Recently, Shin Dong-bin, chairman of the LOTTE Group, attended the opening ceremony of LOTTE Wellfood's new factory in India, drawing attention. LOTTE Wellfood, which entered the Indian market in 2004, is set to expand its ice cream factory operations and enhance the production line for Choco Pie in the latter half of the year, while also establishing its first overseas production base for Pepero.
The reason Chairman Shin is directly overseeing the Indian market is due to stagnation in domestic operations amid weakened consumer sentiment, while the Indian subsidiary is showing significant results. India, with a population of 1.4 billion, is the world's most populous country, and its confectionery market is estimated to be over four times larger than that of South Korea, amounting to 17 trillion won. According to the industry, LOTTE Wellfood's sales in India were approximately 290 billion won last year, with this year's sales expected to grow nearly 20% compared to the previous year.
It's not just the confectionery industry. India is regarded as a beneficiary of the Central America tariff war and is attracting worldwide distribution companies as a place of production and a consumer market. Last year, India's Gross Domestic Product (GDP) growth rate was recorded at 6.4%. Given that the global average growth rate in the early 3% range, this is a high figure.
◇ Rapid increase in middle-class population leads to emergence of luxury and fashion new markets
According to related industries on the 10th, India is experiencing a rapid increase in its middle-class population, which is assessed to have high potential as a luxury and fashion consumer market. The number of middle-class individuals in India is 430 million, more than the combined total of middle-class individuals in the United States and Western Europe. Additionally, the number of ultra-high-net-worth individuals with assets of over $30 million (approximately 4 billion won) is projected to increase from 13,000 in 2023 to 20,000 by 2028.
The fact that there is a large consumer demographic that is sensitive to trends is also cited as an advantage. The median age of the Indian population is 27.9 years, and half of the population is under 30.
In the economic capital of India, a luxury brand commercial zone is developing in the center of Mumbai. The luxury shopping mall, Geo World Plaza, which opened in 2023, features 66 global luxury brands such as Louis Vuitton, Gucci, Dior, and Cartier. The French department store Galeries Lafayette is also planning to open department stores in Mumbai and Delhi.
Interest from luxury and fashion corporations is also increasing. Bulgari, a jewelry brand under the world's largest luxury group LVMH, plans to increase its number of stores in India from 12 cities currently to over 20 cities. The French comprehensive sports brand Decathlon announced plans to increase its number of stores in India from 110 to 190 and invest $111 million (approximately 161.3 billion won) in the Indian market over the next five years.
McKinsey & Company estimated that the number of global fashion brands that have entered or are planning to enter India will increase from four in 2023 to 24 by 2025. It also forecasted that the non-luxury sales growth rate in India would be between 12% and 17%, and the luxury sales growth rate would be between 15% and 20% this year.
◇ Domestic corporations also speeding up entry into India
Domestic corporations are also accelerating their entry into India. Youngone, an Original Equipment Manufacturer (OEM) clothing company, has designated India as a new production hub following Bangladesh, China, Vietnam, and El Salvador. They are investing $120 million (approximately 175 billion won) to build a manufacturing plant in Telangana, India. LF's Haezes is also set to enter the Indian market this year, alongside the Middle East, targeting annual sales of over 1 trillion won and expanding its reach in Asia.
There are also places achieving results with platform businesses leveraging the Korean wave. The e-commerce platform "Macaron" is selling over 18,000 products from more than 380 K-beauty brands, including COSRX and Chosun Beauty, in the Indian market. Last year, the consolidated sales of Macaron's operating company, Blimong Kids, was 33 billion won, a 209% increase compared to the previous year.
◇ Underdeveloped distribution infrastructure and strong regulations are obstacles
However, the underdeveloped distribution infrastructure and strong regulations are identified as obstacles to entering India. In India, global corporations with more than 51% foreign equity must source more than 30% of the materials used in their products locally. As a result, many overseas corporations enter through joint ventures with local companies.
LOTTE Wellfood entered the Indian market by acquiring local confectionery company Paris. The American coffee chain Starbucks has also entered India through a joint venture with a local group, planning to expand its store count from the current 450 to 1,000 by 2028. The French Lafayette Department Store has also partnered with the Indian company Aditya Birla.
Kang Young-hoon, a partner at McKinsey & Company, stated, "Interest in Korean style is growing in India," and noted that, "Similar to entering the U.S. market through Amazon, corporations should collaborate with online distribution companies that hold significant market share in India." In fact, brands like Ralph Lauren, H&M, and Mango have entered the local market through India's largest fashion platform, Myntra. Myntra boasts 60 million monthly active users, with the primary users being Generation Z (those born in the late 1990s to early 2000s).