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Impeachment of South Korean president weighs on soju stocks
President Yoon Suk Yeol’s impeachment in December has weighed heavily on shares of alcoholic beverage companies which are already struggling due to weakened consumer demand.
Lotte Chilsung, a beverage unit of South Korea’s Lotte Group, experienced a 52-week low in terms of stock price last week, falling as low as 106,700 won during intra-day trading, according to The Korea Times.
Industry sources predict its stocks could fall below 100,000 won due to ongoing trading challenges, noting that the company has not retreated to such a level since November 2020 at the height of the COVID-19 pandemic.
Mass protests following the impeachment of President Yoon Suk Yeol over his ill-fated martial law declaration are partly to blame for weakened trading among alcohol companies in South Korea. Demonstrations over the last few weeks have led to fewer gatherings over the festive period and therefore less drinking, impacting stock prices.
The Korean soju market as a whole is expected to report stagnant sales over a five year period (2022-2027), and already dampening consumer demand is being exacerbated by recent political woes.
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According to The Korea Times, HiteJinro, the country’s biggest alcohol producer, has also seen its stock price slide.
Market observers have deemed the outlook less favourable for the beer and soju maker than Lotte Chilsung as the former concentrates solely on alcohol whereas the latter produces a range of nonalcoholic beverages.
Drinks companies are likely to continue having to weather downward sales with weak domestic consumption expected to intensify throughout 2025. The country’s GDP growth is expected to fall below 2% this year.
However, HiteJinro is looking to international markets to make up the difference. South Korea’s leading soju maker has seen sales in Cambodia increase by an average of 31% annually over the past five years.
The company is hoping to continue tapping into Gen Z and Millennial consumers in Cambodia with its range of spirits including Chamisul and Green Grape Soju.
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