Overview of the Korean alcoholic drink market - focusing on Spirits

Transcription

1 Overview of the Korean alcoholic drink market - focusing on Spirits January, 2011 Agricultural office, Seoul 1. Market background 1) Legal drinking age In South Korea the legal drinking age is 19-years-old, as stated by the Youth Protection Law. At this age, South Koreans typically graduate from high school, while many go to university, and begin to adopt the habit of drinking alcohol at social gatherings. People under the age of 19 cannot legally enter bars or nightclubs or purchase alcoholic drinks. However, the law is not always adhered to by bar, club or shop owners. Not only do they sometimes ignore the law for the sake of sales, but many also fail to check the identification of each customer. Bar and club owners caught by the police allowing people under the legal drinking age to enter their establishments, or shop owners selling alcoholic drinks to underage customers, can receive prison sentences of up to two years or a fine of up to Won10 million. Bar owners who fail to adhere to the law on underage drinking can also be punished by having their business closed down for a period of up to six months. As such penalties result in serious losses to bar, club and shop owners, most will ask customers suspected of being under the legal drinking age to present proof of identity. 2) Drink driving South Korea has a high level of drink driving incidents overall, as heavy drinking is common due to the prevalent drinking culture at social events and gatherings. According to government regulations, driving with a blood alcohol density of 0.05% or over is punishable as a driving offence, and the offender is liable for a fine of up to Won 5 million or imprisonment of up to two years. A blood alcohol density of over 0.1% can result in the loss of the offender s driving licence, and they cannot take a driving test cannot for one year. If no accident results from the drink driving offence, a fine without arrest is the normal procedure unless the driver s blood alcohol level exceeds 0.36%. However, for multiple drink driving offences within a specified period, or accidents arising from drink driving, the penalty is much heavier, often including arrest. As the accident rate caused by drink driving is increasing in South Korea, the government is strengthening the law to combat the problem. This may be partly contributing to the trend towards lowering the alcohol content of drinks. 3) Advertising In South Korea, the advertising of alcoholic drinks is allowed under certain conditions. This is because alcoholic drinks are designated as products that can harm the health of the general public. The advertising of products with an alcohol content of 17% or over is forbidden and the advertising of products with less than a 17% content is restricted between certain hours. This means that wine and beer can be advertised on television while spirits cannot. On television, advertising is forbidden between hrs. In addition, the Public Health Enhancement Law and the Youth Protection Law each require the inclusion of a health

2 warning when advertising alcoholic drinks. 4) Opening hours In South Korea only on-trade outlets with hostesses who serve alcoholic drinks to customers are subject to regulations regarding opening hours. Such outlets are comprised of room-salons, as well as bars and clubs, with hostesses. These outlets are obliged to close from hrs. Other on-trade outlets, such as karaoke bars, and bars and nightclubs without hostesses, are not restricted in terms of opening hours. 2. License for marketing & distribution of alcoholic drinks The specific structure and scheme of the marketing & distribution of alcoholic drinks in Korea are based on the following regulations in Korea. *A wholesaler of alcoholic drinks is not allowed to import alcoholic drinks. *An importer of alcoholic drinks is not allowed to handle domestic alcoholic drinks. *A producer of alcoholic drinks is not allowed to directly supply alcoholic drinks to supermarkets or *department stores (only except a very special type of alcoholic drinks) The above mentioned structure and scheme of alcoholic drinks sector shows that the people who have the licenses for wholesale of alcoholic drinks have exclusive right to buy and sell all alcoholic drinks, and that it is not allowed to import alcoholic drinks. This scheme does not give actual troubles to imports & sales of Scotch whisky of which import volume is over US$ 190 million per year, because the large-scaled exporter of Scotch whisky can have its own exclusive marketing & distribution channels in Korea, for instance, by taking over the companies which have the licenses for wholesale and import. However, this could be a serious trouble to an exporter of certain alcoholic drinks tying to start exporting of alcoholic drinks to Korea, because the exporter is able to supply alcoholic drinks to major wholesalers only after selling them to a Korean company who has a license for imports of alcoholic drinks. There is no difference in the type of business and rights between a wholesaler and importer of alcoholic drinks. The only difference is that a wholesaler is allowed to handle both domestic and imported alcoholic drinks while an importer is allowed to handle only imported alcoholic drinks imported by that importer (not the alcoholic drinks imported by another importer) It is strictly banned that restaurants & bars buy alcoholic drinks from supermarkets & stores. It is because the NTS (National Tax service) checks sales amount of restaurants & bars on the basis of the sales amount of alcoholic drinks between wholesalers and restaurants & bars. However, still a lot of restaurants & bars illegally sell alcoholic drinks they bought in supermarkets to consumers. 3. Taxation, duty levies and margin The alcoholic drinks tax law in South Korea regulates beer at the highest tax rate, followed by spirits and wine. The country s excise tax comprises liquor tax, education tax and VAT (value-added tax). Liquor tax is calculated as a percentage of the net price. Education tax is a percentage of liquor tax. Value-added tax within excise tax is different from VAT as a sales tax, which is added just before the formation of the retail selling price (rsp). Value-added tax is defined as a percentage of the sum of the net price, liquor tax and education tax. When the three taxes are added to the net price, this equates to the manufacturer s selling

3 price (msp). There have been ongoing changes made to the local tax structure for alcoholic drinks. *Soju, a popular traditional local spirit, saw its liquor tax increase from 35% in 1999 to 72% in This was the result of international disputes with the EU and the US regarding Soju s favourable tax structure over imported spirits. As the World Trade Organization sided with the EU and the US, the South Korean government levelled the playing field for spirits by increasing the tax on Soju to 72% while cutting that of imported spirits from 100% to 72% in the same year. * Soju: the most popular traditional Korean liquor in the country. It was originally brewed from grains, but today it is mass produced mainly from sweet potatoes; On the other hand, beer is experiencing tax cuts. The tax on beer was reduced gradually, by 10% per year, from 150% in 1996 to 80% in The high tax rate for beer is the subject of hot debate. Beer players claim that the local tax structure is misleading, as alcoholic drinks with higher alcohol content than that of beer, particularly spirits, are subject to a lower tax rate. This is contrary to the tax system in most other countries. In order to remedy this situation and to relieve the customer s burden on beer purchases, in 2007 the tax on beer was reduced to 72%. Table 1 Taxation and Duty Levies on Alcoholic Drinks 2009 % value/actual Beer Wine *Takju Spirits(+Soju) Liquor tax Education tax Import tax Import tax from Chile(FTA) Import tax from ASEAN(FTA) Import tax from Singapore(FTA) Value-added tax (VAT) * Takju: a traditional milky rice wine with a low alcohol content, made by steaming and drying glutinous and non-glutinous rice, barley and flour, mixing the substance with leaven and water, fermenting it at a certain temperature, and finally sifting and extracting. Table 2 Import duty schedule of Alcoholic Drinks on the EU-Korea FTA Present tariff (%) Abolition of tariff Wine 15 immediately Beer 30 7 years Scotch, Bourbon, Irish Whiskey 20 3 years Tequila, vodka, brandy 20 5 years Once the Free Trade Agreement between the EU and South Korea comes into effect from 2011, South Korean consumers are expected to have more varieties of alcoholic drinks from European countries at lower prices to choose from once the import tax of 15~30% is removed, as specified under the terms of the agreement. Depending on kind of alcoholic drinks, the import tax will be lifted immediately or decline by a

4 certain percent every year from 2011 for 3~7 years. Table 3 Selling Margin of a Typical Domestically Produced Beer Brand 2009 (% of retail value) 2009 VAT 9.1 Excise 34.2 Import tax 0 Retailer 14.5 Distributor 5.7 Manufacturer 36.5 TOTAL 100 Notes: Based on Hite, Won 1,570, 500ml at supermarkets/hypermarkets and 4.5% ab. Excise includes any other tax as relevant Table 4 Selling Margin of a Typical Domestically Produced Wine Brand 2009 (% of retail value) 2009 VAT 9.1 Excise 17.6 Import tax 0 Retailer 14.5 Distributor 5.7 Manufacturer 53.2 TOTAL 100 Notes: Based on Bekseju, Won4,100, 300ml at supermarkets/hypermarkets and 13% abv. Excise includes any other tax as relevant Table 5 Selling Margin of a Typical Imported Wine Brand 2009 (% of retail value) 2009 VAT 9.1 Excise 16.1 Import tax 6.4 Retailer 17.6 Distributor 8.4 Manufacturer 42.4 TOTAL 100 Notes: Based on Jacob's Creek, Won18,000, 750ml at specialists and 12% abv. Excise includes any other tax as relevant

5 Table 6 Selling Margin of a Typical Domestically Produced Spirits Brand 2009 (% of retail value) 2009 VAT 9.1 Excise 35.6 Import tax 0 Retailer 11.9 Distributor 5.5 Manufacturer 38 TOTAL 100 Notes: Based on Chamjinisulro (Soju), Won 940, 360ml at supermarkets/hypermarkets and 20.1% abv. Excise includes any other tax as relevant Table 7 Selling Margin of a Typical Imported Spirits Brand 2009 (% of retail value) 2009 VAT 9.1 Excise 30.5 Import tax 5.4 Retailer 15.2 Distributor 12.6 Manufacturer 27.2 TOTAL 100 Notes: Based on Imperial Classic 12 YO, Won25,000, 350ml at supermarkets/hypermarkets and 40% abv. Excise includes any other tax as relevant 4. Operating environment a. Contraband/Parallel Trade Alcoholic drinks are among the main contraband goods in South Korea, because of the high tax levied on these products. Premium Western spirits like whisk(e)y and brandy and cognac account for the majority of contraband alcoholic drinks sales in South Korea, as many global brands enjoy significant popularity in the country. Global whisk(e)y manufacturers have worked hard to prevent the sale of contraband or counterfeit products by introducing holograms and tin seals, but the sales of contraband alcoholic drinks are estimated to be rising. Some contraband alcoholic drinks are being passed from US army base Post Exchanges (PXs) into the local marketplace. However, as this is a sensitive issue concerning the relationship between South Korea and the US army, it has been difficult for the government and the relevant authorities to regulate this problem. b. Duty Free In South Korea duty free alcoholic drinks are only available to those travelling in or out of the country, and for certain specific purposes. Duty free products are offered at licensed duty free shops in airports, and on airlines and ocean liners. In addition, duty free alcoholic drinks are available in military PXs and these products are strictly labelled as PXs duty free items on the packaging and cannot be distributed by retail

6 outlets or other duty free stores. Generally, all imported alcoholic drinks have duty levied on them, except alcoholic drinks imported by foreign diplomats, or for religious services or medical purposes. Travellers can purchase duty free alcoholic drinks from airports. However, this is limited to one bottle of less than one litre, with the price ceiling set at US$ One recent exception to the above regulations is alcoholic drinks sales through duty free shops, which first opened in December 2002, on Cheju Island. Cheju Island is the most famous tourist attraction in the country, and the government has ambitiously put forward plans to develop it as an international free city by 2010, in order to make it a world-renowned tourist destination. Duty free shops form part of the government s plans, to cater to domestic travellers visiting Cheju Island. c. Cross-border/Private imports In South Korea, the duty free allowance on alcoholic drinks for people travelling back to South Korea from other countries is one litre per person. If one is caught trying to exceed the permitted alcohol limit, the liquor is confiscated and can be redeemed only if the tax is paid within three months. In September 2006, Incheon Airport Customs Office announced that it was to auction 1,414 bottles of confiscated alcoholic drinks; the volume more than doubled in 2006 as more people in South Korea travel abroad. 5. Market data Table 8 Retail Consumer Expenditure on Alcoholic Drinks (Won million) Total 6,229, ,096,091 7,571, ,058, ,481, ,559, Table 9 Domestic production and import of Alcoholic Drinks by Sector: Total Volume (Million Litres) Soju domestically produced , Beer Whiskey domestically produced 1,992 1,819 1,880 1,948 2,016 1,956 imported domestically produced imported Wine(grape) imported Takju domestically produced ? *Others Total domestically produced ? imported domestically produced 3,434 3,316 3,470 3,482 3,593 3,475 imported * Others- Spirits (except for Soju and Whiskey), wines(except for grape wine), RTDs/High-Strength Premixes

7 Table 10 Sales of Spirits by Subsector: Total Volume (1,000 Litres) Whisk(e)y 23, , , , , , Single Malt Scotch Whisky Blended Scotch Whisky 23, , , , , , Bourbon/Other US Whiskey Canadian Whisky Irish Whiskey Japanese Whisky Other Whisk(e)y Brandy and Cognac Brandy Cognac White Spirits 1, , , , , , Gin Vodka Rum White Rum Dark Rum Tequila (and Mezcal) Liqueurs Cream-based Liqueurs Bitters Other Liqueurs Other Spirits 1,089, ,090, ,125, ,154, ,199, ,231, * Maesilju 7, , , , , , * Soju 1,059, ,061, ,097, ,126, ,172, ,204, Other Distilled Beverages 22, , , , , ,220.3 Spirits 1,115, ,115, ,150, ,180, ,222, ,253,993.8 * Maesilju: traditional liquor made by adding plum and sugar to Soju and brewing it * Soju production in Table 9 and Soju sales in Table 10 is a little bit different by data source Table 11 Sales of Spirits by Subsector: Total Value (Won billion) Whisk(e)y 4, , , , , , Single Malt Scotch Whisky Blended Scotch Whisky 4, , , , , , Bourbon/Other US Whiskey Canadian Whisky Irish Whiskey Japanese Whisky Other Whisk(e)y Brandy and Cognac Brandy Cognac White Spirits Gin Vodka Rum

8 White Rum Dark Rum Tequila (and Mezcal) Liqueurs Cream-based Liqueurs Bitters Other Liqueurs Other Spirits 4, , , , , , Maesilju Soju 4, , , , , , Other Distilled Beverages Spirits 9, , , , , ,126.0 Table 12 Sales of Blended Scotch whisky by Premium/Super-premium Split (% total volume) Super Premium Premium Standard Economy Total Classification of spirits products is based purely on pricing, taking a typical brand, usually the leading brand by volume, as the benchmark price, which is indexed as 100%. The benchmark brand will usually be a standard-priced brand. There will be exceptions, however, whereby an economy brand (likely for vodka in some countries in Eastern Europe) or a premium brand (typically the case for Scotch whisky in the US) is used as the benchmark brand. Refer to the guidelines below for further detail. Imperial Classic 12 YO, priced at Won 25,000 for a 500ml bottle in the off-trade, was positioned as a standard blended Scotch whisky in South Korea in It competes with brands like Johnnie Walker Black Label within the standard-priced segment. Super-premium-priced brands include Ballantine s 17 YO and Cutty Sark 18 YO. Based on benchmark brand being standard: - Super-premium: 30% or higher than price of the benchmark brand - Premium: % higher price than benchmark brand - Standard: Between 9.99% lower or 9.99% higher than benchmark brand - Economy: At least 10% lower than the price of benchmark brand Table 13 Sales of Gin by Premium/Super-premium Split (% total volume) Super Premium Premium Standard Economy Total

9 London Dry Gin was an economy brand of gin in South Korea in 2008, priced at Won 7,450 per 700ml in the off-trade. London Dry Gin from Kooksoondang Brewery Co Ltd is mainly sold through on-trade outlets. Table 14 Sales of Vodka by Premium/Super-premium Split (% total volume) Super Premium Premium Standard Economy Total Absolut is a standard-priced brand of vodka in South Korea, priced at around Won 36,000 per 700ml in the off-trade in Other significant vodka brands like Belvedere and Smirnoff are positioned as superpremium products Table 15 Sales of Flavored vs Non-flavored Vodka (% total volume) Flavored Vodka Non-Flavored Vodka Total Table 16 Company Shares of Alcoholic Drinks (% total volume company) Hite Brewery Co Ltd Oriental Brewery Co Ltd Lotte Chilsung Beverage Co Ltd Kumbokju Co Ltd Muhak Co Ltd Daesun Distilling Co Ltd Seoul Takju Association Bohae Brewery Co Ltd Kooksoondang Brewery Co Ltd Anheuser-Busch InBev NV Others Total

10 Table 17 Company Shares of Spirits (% total volume) Jinro Co Ltd Lotte Liquor BG Co Ltd Kumbokju Co Ltd Muhak Co Ltd Daesun Distilling Co Ltd Bohae Brewery Co Ltd Diageo Korea Pernod Ricard Korea Ltd Lotte Chilsung Beverage Co Ltd Doosan Corp Ltd Hiscot Co Ltd Jinro Ballantine's Co Ltd Doosan Seagram Co Ltd Seagram Korea Co Others Total Table 18 Off-trade Sales of Alcoholic Drinks by Distribution Format: % Value 2009 (% Off-Trade) 2009 Store-Based Retailing 100 Grocery Retailers 100 Supermarkets/Hypermarkets 52.8 Discounters - Small Grocery Retailers 45 Convenience Stores 12.9 Independent Small Grocers 30.7 Forecourt Retailers 1.4 Food/drink/tobacco specialists 2.2 Other Grocery Retailers - Non-Grocery Retailers - Non-Store Retailing - Vending - * Homeshopping - * Internet Retailing - Direct Selling - Total 100 * Homeshopping and internet retailing - according to the notification of Korea NTS(National Tax Service) dated January 21, 2005, it is not allowed to sell or buy alcoholic drinks by on-line shopping.

11 5. Trade Table 19 Imports of alcoholic drinks by year (Value: CIF USD1,000, Volume: 1,000 Litres) category year Wine Beer Vermouth Other brewed Cognac Grape Brandy Other Brandies Whisky Rum Gin Vodka Liquor Kaoliang Liquor Tequila Others Total Value 57,980 67,654 88, , , ,451 Volume 14,974 18,570 21,864 32,154 28,770 23,009 Value 14,848 16,532 20,506 30,579 39,373 37,156 Volume 21,334 22,828 26,912 35,816 43,196 41,492 Value Volume Value 2,243 2,361 3,256 4,621 7,190 10,543 Volume 1, ,305 1,813 2,442 3,233 Value 9,772 12,406 11,500 13,335 8,241 6,873 Volume 1, Value 3,220 3,640 3,443 3,479 2,915 1,159 Volume 880 1, Value , Volume Value 213, , , , , ,812 Volume 19,957 20,893 20,371 23,176 23,321 21,243 Value ,015 Volume Value Volume Value ,340 1,641 2,299 2,477 Volume Value 5,434 6,274 7,500 8,411 11,265 10,103 Volume 2,968 3,153 4,016 4,335 5,521 4,647 Value 1,091 1,304 1,607 1,607 2,051 1,928 Volume 2,103 2,323 2,743 2,847 3,881 3,844 Value 1,197 1,480 1,825 2,331 2,349 2,187 Volume Value ,009 3,235 3,349 2,992 Volume 1, ,273 3,272 2,368 1,418 Value 312, , , , , ,453 Volume 66,452 72,974 81, , , ,872 Table 20 Spirits Imports by Country of Origin: Total Volume (Thousand Litres) Spirits TOTAL 38, , , , , ,693.3 Spirits United Kingdom 26, , , , , ,192.7 Spirits China 4, , , , , ,943.1 Spirits Australia , , ,322.5 Spirits New Zealand 2, , , , , ,253.3 Spirits France 3, , , , , ,588.6 Spirits United States , ,526.1 Spirits Japan , Spirits Mexico Spirits Netherlands

12 In 2008, whisk(e)y from the UK accounted for 95% of total whisk(e)y import volumes. US whiskey accounted for the second largest share at 4%. The annual import volume of US whiskey showed a 9% volume increase in 2008 while UK whisk(e)y stagnated. 6. Market trend of alcoholic drinks (the whole market) 1) Overall alcoholic drinks market a. Alcoholic drinks recover on the back of an improving economy South Korea s real GDP (Gross Domestic product) growth reached 5% in 2007 and real GNI (Gross national Income) growth was slightly higher. At the same time, inflation has been stable at 2-2.5%. Private consumption also recovered mainly through durable goods and infrastructure investment to post double-digit growth. Strong exports have been maintained to China and Southeast Asia. This represented a key difference, as economic growth did not directly lead to increase private consumption in 2006, while GDP growth in 2007 is expected to create increased private consumption. The alcoholic drinks industry generally showed positive growth rate in total volume terms during the review period. b. New products offer health benefits The health and wellness trend in South Korea has long been important and it remained so in Manufacturers have actively introduced new alcoholic drinks products that offer value added functions. The domestic beer industry witnessed new product launches during the review period. Beer manufacturers introduced fortified, and reduced calorie beer to target health and diet conscious consumers. The low alcohol range of Soju expanded from 2006 and manufacturers have introduced even lower alcohol content products competitively during the review period. The leading Soju companies mainly produce 19.5% and 19.8% abv Soju products, while small- and medium-size local Soju companies introduced 16% abv products. c. Female drinkers emerge as a core consumer group The increasing social and economic participation of women has created more drinking occasions for female consumers. As female drinkers emerge as a powerful consumer group, manufacturers have developed new products and more marketing activities focused on women. Volume sales of gin, rum and liqueurs grew as the number of female drinkers increased. Sales of reduced alcohol content Soju increased as more female drinkers moved to low alcohol (Fig.5) and smoother products. Beer manufacturers also introduced new products targeting female drinkers and this strategy was reinforced by strong marketing activities. d. Cultural marketing techniques attract higher-income consumers Consumer tastes have changed rapidly and instead of direct product promotion, manufacturers have introduced marketing programmes to position their products in consumers minds as a cultural or lifestyle choices. The alcoholic drinks industry has reached maturity and the competitive landscape is fierce. To differentiate their products, manufacturers have operated cultural marketing programmes to appeal to consumers in terms of lifestyle and emotion. Whisky manufacturers and importers have used marketing campaigns featuring golf to target mainly higher-income consumers who can afford premium products. These manufacturers have sponsored professional golf tournaments and offered golf lessons to consumers. Cultural marketing programmes will be diversified to include art and music in an effort to communicate with

13 diverse consumer groups. e. The consumption of premium products increases As the economy grows and people become more health conscious, consumers in South Korea are more interested in better quality food and drink. The growing consumer interest in healthier lifestyles was maintained during the review period and this trend has helped to change the drinking culture in the country. The binge drinking population is decreasing and consumers are looking for reduced alcohol content but better quality drinks. As consumers consider alcoholic drinks part of the wider food industry, sales of premium products grew and manufacturers have introduced more high quality options. Premiumisation was evident in most alcoholic drinks categories in South Korea and this trend is likely to continue over the forecast period. 2) Spirits market (except for Soju) a. Whisky South Korean consumers tend to seek premium products in all categories within whisk(e)y, premium Western products continued to see positive growth. Since the last quarter of 2008 when the economic downturn worsened, premium products have posted negative performances along with standard products. Premium and standard products lost share in the overall whisk(e)y category to super-premium and economy products b. Single malt Scotch whisky Single malt Scotch whisky achieved 12% growth in total volume terms in Single malt Scotch consumers are willing to pay high prices for better quality and reputation. Therefore, manufacturers made concerted efforts to position their products as luxurious and super-premium. They strengthened their product line-ups by launching new products and limited edition variants, and then targeted high-end hotels and bars. As single malt Scotch continued to see double-digit growth in South Korea, Edrington Group established itself locally by buying Maxxium Korea Ltd, while William Grant & Sons set up a local office in Maxxium Korea Ltd introduced Macallan 21 YO and a limited edition of Macallan Lankin. William Grant & Sons Korea Ltd launched Balvenie 12 YO in addition to 15, 17 and 21 YO variants as well as Balvenie Moët Hennessy Korea Ltd s Glenmorangie also added new products in 2009 to strengthen its line-up. c. White spirits White spirits achieved a 2% increase in volume terms mainly due to these products being used as a base for cocktails, which have steadily gained in popularity among younger consumers. These products are consumed mainly in on-trade bars, clubs and pubs. As owners of on-trade outlets prefer lower-priced products for their cocktail base, standard and economy products commanded a majority share in gin. Kooksoondang Brewery s London Dry Gin continued to gain share in the on-trade due to its low price. However, gin posted a decline in 2009 as consumers tended to drink less during the economic downturn. However, premium products continued to gain in vodka due to aggressive marketing activities. As manufacturers invested heavily in brand positioning, vodka built up an image as a young and stylish drink. Absolut Vodka maintained its strong leadership in the vodka category while Diageo Korea sought to increase its share by launching new products like Smirnoff Flavour in 2008 and Smirnoff Mule and Ice in Thanks to strong positioning and ongoing marketing initiatives, vodka extended its distribution in the off-trade. Young

14 Koreans active consumption of vodka contributed to the increase in sales and penetration in off-trade outlets. In 2009 vodka achieved total volume growth of 4%. c. Brandy and cognac The brandy and cognac category posted a 15% total volume decline in Brandy recorded a 14% decline and cognac a 15% drop. This dramatic contraction can be attributed to the slowing economy and the drinks high-alcohol content. South Korean consumers spent less on alcoholic drinks due to the recession and avoided high-alcohol content drinks due to increased health awareness. In addition, brandy and cognac are both regarded as old-fashioned. They used to be considered luxury gift items during the holiday season, but now seem to have been replaced by single malt Scotch whisky d. Tequila Tequila posted healthy volume growth of 10% in Frequent trips abroad and cultural exchanges on-line have driven sales of Western spirits like tequila among young people, particularly in clubs and bars e. Liqueurs Liqueurs also continued to see positive growth in 2009 of 1% in total volume terms. Liqueurs like Baileys and Kahlúa are used for various drinks other than alcoholic drinks. Products like Baileys and Kahlúa appeal to female consumers who prefer sweet tastes. As more cocktail recipes appear on the internet, off-trade sales of liqueurs have steadily increased. 7. Reference - Euromonitor - Korea National Tax Service - Korea Alcohol & Liquor Industry Association - Korean International Trade Association