E-Malt.com News article: South Korea: Diageo Korea shifts focus to lower-alcohol drinks as demand for stronger brands declines

Diageo Korea has shifted its focus to lower-alcohol drinks to meet growing consumer demand for mild liquor since CEO Cho Kil-soo took the helm two years ago, The Korea Times reported on July 5.

Sales of Windsor, Johnnie Walker and other hard-liquor brands have been declining as Koreans increasingly prefer low-alcohol drinks amid the well-being trend. The continued economic downturn and the growing number of price-sensitive female drinkers have also made it more difficult for Diageo and other whisky makers to sell relatively high-priced premium liquor.

To cope with rapidly changing consumer tastes, Diageo has diversified its product lineup, introducing a wide range of lower-alcohol spirit drinks and more actively promoting its premium beer brand, Guinness.

Over the past four months, the Korean unit of the British premium whisky maker has written a success story with "W Ice by Windsor (W Ice)," a low-alcohol spirit that has an alcohol content of 35 percent, compared with the 40 percent of conventional Scotch whisky. According to Diageo, the new beverage retains the unique flavor and taste of conventional Scotch whisky. W Ice is blended with Scotch whisky (99.85 percent) and other ingredients, including pine, dates and dried fig essence.

The product was available only to those residing in Busan and surrounding South Gyeongsang Province from March. But the company began selling it on the country's southern resort island of Jeju on July 1.

"We decided to offer W Ice to Jeju consumers," Cho said during a press conference at the Hyatt Hotel Jeju on July 3. "Jeju has been one of our important markets in which the consumption of premium whisky is among the highest in Korea. We are positive that the low-alcohol spirit will also become a huge hit."

Sales of hard liquor declined about 3.7 percent nationwide in 2014 from 2013, but consumption rose 4.7 percent on Jeju.

In Busan and South Gyeongsang Province, about 3,000 restaurants and other establishments sell W Ice and more than 80 percent of them have reordered, sharply higher than the industry average of 40 percent, the company said.

To meet growing consumer demand, Diageo has begun offering W Ice at discount stores and other retailers in the region for those wanting to drink it at home. A 450-milliliter bottle of W Ice costs 24,530 won ($22).

"We seek to become the No. 1 whisky brand on Jeju Island," Cho said. "We will put consumer needs first and enrich their experiences to repeat our success story here. We will launch an array of marketing campaigns to enable Jeju consumers to enjoy what W Ice offers."

French whisky maker Pernod Ricard holds the largest market share on Jeju.

Cho said Diageo would launch more aggressive marketing to promote its Guinness beer brand. "The sales of Guinness have increased by more than 50 percent this year from 2014 as consumers seek more genuine, premium European beer. We will solidify Guinness' status as one of the most loved imported beer brands in Korea."

Cho also said Diageo would promote its vodka brand, Smirnoff, adding that the growing number of younger drinkers willing to mix vodka with other products has boosted its sales.


08 July, 2015