When Sunghoo Yang raised a glass in front of his fellow Forbes 30 Under 30 Asia 2017 winners from South Korea on his company’s patio this summer, he told them to enjoy the moment, but there was much work to be done. The recognition is nice, he said, but it is only a means to an end goal that is far greater.
Living by his words, he hasn’t stopped there. Yang wants his company The Booth, one of South Korea’s fastest growing breweries, to be the Heineken of craft beer, a strong brand globally and a benchmark for consistent quality. To help it get there, the company announced today a 5 billion won ($4.6 million) funding round from Yuanta Investment and Medici Investment to strengthen its internal operations and expand into San Francisco and Southeast Asia. The investment, which closed Nov. 29, brings total funding to 10 billion won.
South Korea’s craft beer scene has seen a revolution in the past four years from a handful of bars to a 20 billion won market, according to KDB Industrial Bank, and is expected to reach 2 trillion won in 10 years. The Booth has arguably been at the head of it. Sticking to a simple menu of pizza and beer, it launched in 2013 as a bar in an alleyway and is now one of the most visible craft brewers in Seoul, with plans to nearly double the number of locations in Korea and abroad next year.
The wave of sophisticated beer gives relief to foodies in a country largely dominated by watery lagers. But for brewers, the competition has grown fierce. Yang, 30, says The Booth has survived and thrived thanks to great branding and quick adaptability.
“We were at the right place at the right time. From 2013 to now, I think we were very quick to adapt to the changing environment,” he says. Even early on when Seoul had only a handful of craft brewers, The Booth leaned heavily on well-designed marketing, led by his wife and cofounder Heeyoon Kim, when its competitors hoped good beer would sell itself, he says.
“As in most startups, you learn that just having a good product isn’t enough. You have to get the word out that you do have a good product,” he says. For beer, that translates into the label and the brand story. Aided by a friendly-looking blue cyclops named Booth Man and his animated crew of funky characters, The Booth’s brand is everywhere from Seoul to the far-flung Jeju Island.
In its first year, the company quickly expanded from selling its own brew to importing other beers like Mikkeller and distributing its own beer to competing bars, a local first. Facing heating competition and the rising costs of rents and wages, its growth was driven by seeking the lowest risks, Yang says. It was less risky to have both storefronts and a brewery, as it would not have to worry about its inventory going bad.
But its biggest challenge for sustainability, he says, is to stand ground amid the price wars launched by bigger companies. “It’s very tempting for us to discount as well, but once you’re in a price war, there’s really no end. And because we’re a small company, we’re never going to win,” Yang says. “Our difficulty is to build a brand that, even though the competition offers a discount price, it would sell itself based on the brand and quality.”
In 2015, the craft craze hit fever pitch in South Korea as import beers flooded the market. When faced with the choice of opening 10 bars or another brewery, it chose the latter, giving it more opportunities to sell to other companies. The Booth bought the former Lost Coast Brewery factory last year in Eureka, California, breaking ground in the world’s largest craft beer market.
Brewing in Korea is a costly process as everything must be imported, from the malts and yeast to brewers themselves, as there was a shortage of experienced professionals in Korea. Entering the U.S. made things a lot easier to access locally grown ingredients and experienced partners to run the factory.
The Booth hopes to expand next year into vibrant, fast-growing Southeast Asian cities like Bangkok or Ho Chi Minh, where international tourists and local taste buds alike are keen for creative brews. Riding on the coattails of popularity of Korean food and entertainment, Yang hopes to find local partners and get deeply involved in building brand loyalty there -- which is key to a sustainable long-term business model, he says.
While the company’s strategy in the U.S. focuses on maintaining a consistently high-quality product for experienced beer drinkers, it must take an entirely different tack in its Asian markets. “In Korea and Southeast Asia, most people are having craft beer for the first time, so it’s very important for us to introduce the culture of craft beer,” he says. That means taking the time to grow a community that appreciates the details like cold chaining and how beer is poured into a glass. “Our belief is once people try craft beer, they’ll like it, and once they like craft beer, they’re going to like our beers.”
The company has grown 80% a year, with the day-to-day changing every few months, Yang says. His biggest learning experience as a CEO has shifted from building a product to hiring the right people. For him, that requires building a culture of brand loyalty.
“If you look at our past two years, we were able to build and sustain a really motivated smart group of people, and we were really lucky that because we are in the alcohol business, it’s a product that most people love,” he says.
Most of his team enjoys good food and recognizes that after trying craft beer, there isn’t time for the mediocre stuff. He believes employees’ passion for the product is vital for a startup’s rapid growth in any industry, be it food and beverage or fintech. “We just really love the product and want everyone else to have it,” he says.