[THE INVESTOR] Jeon Dong-keun, CEO of Korean craft beer brewery The Satellite Brewing Company, was not really a big fan of beer. That is, until he tasted a peach-flavored craft beer at a pub near Kalamazoo College in Michigan, the US, where he studied economics.
“I was first surprised by the variety of beer options at a pub in the US,” CEO Jeon told The Investor in an interview at the startup’s office in Gasan-dong in southwestern Seoul on Nov. 9.
“Then I was mesmerized by the taste of craft beer made by a local brewery in the area.”
Since he was young, Jeon wanted to run his own business -- he chaired a Korean office of a nonprofit global entrepreneurship program, called SAGE, when he was a high school student, and organized some events like a nationwide football competition and attracted sponsorships from companies.
However, he was not sure about the specific business sector he wanted to jump in after college graduation. That glass of beer, called Peachy Pom Pom, a rose-colored ale made by Short’s Brewing Company, made things crystal clear. He decided to start brewing beer.
With little experience in the industry, he first started to work as an unpaid apprentice at the US brewery that first got his attention. He worked three shifts of six hours voluntarily for almost half a year. Although he did not get paid, he said, it was one of the most important and memorable moments in his life as he could work and learn a lot about brewing.
While doing the apprenticeship, he flew back and forth between Korea and the US to prepare to start his own brewery in his home country.
The US company later became a partner, as well as investor, and officials from the firm visited Seoul many times to help Jeon and his team set up brewing machines in the beginning.
“When we had no team of brewers, the US partner taught us some technical stuff like finding a nice balance between hops and malts,” he said
The CEO of the fledgling craft brewery startup said investors seem to have believed in the potential of craft beer business, his passion for brewing, and a unique business model that sells exclusively imported hops to Korean breweries.
The current government’s plans to lower tax rates on domestic beer brands is also what makes the business appealing to investors.
Under the existing laws, taxes are imposed on factory prices, including manufacturing and marketing costs and margins while imported beers are taxed based on the volume of imports, excluding marketing costs and margins.
Jeon, who has long wanted to become an entrepreneur, admitted running a company is not an easy job.
“Actually running a business is a whole lot different from making a business plan and thinking of possible problems and solutions at school,” the CEO said.
“So many unexpected things, like delays in customs processes, occur one after another, and handling them well seems to be really important.”
His two other co-founders left the company in the early business stage due to personal reasons.
Although it faced numerous challenges, the startup which was established early last year has been on an upward growth path, and is also seeking new investments to scale up its facilities and lineup.
Over the past 1 1/2 years, the local brewery has scaled up its annual beer production capacity to 860,000 liters, supplying to some 70 pubs and restaurants in the Seoul area.
Tropical fruit beer Would You IPA, Mango-flavored ale Mangoya, sweet pilsner Rocket Pils, and Denali Pale Ale, which features an aroma of orange and citrus, are some of the signature craft beers of the firm.
It plans to produce Milk Stout, a dark beer with chocolate and coffee flavor later this month.
The company, which has set this year’s sales target at 1 billion won (US$884,110), aims to triple the figure next year.
Among many factors like taste and price, he said, consistency of quality is the most important ingredient for the success of a brewery.
“Consistency in quality is a key factor as customers begin to have doubts if the taste changes frequently,” said Jeon, adding he and his team will continue to achieve consistency to survive in the growing craft beer market in Korea.
The local market is forecast to grow from 39.8 billion won in 2017 to 57 billion own this year, according to Korea Craft Brewers Association, an industry group for local breweries. The number of local craft breweries has increased from 54 in 2014 to some 100 this year.
By Kim Young-won (firstname.lastname@example.org)