Selling off the Imperial Brand
Whisky sales in Korea have been on a continuous downturn over the past decade mainly due to changes in lifestyle of Koreans. The domestic sales of the spirit recorded some 1.49 million boxes (a box containing 500ml bottles) in 2018. Industry watchers attribute it to the reduced chances of get-togethers of company employees after the government measure to limit the maximum workweek to 52 hours, sluggish economy and an increasing number of people enjoying drinking alone.
To find a breakthrough in the declining market, Pernod Ricard Korea (PRK) has announced a restructuring plan, selling off its Imperial brand and reducing the number of employees through an early retirement program.
CEO of the company Jean TOUBOUL said on January 22 that PRK would change its business model in Korea, assigning the distribution of Imperial brand to Drinks International Ltd. A Scotch whisky brand indigenous to Korea, Imperial was once the top seller in the country but now barely maintains the third position in the market.
PRK also announced a large-scale restructuring, saying it will “focus efforts on its Strategic International Brands, such as Ballantine’s and Absolut.” The restructuring includes a plan to reduce the number of employees from the current 211 to below 100. But the labor union of the company has declared to fight, claiming that the restructuring, which threatens the livelihood of employees, had been decided without their agreement.
PRK has promised to “spare no efforts to help the people who would be inevitably affected by the early retirement plan.” It said it has set aside 50 billion won to pay retirement allowance amounting up to 69 times of their monthly salary, including the retirement bonus stipulated by the law. It said it will also help those who apply for early retirement in various other ways, such as counseling for career transfer and support for interests of loans for new business.
PRK said the restructuring was an inevitable decision to secure competitiveness in the sluggish whisky market in Korea and maintain its Korean business. “With a more efficient organization and a renewed focus, PRK will transform into a fully consumer-oriented company regaining a competitive advantage in the market,” said an official, adding, “We will respect and support as best as we can the employees who will be inevitably impacted by the reorganization.”
Industry sources said they are closely watching whether the PRK will be able to be back in good shape through the reorganization, therefore, leading a bounce back of whisky business in Korea.