Hite Jinro will cease production at its Iksan plant in North Jeolla Province and consolidate operations at its Jeonju facility. This decision comes amid a decline in alcohol consumption and aims to streamline production by closing an aging facility and enhancing the efficiency of existing operations.
According to a report filed with the Financial Supervisory Service on September 9, Hite Jinro has decided to end production and operations at the Iksan plant on October 16. The company stated that this move is part of efforts to optimize production operations, taking into account the aging of the plant and equipment as well as operational conditions.
Established in 1957 as the former Bobae Soju plant, the Iksan facility has been a production hub for PET soju products, including distilled spirits. The Jeonju plant primarily produces beer brands such as Hite, Terra, and Kelly.
Last year, the Iksan plant generated sales of 42.1 billion won, which represents 1.68% of Hite Jinro's total consolidated revenue of 2.4986 trillion won. Hite Jinro indicated that production volumes from the Iksan plant will be transferred to the Jeonju facility, ensuring no impact on product production and supply.
Production equipment will also be gradually relocated to the Jeonju plant. Employees from the Iksan facility will be transferred to the Jeonju plant to maintain employment. A Hite Jinro official stated, "After a comprehensive review of the production conditions at the Iksan plant and future production competitiveness, we decided to halt operations and consolidate production functions at the Jeonju plant."
When the Iksan plant was established, the surrounding area was primarily agricultural land on the outskirts of the city, but it has since transformed into a residential area with large apartment complexes. According to Hite Jinro, this transition has led to ongoing noise complaints, and the aging facilities and lack of storage space have made it difficult to expand production capabilities.
Hite Jinro believes that consolidating production functions at the Jeonju plant, which has the necessary production facilities and infrastructure, will be more efficient. A company representative noted, "We expect to enhance production efficiency and establish a stable production base by utilizing existing production facilities and infrastructure."
This restructuring of production sites aligns with Hite Jinro's recent efforts to improve cost efficiency. The company's consolidated revenue for the second quarter of this year was 618.6 billion won, a 4.3% decrease from the same period last year, while operating profit rose by 0.7% to 64.9 billion won. The company explained that despite a contraction in the alcohol market, it has defended profitability through cost efficiency and sound management.
By business segment, there was a significant disparity in performance between soju and beer. In the second quarter, soju sales increased by 0.1% to 382.7 billion won, with operating profit rising by 18.4% to 58.2 billion won. In contrast, beer sales fell by 15.3% to 176.3 billion won, and operating profit dropped by 29.2% to 8.3 billion won. Overall sales for the first half of the year totaled 1.2094 trillion won, with operating profit down 4% to 120.9 billion won compared to the same period last year.
* This article has been translated by AI.
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