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ISSN : 2233-4165(Print)
ISSN : 2233-5382(Online)
Journal of Industrial Distribution & Business Vol.8 No.5 pp.43-52

Locally Made Liquor(LML) Industry Status and Development Plan Using a Scale Efficiency Analysis

Dongso Lee*, Jong-Woo Choi**, Duk Huh***
*First Author, Senior Research Associate, Korea Rural Economic Institute, Korea.
***Director, Korea Rural Economic Institute, Korea.
**Corresponding Author, Research Fellow, Korea Rural EconomicInstitute, Korea. Tel: +82-61-820-2288,
September 7, 2017. October 6, 2017. October 15, 2017.


Purpose – The domestic liquor market is steadily increasing, but locally made liquor markets remain stagnant. The market opening due to the FTA and westernized eating habits are expanding the consumption of imported liquor by Koreans and the demand for beer and soju is still high. Therefore, we analyzed the scale efficiency of Korean locally made liquor companies.
Research design, data, and methodology – Based on a translog-cost function, a scale efficiency analysis was conducted using the government’s information survey on the liquor industry. Data from 541 liquor companies analyzed from 2013 to 2014 were used for analysis.
Results – As a result of the scale efficiency analysis, the average sales of the mid-sized locally made liquor companies is 171 million won, but the appropriate sales amount is 1 million won. It is estimated that there is a need to increase sales.
Conclusions – The gap between the actual sales and the appropriate sales of mid-sized locally made liquor companies with 3~10 employees is larger, so it is necessary to reduce the average cost by increasing the sales of locally made liquor companies. In order to do so, it is necessary to acquire customer strategies such as product differentiation, advertising and publicity.

JEL Classification: Q10, Q18, L10.





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