markets means no growth for Korea’s second-biggest beer company by sales after Oriental Brewery.

“As Japan is a saturated market for HiteJinro, the company is planning to boost sales in China and forge a presence in Africa and Eastern Europe,” Lim said.

Globally, Japan is its biggest client, accounting for 67 percent of HiteJinro’s soju and 70 percent of its beer sales. But sales there are slowing, said the director.

“Demand for less strong liquor is growing in China due to health concerns. In advanced countries, we are launching products such as soju-based cocktails and soju-based slushies to lure local customers who increasingly care about their health,” Lim said.

HiteJinro suffered a 24 percent slump in net profit for 2013 at 79 billion won ($76 million) from 103.5 billion won a year earlier, according to the Financial Supervisory Service.

The brewery currently earns 91 percent of its total sales at home — it does not have an overseas production facility. It currently produces 1.5 billion liters of beer a year and 800,000 liters of soju, the country’s traditional distilled liquor.

OB, which took a 60 percent of the domestic beer market as of March 2013, has a production capacity of 1.6 billion in Korea. The remaining 40 percent was claimed by HiteJinro, according to the companies. OB does not have a plant overseas, either.

“Acquiring a micro brewery is a possible option to expand into global markets,” Lim said. By Choi Kyong-ae The korea times

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