Lunar New Year brings buzz to liquor industry

The Lunar New Year's Day coming up next month has brought a buzz to liquor distributors here, thanks to rising hopes of an economic recovery, industry sources said yesterday.

They said that the improving consumer sentiment is fueling the buzz, prompting liquor companies to increase supplies of gift sets.

"We have prepared for the recovering sentiment by increasing supplies of gift sets by 12 percent compared to last year; we're really looking forward to a better year," Yoo Ho-sung, head of the public relations division of Pernod Ricard Korea, told The Korea Herald.

Whisky, wine and other higher-priced liquor products suffered a sharp decline in demand last year as the unprecedented global financial crisis quashed consumers' spending appetite. Meanwhile, the rising popularity of "makgeolli," a Korean traditional rice-based wine that is also of modest price, had contributed to the dent in demand for wine, industry observers have noted.

Korea has been one of the few OECD economies to avoid recession last year and enjoy a faster recovery than other members. The Bank of Korea projects Asia's fourth-largest economy will expand 4.6 percent and the Finance Ministry forecasts 5 percent. The International Monetary Fund predicts 4.5 percent, while the Organization for Economic Cooperation and Development estimates 4.4 percent growth.

Amid the rosy outlook, Pernod Ricard Korea said its increased gift-set supplies featuring whiskies and vodka, with the prices ranging from 30,000 won to 110,000 won.

"We've also diversified the gift sets, particularly for whisky and vodka, to provide a wider selection to consumers," Yoo said. "We rather expect the demand for agricultural goods to drop this year as liquor consumption goes up," he added.

Diageo Korea, Pernod's rival, said it has prepared 20 different gift sets priced between 20,000 won and 200,000 won. The distributor of the Windsor whisky brand expects sales for this Lunar New Year to grow at least 10 percent compared to a year ago.

Local wine importer Keumyang International said it has boosted its stock of gift sets by 10 percent compared to 2009 with prices ranging from 50,000 won to 100,000 won.

"The process of distributing stock to retail outlets, such as department stores and discount-store chains, has just begun, so we expect to be able get a clear picture of the sales trend by the end of this month," Yoo said.

A survey projecting the household consumption trend for this Lunar New Year, which falls on Feb. 14, showed that 40.6 percent of the 800 surveyed respondents expect a slight decline in the Lunar New Year economic climate compared to last year. Another 40.1 percent projected a "similar" condition, while 10 percent forecast a "slight improvement." The other 9.1 percent forecast a "significant decline," and 0.2 percent projected a "significant improvement."

Of those predicting a decline in the economic climate for the upcoming holidays, 46.2 percent cited "a drop in income," which lead the list of reasons. Trailing behind was "continual economic uncertainty" with 39.5 percent, and then "employment instability" with 5.9 percent, and then "decline in asset value" with 3.6 percent.

The survey, released yesterday by the Korea Chamber of Commerce and Industry, was based on the responses given by 82.3 percent of the total 800 surveyed households in Seoul and the surrounding areas in Gyeonggi Province between Jan. 8-14.