[News Space=Reporter seungwon lee] Although Beer K (CEO Lee Young-seok) has reduced its deficit significantly compared to the previous year, it is still going through a difficult time as it cannot shake off the label of urine beer. 

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 1st, Beer K's sales in 2024 will be 34.1 billion won, a 57.7% decrease from 80.6 billion won in the previous year (2023).

Not only sales, but also operating loss was recorded at 3.3 billion won. Although the deficit was greatly reduced compared to the previous year's operating loss of 8.2 billion won, the company is going through a difficult time as it has not been able to escape the swamp of deficits for three consecutive years. 

Net income for 2024 also recorded 2.7 billion won, an improvement over the previous year's net loss of 5.2 billion won.

In 2021, when things were going well, Beer K recorded sales of 105.2 billion won and operating profit of 6.9 billion won, showing solid performance.

However, the decisive reason for the halving of sales and three consecutive years of operating losses was the incident that damaged the image of the Tsingtao beer brand, which has a 120-year history. 

In October 2023, a video was released showing an employee urinating in a beer truck at a Tsingtao Beer factory in China. The incident caused Tsingtao Beer's market capitalization to evaporate by over 1 trillion won. Netizens responded with comments such as "The most expensive urine in history," "The Internet is scary," and "Urine with a market value of 10 billion yuan."

Although the Ministry of Food and Drug Safety (MFDS) and Beer K have explained that the Tsingtao No. 3 factory where the urination incident occurred is not related to beer imported into Korea, it seems that more time will be needed to change the minds of consumers who have turned away.

In addition to Tsingtao beer, Beer-K sold products such as Laoshan Beer, Magners Cider, Cruiser (RTD (Ready To Drink) with an emphasis on fruit flavor), and Somersby (alcoholic cider brand) in Korea.

Tsingtao beer is a key source of revenue and a flagship product, accounting for about 90% of Beer K's sales. Currently, no other products are being sold, and only Tsingtao beer is being sold, so it can be seen as 'Tsingtao Korea (Korean Tsingtao)'.

Selling and administrative expenses amounted to 14.2 billion won, of which 3.9 billion won was for salaries, 2 billion won for commissions, and 3.5 billion won for advertising and publicity expenses.

Current liabilities decreased significantly to KRW 3 billion compared to the previous year (KRW 7 billion), and the debt burden was also alleviated due to the completion of repayment of short-term borrowings. The debt ratio also remained stable at 12.5%.

Total capital decreased slightly from the previous year to 23.9 billion won. Due to the net loss and financial difficulties for the period, no dividends were paid. Currently, the shareholder composition of Beer K is identified as Lee Young-seok 37.5%, Kim Woo-young 15%, Lee Seung-wook 15%, Lee Joo-hoon 14%, and others 18.5%.

In 2020, when performance was good, a dividend of 1.5 billion won was paid.

Due to the company's difficult circumstances, advertising expenses also fell sharply from 15.4 billion won to 3.5 billion won, a 77% decrease. This was a measure to reduce costs, but it led to a lack of marketing necessary for brand recovery, resulting in a vicious cycle of declining sales.

Inventory assets also decreased by 60% from 10.6 billion won to 4.3 billion won, and there was also a loss of 500 million won due to disposal of some inventory.

A Beer K official explained, "We are going through a difficult time due to the 2023 incident, but we are pursuing business by maintaining a profit trend and strengthening our fundamentals rather than increasing sales."

A financial analysis expert in the distribution industry explained, "Although Tsingtao suffered a significant drop in sales due to the damage to its brand image, it succeeded in reducing its deficit through cost-cutting efforts." He added, "However, it is analyzed that the effect of brand promotion and consumer inflow was reduced as Tsingtao's marketing costs were drastically cut."

He continued, "Since the urine beer incident, Koreans' distrust of Chinese beer has deepened, and instead, Japanese, Dutch, and American beer brands have increased their market share," and emphasized, "It seems necessary to find new sources of revenue, source a second Tsingtao, and pursue effective marketing and promotion strategies in parallel."