[Korean Startup Interview] Korea’s Traditional Liquor Boom: Mewolmejoo’s Digital Revolution and Global Ambitions
Traditional liquor refers to alcoholic beverages made using local specialties from various regions, encompassing a range of drinks including makgeolli made from rice, distilled spirits, cheongju, and wine made from domestic grapes.
According to the National Tax Service statistics, the traditional liquor industry grew from 94.1 billion won in 2021 to 162.9 billion won in 2022, a 73% increase (68.8 billion won). This accounts for more than 1.6% of the total liquor sales in Korea, a significant growth compared to the mere 0.4% five to six years ago. Lotte Mart’s traditional liquor sales from January to April this year increased by 15% compared to the same period last year, recording rapid growth each year with 23.2% in 2020, 36.9% in 2021, and 16.7% in 2022. This growth has been propelled by the government’s support policies for traditional liquor, online distribution, and a shift in consumer awareness.
Especially, a trend of enjoying the taste and style of alcohol has emerged centered around the MZ generation, who prioritize individuality and preference, and they have become the main customer base in the traditional liquor market. In response to this younger consumer demographic, Mewolmejoo introduced an online traditional liquor tasting subscription service. Although there are over 2000 local breweries in Korea, only about 10% engage in online sales, and information about their products is hard to access.
Jong-Chan Son, the founder of Mewolmejoo, has a background in wine distribution strategy consulting in the United States’ famous wine-producing region, Napa Valley. With experience in assisting small-scale breweries in entering large distribution channels, Son launched Mewolmejoo in 2021, identifying similar challenges faced by domestic traditional liquor breweries. Initially, like existing traditional liquor distributors, the company distributed products directly from breweries but pivoted to offering 70ml samplers to allow consumers to taste a variety of alcohols and find their preferences.
Son stated, “I thought it meaningless to just mediate products as produced by breweries, so I planned a small 75ml sampler. We handle everything from branding the labels to packaging the products we distribute. Also, our significant differentiation is helping breweries that haven’t been discovered yet with their online digital transformation.”
Currently handling 120 types of liquor, Mewolmejoo allows customers to subscribe to small quantities, taste, and then purchase the original products at the lowest price in the country through their website. Mewolmejoo, which is automating its primarily manual production process, aims to prepare a production line capable of handling bulk orders from early next year. Through this, they plan to automate packaging and inventory management of various breweries and expand into the IP content market with internal branding.
As part of the GMEP(Global Market Expansion Program) supported by the Korean Institute of Startup & Entrepreneurship Development, Mewolmejoo has also been selected for the ‘Smart City Startup Vietnam Entry Program’ hosted by The Invention Lab, preparing for global expansion. Through this program, they plan to check the needs of the traditional Korean liquor market in Vietnam, not only with Koreans in Vietnam but also in the local market, and ship 200 boxes by October.
Mewolmejoo plans to meet consumer demand for offline stores and create PB products by conducting a pre-Series A round in the second quarter of 2024. Jong-Chan Son, the representative of Mewolmejoo, said, “The traditional liquor market is still an area where digital transformation has not occurred. We are the best team at discovering and marketing 90% of the unknown breweries. Mewolmejoo aims to expand the supply market of breweries through its own breweries and automation systems. Through this investment, we plan to increase manpower, enhance accessibility by elevating to a platform store.”
Increase in Demand for Unique Traditional Alcoholic Beverages
As of 2023, domestic alcohol consumers in Korea are seeking new types of alcoholic beverages beyond the traditional soju and beer. This is particularly true when drinking at home or purchasing online, as consumers are looking for more diverse, unique, and premium options. While unique traditional alcoholic beverages like Wonsoju, Boksoondoga, and Haechang Makgeolli are still being produced, they are hard for consumers to purchase. This is largely because they lack knowledge about these products – unfamiliar with the taste, lacking information, and having no recommendations. However, the problem also lies with domestic local breweries. Of over 2,400 breweries, more than 2,000 generate less than 1.5 million won in monthly sales. Most of these are small-scale businesses lacking marketing and sales channels.
Although traditional alcoholic beverages are the only ones legally available for online sales and delivery, only 10% of breweries operate online stores, indicating a deficiency in digital infrastructure. Breweries face worsening business conditions due to inadequate infrastructure, and while consumers want to buy new and unique traditional beverages, they cannot. Mewolmejoo seeks to address these bidirectional issues.
Connecting Consumers and Breweries, Experiencing Unique Traditional Beverages
Mewolmejoo is a monthly traditional alcohol tasting subscription service. It offers exclusive access to representative products from local breweries that are otherwise hard for customers to explore, providing them in 75ml miniature versions through the subscription service. Subscribers can taste these small-scale products and purchase only those they like separately.
Consumers can experience the products without visiting the breweries through content cards included in each monthly subscription package. Mewolmejoo also offers limited editions exclusive to its customers, including first releases and rebranded products. They quickly solve issues by securing IP for miniature versions of local breweries’ products. Currently, Mewolmejoo partners with 35 breweries and offers over 100 products, including 15 exclusive products, connecting breweries seeking new marketing and sales channels with customers wanting to experience unique alcohols.
Targeting Preferences by Offering a Variety of Traditional Alcoholic Beverages in Small Quantities
Mewolmejoo, the first in Korea, recommends alcohols suited to customer’s preferences through a customer data-based algorithm within just a minute. After experiencing the desired products in small quantities, customers can record their preferences and purchase the alcohols they enjoyed at the lowest price in the country. Mewolmejoo has a wide range of product partnerships compared to competitors and holds a distinctive position in product branding. Competitors’ subscription services partner with products in bottles of 500ml or more and use the labels provided by the breweries. However, there are less than 200 breweries in the country that can produce more than 10,000 bottles of 500ml products per month, limiting the available product quantity.
In contrast, the partnered products for Mewolmejoo’s tasting service are in 75ml miniature bottles with brand labels designed by Mewolmejoo itself. Over 1,000 domestic breweries can produce more than 10,000 bottles of 75ml tasting products per month, making many more products available for partnership. Furthermore, Mewolmejoo’s exclusive partnership on the IP for these miniature products means that competitors cannot offer such small-scale products, serving as a unique selling point.
Traditional Liquor Tasting Subscription Service
Mewolmejoo is a monthly traditional liquor tasting service that arrives every month. For our regular Mewolmejoo subscribers, we curate a new traditional liquor every month and ship it to customers’ homes on the last Friday of the month. Customers receive a small package of traditional liquor, read through content cards, taste each product, and purchase their favorites separately.
After recording more than 1,000 registrations, a subscription conversion rate of 38%, and a subscription retention of 88% for over two months with our prototype, we launched our MVP service in the first week of September. Through Mewolmejoo, which offers a new liquor experience and a differentiated brand experience, customers experience their liquor and liquors unavailable elsewhere every month.
Targeting 9.5 million online liquor consumers aged 25 to 45
Based on 2022, the online liquor consumption market is 9.8 trillion KRW. Of this, we are targeting 950,000 online consumers aged 25 to 45, aiming for a short-term target market of 5.5 trillion KRW. Particularly, our main target customer segment, people in their early to late 30s, includes 1.5 million people who consume traditional liquor at least once a month.
We aim for annual sales of 7.5 billion KRW through 100,000 monthly subscribers by 2025, targeting this 375 billion KRW traditional liquor consumption market. Mewolmejoo operates two business models, B2B and B2C. For B2C, we offer customers a monthly subscription service with three subscription models: monthly 3-kind tasting (24,900 KRW), monthly 5-kind tasting (34,900 KRW), and monthly 8-kind tasting (54,900 KRW).
Customers experience 3, 5, or 8 types of products each month through the subscription model, and can purchase only the products they like from our online store. Especially for individual purchases, we offer discount coupons for the lowest prices in Korea. For B2B corporate contracts, we offer one-time tasting packages ranging from 20,000 to 150,000 KRW, and produce and ship liquor goods packages containing the company’s BI.
Founder with a background in consulting for Napa Valley wine distribution strategies
Since launching the service with government support after being recognized for its business viability at institutions like the Young Entrepreneur Training School, we have been validating our business model, attracting over 1,000 registered members and 400 subscription customers.
Also, we are increasing sales through B2B contracts with credible domestic institutions and companies like Kyobo Life, Seoul Tourism Foundation, etc., and are looking forward to more than 10 business partnerships in the second half of the year. In 2023, we attracted seed investment through The Invention Lab and are conducting traditional liquor export mediation between Korea and Vietnam this coming October.
Last August, we demonstrated our data-related technical skills by applying for two additional patents, and we plan to implement this technology for our customers this December. The founder was in charge of wine distribution strategy consulting in Napa Valley, the mecca of American wine.
He witnessed how local liquors in Napa Valley influence consumers’ lifestyles and how properly created online services rapidly advance the liquor industry. Especially, wine tasting services triggered customers’ experiential desires, and with the pandemic, online services caused a significant boom, leading to rapid growth in the wine industry.
In Korea, the traditional liquor market was the only type of alcohol allowed for online sales, but there were hardly any leading companies in the market, and each brewery’s infrastructure was lacking. Seeing this, the team members met in Napa Valley and are innovating the traditional liquor market as a vertical commerce company for Korean traditional liquor.
Why should we receive investment?
First, we provide a service needed in the market and realize monetization. Mewolmejoo generates revenue by targeting both general users and corporate clients through a traditional liquor shopping mall and gift service. Even after launching the new ‘tasting subscription service,’ we continue to generate steady revenue from the B2B gift service. Last year’s sales were 80 million KRW, and this year’s sales are expected to exceed 100 million KRW.
Second, we possess the technology necessary for a data business. We are a startup with a liquor recommendation algorithm for each product/customer, based on the analysis of tasting data, preference data, and purchase data of customers. Through this, we aim to expand into other types of alcohol like wine and whiskey and plan to grow as a vertical commerce as well. Additionally, we are preparing additional business models, such as personalized liquor recommendations, through consumer data collaboration with financial sectors like KB Financial Group.
Third, we own our logistics center and manufacturing infrastructure. We have our logistics center in Ansan, Gyeonggi-do, where we handle product storage, management, packaging, and shipping, and plan to establish breweries for manufacturing. We aim to ensure the sustainability of the business by increasing the operating profit margin of the B2C subscription service to over 40% through PB product development.
What are the plans for entering the global market?
The short-term achievement we seek through this GMEP is export mediation by connecting domestic traditional liquor breweries with the local markets in Vietnam. In the future, we plan to expand to countries in Southeast Asia, such as Indonesia, Thailand, and the Philippines, where the online liquor market is growing rapidly.
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