Shinsegae Inc., South Korea’s largest department store and supermarket company, has decided to exit the whisky market, a move counter to the rising demand for spirits. The decision, revealed by company officials on Thursday, is part of a strategic shift toward enhancing profitability rather than pursuing external growth.
Shinsegae L&B, a subsidiary under the E-Mart Inc. umbrella, will be dissolving its whisky business unit. This shift comes as the company’s primary business segment, wine import and distribution, faces a downturn in sales due to the current economic slowdown. The impact is reflected in the company’s financial performance, with Shinsegae L&B recording a net loss of 10.4 billion won ($8 million) in the first nine months of this year, alongside a 10% decrease in sales to 135.7 billion won in the same period. Wine sales contribute a significant 70% of the company’s revenue.
In a New Year’s message, Vice Chairman of Shinsegae Group, Chung Yong-jin, acknowledged the challenges that 2024 will bring, underscoring the need for the company to face these harsh realities head-on. He emphasized the importance of prioritizing profitability in strategic decision-making, including the consideration of entering new market sectors or expanding the business.
This approach to business strategy has been evident in recent months, with Chung urging employees to adapt by changing organizational structures, systems, and work methods. This call for transformation was echoed in a meeting of the Management Strategy Office, Shinsegae’s strategic planning division. Furthermore, in September, Shinsegae executed a significant reshuffling of its executive leadership, replacing nine chief executives across its subsidiaries, indicating a comprehensive reevaluation and realignment of its business priorities.
This strategic exit from the whisky market marks a pivotal moment for Shinsegae Inc., as it refocuses on its core wine business and adapts to the evolving economic landscape in the retail sector.
