South Koreans Switch to Soju, Cigarettes, Condoms to Save Cash

South Korean stocks trader Kim Won Ho has cut down on his bar bill as the economy slows. He isn’t drinking less, he’s just switched to cheaper local soju rather than his usual 12-year-old Chivas Regal whiskey.

“We’re not getting any Christmas bonus this year and we’re worried about pay cuts or even layoffs,” said Kim, 37, at a pork-belly barbecue restaurant in Seoul, as a colleague poured the green bottle of liquor, distilled from potatoes, barley and other starches. “Whiskey is too luxurious for me now.”

The traders, who declined to identify their company to avoid embarrassing managers, are among millions of South Koreans who are cutting back on travel, food and entertainment as the global credit crisis drives down stocks and the won. The South Korean currency has slumped 31 percent this year, the second-worst performer of the 16 major currencies tracked by Bloomberg.

South Korea has pumped funds into the financial system, boosted public spending and trimmed interest rates to bolster an economy that grew at the slowest pace in four years last quarter. The Bank of Korea today cut its key interest rate to 3 percent from 4 percent. President Lee Myung Bak on Nov. 26 ordered that ministers come up with more measures to boost consumer spending.

South Koreans, Asia’s second-biggest alcohol consumers after Australians, bought 2.5 billion bottles of soju in the first nine months of this year, up 5.1 percent from a year earlier, according to the Korea Alcohol & Liquor Industry Association. That’s about six bottles a month for each person of drinking age.

Canceled Parties

In the same period, South Korea’s wine sales growth slowed to 25 percent, from 70 percent a year earlier, according to the Korea Wines & Spirits Importers Association. The association wouldn’t release figures for whiskey imports.

South Korean companies are also canceling year-end parties, usually held at hotels. A manager at a hotel in downtown Seoul said year-end reservations for corporate parties are down 40 percent from last year, and cancellations continue.

“Hotels in Seoul are really sensitive about this so they don’t want to tell the newspapers, but we hear it’s about the same at every hotel,” said the manager, who said he would be “out of a job” if his bosses knew he was speaking to the press about the cancellations.

Slimmer purses and more expensive ingredients have also hit restaurants. More than 181,000 restaurants closed in the first nine months of this year, according to the Korea Restaurant Association, more than double the number last year.

Duck Restaurant

“President Lee said he would get the banks to provide liquidity to family businesses like ours, but I didn’t see that happening at all,” said Kang Min Ho, smoking a cigarette as he watched workers disassemble the kitchen of his duck barbecue eatery in Shindang-dong near downtown Seoul, which closed this month. “We owe six months in back rent. I hope what I sell off from the kitchen is enough for that, but I seriously doubt it.”

The economic woes are helping sales of instant noodles called “ramyeon,” which typically cost about 68 cents a pot. Sales rose 38 percent in October compared with the same period last year, according to the 24-hour convenience store chain FamilyMart. Shares of Nong Shim, which makes the nation’s best- selling brand of ramyeon, gained 17 percent in the past month.

Cigarette sales rose 9 percent in the same period. KT&G Corp., the nation’s cigarette-making monopoly, has dropped 2.5 percent this year, compared with a 39 percent decline in the benchmark Kospi index.

Condom Sales Rise

Koreans worried about the cost of raising children in a recession are helping boost sales of condoms, according to GS25, another convenience store chain. Condom sales rose 17 percent in October and 24 percent in November, compared with the same months last year. According to a Nov. 20-27 survey by Internet site JobKorea, 45 percent of 689 married people without children said they were avoiding pregnancy because of the current economic woes.

“People are unsure of the future in these times of economic difficulty, and they want to avoid having children,” said Lee Dong Hoon, a consumer and marketing researcher at Samsung Economic Research Institute in Seoul. “As long as the economy remains sluggish, I think condoms will continue to sell at a steady pace.”

Some newlyweds are having to choose between a honeymoon abroad or at a domestic destination, after the won’s slide raised the cost of going abroad.

Travel Agency “Tour Baksa” started offering this month 1 million won ($735) honeymoon packages to cities such as Kyushu, Tokyo, or Osaka in Japan and Hong Kong, Beijing and Shanghai in China. The per-person fee includes an air ticket, one night at a budget hotel and a tour guide for 10 or more couples.

“I can’t believe I’m looking at this as the possible solution to my honeymoon -- it’s so depressing,” said Shin Eun Joo, 29, a cosmetics shop assistant in Seoul who plans to marry in February. “But unless by some miracle the won recovers, there is no way we will be able to afford an overseas honeymoon. We’d have to begin our marriage over our heads in debt.”