Domestic corporations have reported solid results despite sluggish domestic demand last year. Lotte Chilsung Beverage surpassed 3 trillion won in revenue, a benchmark for large food corporations, and achieved 4 trillion won for the first time.
Thanks to the popularity of K-food, domestic corporations are expected to continue growing in the international sector this year, following gains last year. Companies like SPC Samlip, Ottogi, and Nongshim are also likely to join the ranks of those reaching 4 trillion won in revenue this year.
According to industry sources and FN Guide on the 10th, Lotte Chilsung Beverage's revenue last year exceeded 4 trillion won. Among domestic food companies, it ranks fifth following CJ CheilJedang, Dongwon F&B, Daesang, and LOTTE WELLFOOD.
FN Guide estimated that Lotte Chilsung Beverage recorded a revenue of 4.0766 trillion won last year, an increase of nearly 1 trillion won compared to 2023. Lotte Chilsung Beverage achieved annual revenue of 2 trillion won in 2011, and the 3 trillion won mark was surpassed in 2023.
It took 12 years to jump from 2 trillion won to 3 trillion won in annual revenue. However, it took only one year to achieve 4 trillion won from the 3 trillion won level. The key is Pepsi in the Philippines.
According to Lotte Chilsung Beverage, Pepsi's revenue in the Philippines reached 944.8 billion won in 2023. With the surge in Pepsi's sales, Lotte Chilsung's overseas revenue increased more than threefold from 234.2 billion won in the first half of 2023 to 803.3 billion won in the same period last year.
In addition to Lotte Chilsung Beverage, LOTTE WELLFOOD has also surpassed 4 trillion won in revenue. LOTTE WELLFOOD plans to increase its overseas sales share from the current 20% to over 35% by 2028. To achieve this, it has established subsidiaries in eight emerging markets, including India and Kazakhstan.
Besides Lotte Chilsung Beverage and LOTTE WELLFOOD, three other corporations in the domestic food sector have exceeded 4 trillion won in revenue. The main contenders include CJ CheilJedang, Dongwon F&B, and Daesang.
CJ CheilJedang is estimated to have recorded a revenue of 29.4897 trillion won last year. Ju Young-hoon, a researcher at NH Investment & Securities, noted, "Concerns remain about the possibility of continuing stagnation in the domestic consumer market, but growth in the overseas food institutional sector, particularly in the U.S., Europe, and Australia, is expected to continue this year."
Daesang has focused on localizing its products in four key global categories: traditional kimchi, K-sauces, K-convenience food (HMR), and seaweed. In the first half of last year, domestic food companies exported Korean kimchi worth $8.2 million (about 110 billion won), with Daesang's traditional kimchi brand accounting for more than half, reaching $4.6 million (about 61.4 billion won).
Daesang completed the first large-scale kimchi factory in the U.S. in 2022, marking a milestone for the domestic food sector. In 2023, it acquired the U.S.-based Asian food specialist Lucky Foods. With the recent rise in kimchi demand in Europe, Daesang is also constructing a factory in Poland.
Dongwon F&B is projected to have recorded a revenue of 4.4479 trillion won last year. It has been performing well in the international sector, leveraging Dongwon tuna and seasoned seaweed products.
Historically, the threshold for classifying large food corporations was set at 3 trillion won in revenue. Until 2022, only four food corporations qualified for the 3 trillion won club. However, starting in 2023, companies like Ottogi and Nongshim have increased their revenues, resulting in a rise in the number of food corporations in the 3 trillion won club to double digits.
This year, Orion and Pulmuone have joined the 3 trillion won club. According to FN Guide consensus, Orion and Pulmuone are expected to have revenues of 3.2144 trillion won and 3.0926 trillion won, respectively, last year, reflecting increases of 6.2% and 7.4% year-on-year.
Experts predict that major food corporations will continue to expand this year. Last year, these major food corporations raised prices for numerous key products in the domestic market. Additionally, the rising exchange rate of the won against the U.S. dollar, due to the expansion into overseas markets, is a positive factor for sales. Conversely, overall domestic consumer sentiment slowdown and rising materials and supplies costs are concerning factors.
Given the trends, SPC Samlip, Ottogi, and Nongshim are strong candidates for joining the 4 trillion won club this year. Ottogi recorded revenue in the 3.5 trillion won range last year, but its overseas sales share remains low at around 10%. SPC Samlip also likely recorded revenue similar to Ottogi in the 3.4 trillion won range.
Samyang Food, which gained global popularity with its spicy chicken noodle series, still has an annual revenue level of 1.7 trillion won.
A representative from the Korea Food Service Industry Research Institute noted, "Food is known for having low operating profit margins and is perceived as a domestic sector with low added value. To break away from this perception, it must actively venture into overseas markets, and to overcome excessive reliance on specific products or some overseas subsidiaries, it must introduce localized products."