OB aims to solidify dominance

CEO’s leadership helps widen gap with rival Hite-Jinro

By Cho Mu-hyun

OB CEO Jang In-soo

Oriental Brewery (OB), Korea’s largest beer maker by revenue, aims to solidify its leadership in the nation’s beer market this year by increasing its market share to more than 60 percent from the current 55 percent.

Specifically, CEO Jang In-soo seeks to widen the gap with rival and runner-up Hite-Jinro.

“Thanks to the changes that Jang brought, such as improved distribution and streamlining of businesses, we are poised to continue our streak of expansion and remain firmly as the No.1 beer maker,” an executive of OB’s sales division told The Korea Times.

The first thing Jang implemented after joining OB in 2010 before he took the top post last year, was to get rid of an old business practice known as “pushing.”

Sales people often pushed out remaining stockpiles to distributors and sellers in the last five days of each month, causing bottlenecks that saw product delivery delayed for months.

“Obviously, unlike distilled liquors or wine, freshness is a key factor in the appeal of beer,” said the executive. “Jang made sure the salespeople delivered products to distributors at a consistent rate throughout the month so sellers have a consistent stock to sell to consumers from early in the month.”

The time a product takes to reach the consumer from factories has been shortened to a week or two since the policy change. “It was one of the main reasons why we could beat our competitor because sellers had a consistent amount of our product,” the executive said.

Jang also improved relationships with sellers and distributors by having salespeople actively meet them to buy and sell OB brands.

“Because we were for a long time and still are owned by foreign investment firm Kohlberg Kravis Roberts, we had a strictly business relationship with our partners before Jang,” said another senior official. “The CEO asked all the sales people to treat sellers and distributors like family.”

Together with the strong brand image OB has secured over the past five years, these changes helped topple Hite-Jinro in 2011. “The failure of Hite-Jinro was that it lost focus by trying to create a synergy between its beer and soju division,” he said. “Instead of launching a hot product, they failed in both sectors because different kinds of alcoholic beverages have very different operating models.”

“The three keywords for this year are Cass, OB Golden Lager and premium,” said OB spokesman Byun Hyung-sup. “We have very strong brand power in all niches of the beer market and these will help us maintain our dominant share over competitors.”

Cass has been most successful with young people while the OB Golden Lager is mainly aimed at a rising number of those who enjoy beer tasting.

“Our exports have been consistently high and that is what premium represents for us: to sell the best beer to Hong Kong, Mongolia and South East Asia, where demand has been growing,” Byun said.

An official overseeing the operation of OB’s factory in Icheon said since Jang took over the helm, facilities have been running nonstop at full capacity. The factory can produce 54 million cases, each containing 20 bottles of beer, annually. Most of Icheon’s stocks are shipped to Seoul, while those from OB’s factory in Gwangju are moved overseas.

“The morale of factory workers is incredibly high right now since we have strong attachments to our products,” said the official. “We are happy to see that we’ve survived through difficult times to become No.1.”

On whether OB’s rise was largely due to its Cass brand being the beer of choice for making poktanju, a beer “bomb” mixed with soju or whiskey, officials said that was only a minor factor and they believed consumers chose the brew for its taste.