In October, Shinsegae Food, which changed its leader to Kang Seung-hyeop, identified the bakery business as its key focus for next year. The securities industry has evaluated it as a viable business. There are positive assessments that Shinsegae Food's revenue may improve next year.
According to the retail industry on the 19th, Shinsegae Food has confirmed the bakery institutional sector as its business sector to take risks next year and is seeking ways to create synergies with group companies.
While alternative food businesses pursued over the past 2 to 3 years are important, it is judged that it is better to focus on business sectors that can produce tangible results next year.
In the securities industry, Shinsegae Food's management judgment is currently seen as reasonable.
Shinsegae Food's third-quarter consolidated sales amount was 385.4 billion won, a decrease of 1.9% compared to the same period last year. Among these, only the bakery institutional sector maintained sales at last year's level. The sales of the meal service and restaurant institutional sectors decreased by about 5% each. Sales in the manufacturing and food materials institutional sector also fell by 1.9%.
Sim Eun-joo, a researcher at Hana Securities, noted, "The bakery institutional sector has not shown significant profit improvement due to rising prices of materials and supplies such as olive oil and cocoa. However, with Kang Seung-hyeop appointed as the CEO, known as a financial expert within the Shinsegae Group, it is expected that management efficiency efforts to strengthen profitability will be actively pursued next year."
CEO Kang is considered one of the leading financial experts in the group. He took the position of financial officer at E-Mart in October 2019 and held dual roles as the head of the support headquarters for E-Mart and Gmarket in March of last year. Before coming to Shinsegae Food, he served as the head of the support headquarters (executive director) at Shinsegae Property.
Currently, the bakery institutional sector accounts for about 25% of Shinsegae Food's sales. Shinsegae Food supplies bread and desserts to over 120 stores including E-bakery and Boulangeries located in E-Mart and also to Starbucks. Shinsegae Food expects to increase profitability through menu upgrades.
Franchise companies like Compose Coffee are also major clients of Shinsegae Food because it can produce and supply bread in bulk. According to the Joint Growth Committee, three coffee franchises, including Compose Coffee, Mega Coffee, and Baek Dabang, which sell more than five types of beverages and bread, opened a total of 1,476 new franchise stores last year.
Recently emerging large bakery cafes on the outskirts of urban areas are also a boon for Shinsegae Food. A retail industry source stated, "In the past, bread was only sold in bakeries, but now distribution channels have become very diverse, including supermarkets, local cafes, and convenience stores, and if Shinsegae Food's business capabilities keep up well, it could become a sector with sufficient results."