Reinventing Korea's traditional liquor, food

Chairman Cho Tae-kwon of Kwangjuyo Group / Korea Times photo by Choi Won-suk

By Kim Ji-soo

Kwangjuyo’s products — its fine ceramics, delicious Korean cuisine and premium Hwayo soju — are often cited for their quality. But things took a more positive turn recently. For instance, Hwayo sales have surged for the first time in years.

“I would say that it is a revitalization of the food culture itself, not only of Hwayo,” said Cho Tae-kwon, 68, chairman of the Kwangjuyo Group, in an interview with The Korea Times. Since it was launched in 2005, Hwayo sales increased slowly but steadily. The brand experienced a breakthrough last year, however, when its sales reached 10.9 billion won, a 32 percent increase over the previous year, according to the company.

The chairman said he believes his pursuit of creating a total value has helped the company succeed. By “total value,” he refers to his work of introducing Korean ceramics, food (hansik) and alcoholic beverages, as well as restaurants in a value-added way. Cho said that the fine traditions of Korean culinary culture were downgraded in particular during the period of Japanese colonialization (1910-1945), when home brewing was banned and liquor taxes were imposed, prompting licensed brewers to make only such beverages as “takju,” or “makgeolli”; “yakju,” a medicinal drink; and diluted soju.

Hwayo’s recent success carries significant meaning business-wise for Cho, who speaks with rapid-fire confidence and sales ability.

Cho learned that it is hard to succeed in the high-end ceramics, food and alcoholic beverage markets, but especially in the high-end traditional Korean liquor market because of the nation’s taxation system and perceptions.

“People said it would be hard to succeed because of fixed public perception, but we were able to do so because we did it combining the culture, the food, the ceramics, the liquor and the restaurant,” Cho said.

Also the liquor tax law of Korea has been a stumbling block for such premium liquor as Hwayo. The Korean government levies taxes on all of the cost from package to sales management as well as manufacturing cost, so-called an ad valorem duty. It makes Korean liquor industry hard to improve quality and diversity products, he said. Most OECD countries calculate liquor taxes based on a company’s production capacity and proof alcohol.

Hwayo’s breakthrough last year is a good sign in the challenging alcoholic beverage industry.

Cho said the company’s breakthrough came when he met with then former Defense Minister Kim Tae-young in 2009, to whom he proposed supplying Korean food and soju to the Defense Ministry’s restaurants (at the time, the restaurants did not offer Korean food and beverages). Cho’s proposal was officially approved by Kim’s successor, the former Defense Minister Kim Kwan-jin, and Cho’s company began supplying these provisions to the military in 2011.

“I told them that the military protects the Korean people and land, so why didn’t they promote Korean culture with the servicemen?” Cho said.

There are several Hwayo products according to alcohol content — Hwayo with 17 percent alcohol for the sake and wine markets; Hwayo with 25 percent for the Japanese “shochu”; Hwayo 41 vying with vodka; Hwayo XP also known as “single rice” vying with Scotch whisky; and Hwayo with 53 percent alcohol vying with the Chinese Kaoliang liquor.

When asked if producing a variety of Hwayo products contradicts the company’s initial purpose of bringing back traditional premium soju, Cho disagreed.

“If you think about it, all creation comes from tradition. Times have changed. Why not imbue modern sensibilities into our traditions, so as to make our beverages part of the mainstream in the world?” Cho said. “Traditions must change with the times and must innovate. This is the new tradition,” he said.

His words ring even truer when one considers his career.

After graduating from the University of Missouri where he studied industrial business management, Cho worked at Tokyo Maruichi International for a year and then for more than a decade at Daewoo Group in various areas but mostly in the new business section. He started his own business in the defense industry, but when his father passed away, he inherited his father’s ceramics business, Kwangjuyo, in 1988. His immediate and most challenging task at the time was the absence of a market for high-end ceramics in Korea.

Thus, Cho studied countries that were famous for their ceramics, he realized a number of things. He noticed that nations that were strong in ceramics were also strong in food, and that culture streams downward from the wealthy. He thus concentrated on that segment of the population for his ceramics, food and soju businesses.

Along the way he underwent many trial and error, and his most significant learning experience happened with Gaon, which opened in 2005.

“I was too hasty; I rushed with the decision to go overseas, especially to China with Gaon in 2006,” Cho said. “I had my eye on the 2008 Beijing Summer Olympics,” he said.

He said he learned the hard way that he should have solidified Gaon’s position in the local market first before going overseas. “I learned the value of money, I woke up and smelled the coffee, and I began to listen to other people’s advice before making a decision,” he said. He said he learned to draft thorough plans and learned to bide his time. Gaon temporarily closed its restaurant in Gangnam afterward, only to reopen this year.

“Culture needs a symbolic trigger and needs to give manufacturers hope so they will continue making products that can compete with others in the world,” Cho said. His daughter, Lucia Cho, has been running the restaurant Bicena in Itaewon, Seoul, since 2012. Bicena is also part of the Kwangjuyo Group.

As a CEO, Cho likes to engage with employees, sending them messages via KakaoTalk or email to “make sure that the employees stay updated” with cultural news, such as recently published books.

“But only once a day,” Cho said, regarding the KakaoTalk messages and emails.

Cho envisioned another cultural wave, like hallyu, that will further popularize hansik, once the Michelin Guide publishes a Korean edition in November.

“There will be a big change ahead when the guide is published,” Cho said.