Tuesday, 22 November 2016

CZECH REPUBLIC: Czech Beer To Brew In South Korea

Czech company Gold of Prague is taking some very ancient Czech beer brewing know how and transporting it lock, stock, and barrel, to South Korea. The beer market there might be in its infancy, but a relaxation of restrictions has sparked a massive array of new beers and micro-breweries. The Czech company is in the throes of two projects with micro-breweries outside the capital, Seoul, and would also like to develop there as well if the early promising signs continue.

I talked with Gold Of Prague chief executive, Lukáš Mikeska, in South Korea about the two projects, one of which has just been launched, and the second which will be completed within a few weeks, and also about its plans to expand further on the Korean market. But first of all I asked him about the company's Czech roots.

“Our company has created an association with the Břevnov Monastery Brewery. This is sited at Břevnov monastery, which is the very first location where beer was brewed in our country. That was probably around the year 993, that is what the chronicles say. Therefore, our design of the technology, recipes, and everything concerning the beer comes from this micro-brewery. This is where our authenticity is based.”

So there are no additives, everything is like a monk in the Middle Ages would recognise what’s going on?

“Of course, the recipes and technology have changed a lot since the Middle Ages. However, our philosophy is to create a brewery which is as authentic as possible using Czech technology and Czech design but also the machinery and equipment is made in the Czech Republic. The recipe and ingredients, everything including the malt and hops comes from the Czech Republic, apart from the local water of course, and the brew masters are Czech. So the product will be just as good as any brewery or the brewery in Břevnov Monastery - the authenticity and same product as you can taste in Prague, this is our goal.”

Can you tell me how the project with South Korea started and who had the idea? I did get the impression that originally the South Koreans were big beer drinkers.

“Well, in a way it isn’t. It started with an article in 2011 I believe in the Economist, and this is not just how our story but the story of Korean beer – our new modern era of Korean beer. The article said one basic thing: that the only activity which is worse in South Korea than in North Korea is beer. The beer is better in North Korea, by the way some of the breweries are also made by Czechs as far as I know. And it was true because there was basically a state duopoly on the production of beer and it was really impossible to start not only a mega brewery but also micro-brewery due to the regulation. There was a huge discussion in the country about it, including in parliament, the bosses of the breweries were called to parliament and there was a huge outcry about it. The result was a bill about regulation in 2014. In 2014, the regulation was relaxed in a way that is bearable – still not ideal but it’s bearable. We were observing these developments and once they happened we said ‘let’s have a look at it because this looks promising.’ The Korean customer is also like awake now and understands that there are other beers apart from the two main brands. Imports have significantly increased since then and there are now 19 micro-breweries and its mushrooming bit still in the very early stages of development.”

Your project is not located in the capital but quit a way out in the provinces, why is that? I presume it’s easier to start something outside of the capital, but is there a reason why you chose this location?

“Well, we have two projects actually. There is a project to build a mix-size brewery which would have a yearly capacity of about 20 million litres. This is being prepared in Jeonbuk province near the city called Iksan. And the site we choose was because the area had been chosen for an industrial area called Foodpolis. This is a huge government project in South Korea. Basically the government wants to create a zone for the production of food and beverages which would be the biggest of its type in the whole of Asia. They have prepared the infrastructure for that and we liked that. It’s much easier for the investor to come to a place where the land is ready and all the utilities are connected. So this is where we agreed on the location and this week we are actually signing the lease agreement to place the brewery there. The state is now that we opened the restaurant last week. We are still building the brewery.

“However, during the preparations we also stumbled on another project, because we were already a little bit known in this country. And there is a very interesting company, one of the biggest in Korea, and they are just finishing a very beautiful brownfield project. Basically their first factory in Busan, right in the centre of Busan, where their founder started the business in 1963, is being rebuilt into a community centre, it’s a gallery. They wanted some interesting tenants there, so there’s a very nice café place and they wanted something else, something connected with beer. So, they asked us if we would build an authentic micro brewery here and that is why we are in Busan.”

And are you already selling beer in South Korea? Have you any inkling that what you are doing will be a success?

“We basically started over the last weekend selling beer. The project in Busan was at the very last minute. We were asked to build the brewery in May. Now we are here and I think that must be a world record for building a micro-brewery. The state of play is that we opened the restaurant last week. The micro brewery is still being finished. It will be finished in two or three weeks time, according to plan. In the meantime we have imported beer from the Czech Republic which we are selling right now in the pub. The reactions are just fantastic. It is the freshness and the way we serve the beer, trying to really follow the basic rules how you store the beer and clean the pipes and so on really makes the difference and the customer so far can see that.”

Did the South Koreans know about Czech beer or is this all new to them? Had they heard about the reputation of Czech beer or were familiar with the history?

“Well, it could be better. I think there is huge room for an information campaign about Czech beer. It’s not like in countries like Russia where the quality is well known. But people who care about beer, most people who care about beer, they know that the Czech Republic is one of the capitals of brewing. Also, Pilsner Urquell is doing very good business here and, I would say, it’s a great ambassador of Czech beer. Their sales are increasing every year by something like 100 percent, this is what I hear, and it’s a huge success. Czech beer is associated with quality here.”

Overall the beer market in South Korea is booming traditionally I thought they had some rich drink as the national drink?

“There is a Makgeolli, which is a rice wine, there is Soju, which is a distillate with sugar, and there is beer. And beer is getting more popular every year. The growth is around four percent this year, especially in the premium Pilsner style market. So this is where we are too. The consumption per capita is of course nothing like the Czech Republic, it’s about 40 litres, per capita, but its growing and there is a population of nearly 50 million people. There is a huge potential and we would like to grab about a half percent of the market, that’s our goal and in that case we will be extremely successful. “

And are there any other projects that you have…you are already working hard on these two but will that open the way to further ones or will you see how these go first?

“We will definitely have to see how it goes but only three days ago we started and we already have a lot of questions whether we plan to do something like this in Seoul. Busan is the second city, it’s a great and beautiful city with the total population around here of about eight million people but Seoul is still the trend setter and the main place for everything. If there is an interesting locality, a location like this, and the conditions are right then we would definitely look at a micro-brewery in Seoul because this is a great ambassador for a big brewery, you can see how the process is going. You can see the tanks, go everywhere and follow the process, so it’s a nice thing to look at.”