E-Malt.com News article: South Korea: Craft brewer 7brau attempting to make a dent in South Korea’s beer market duopoly

Although the corporate tiles changed a few times due to reasons such as mergers and acquisitions, the domestic beer market in South Korea has been dominated by Hite-Jinro and Oriental Brewery (OB) since 1930, The Korea Times reported on October, 15.

Hundreds of foreign brands have tried to carve out a niche over the past two decades but they still account for a small fraction of the market, in the neighbourhood of 5 percent.

In this climate, the country’s first small-sized brewery, 7brau, is attempting to make a dent in the time-honoured duopoly by offering alternative craft beers, which were permitted to be distributed just two years ago.

“We were the first player to win a government license last year after the Seoul administration allowed craft beer companies in 2010 to boost the economy,” 7brau founder and CEO Kim Kang-sam said.

“Based on our flagship product, an India Pale Ale (IPA) produced with super-clean water from Gangwon Province, we are poised to storm the market. Responses have been good thus far.”

The original pale ale refers to a beer first produced in the United Kingdom in the 19th century. As the British colonial empire expanded into places such as the Indian subcontinent, the beverage was also shipped to the colonially administered territory. But the long voyages compromised the original taste of the pale ale that arrived in British India.

To address this, the hops content was increased to produce what has become known as IPA. It succeeded in maintaining its unique taste during the voyage to India from the U.K.

Kim’s company currently produces three beers, an IPA, a pilsner and a stout. It started marketing canned IPA at Home plus earlier this month.

Some 30 stores of the country’s No. 2 discount chain put the new beer on their shelves and the number is expected to increase to 50 later this year and to more than 100 by 2013.

“Presently, the canned IPA is available mainly at Home plus outlets in Seoul and its vicinity. They almost sold out in less than a month despite a higher price tag than other major brands,” he said.

“By next year, they will be available throughout the country to compete in the high-end segment.”

With only 11 employees and about 10,000 litres in daily capacity, 7brau is a minnow compared to its mammoth competitors of OB and Hite-Jinro that each boast a capacity of more than 1 million kiloliters.

Yet, Kim is resolutely determined to grapple with the challenge before him.

“The beer industry costs a lot through investment. As a result, small-sized outfits tend to struggle in competing with mega-sized established companies,” the 54-year-old said.

“Yet the eased regulations, coupled with government support for medium- and small-sized enterprises are of help. We are doing well so far, largely in part to the collective support of our workforce.”

Kim expects more new entrants into the industry down the road.

“Various imported brands have gained popularity of late, which shows Korean consumers have turned their sights to alternative options and the trend is expected to accelerate with the advent of craft beer companies,” he said.

“Many others are likely to jump into the ring and as a trailblazer; I think 7brau is required to play an important role while taking big responsibilities.”

Kim has been in the beer industry throughout his career. He opened brewpubs in Seoul in 2003, which caught on with several end users.

He expanded the pubs, dubbed 7brau, to other regions near Seoul and has prepared for his craft beer company through such efforts as inviting a brewmaster from Europe.


17 October, 2012