December 25, 2021 08:33
Korean food manufacturers are increasingly turning to populous overseas markets as the population at home dwindles and ages.
This is especially pressing for confectioners, whose main customers are children and teenagers, because the birthrate in Korea is one of the lowest in the world. Orion, the No. 1 confectioner, is speeding up its foray into India, the world's second most populous country whose market for baked goods is scaled at W17 trillion (US$1=W1,188).
Orion has already built a factory in the state of Rajasthan and intends to boost sales in big cities where average incomes are rising. It beat Lotte Confectionery last year to become Korea's No. 1 confectioner by expanding marketing in populous countries like China, India and the U.S., which led to a 65-percent increase in sales.
Cumulative sales in the first three quarters of this year totaled W1.73 trillion, while the operating margin amounted to 18.3 percent, the highest in the domestic food industry.
Lotte is also targeting the Indian market, building huge factories in Chennai and Delhi and generating W40 billion in sales from its trademark Choco Pie last year. Mindful that vegetarians in India account for more than 30 percent of the population, Lotte replaced eggs with a vegetable substitute.
"The domestic market for baked products is shrinking two percent each year due to a declining population, and the future of our company rests on foraying into overseas markets."
SPC Group, which runs the biggest bakery chain in Korea, opened its first Paris Baguette outlet last month in Jakarta, Indonesia, the world's fourth most populous country. In China it already operates 300 Paris Baguette stores in 13 major cities.
"We have 430 shops around the world centering on populous countries like China, the U.S. and Indonesia," a staffer said. "Next year, we plan to invest more overseas."
Korean dairy makers are also desperately seeking new markets. Faced with a 20-percent contraction of the domestic market for powdered milk, Maeil Dairies acquired a factory in Australia and established a branch office there. It is also investing heavily to gain a foothold in China, whose market for powdered milk is 50 times bigger than Korea's, opening a local office in 2018 and selling three brands now.
Vietnam is another promising market because it is a young country with half the population consisting of people in their 20s and 30s. Convenience store chain GS25 became the first in the domestic industry to open a store there. The store opened earlier this month, three years after GS25 formed a tie-up with SonKim Group. It hopes to open 700 convenience stores in Vietnam by 2027.
Supermarket chain E-Mart is stepping up its foray into Mongolia. The country has a population of just 3.29 million, but 70 percent of them are under 40. Since forming a tie-up with a local company, E-Mart has opened three discount outlets in Mongolia so far. Sales last year surged 47 percent.
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