Coway, a rental company, has surpassed an annual revenue of 4 trillion won for the first time last year. In addition to its core water purifier business, the new BEREX brand, recognized for its mattress and massage chair offerings, has also grown. The sales from overseas subsidiaries, which have been cultivated over several years, increased as well. Coway plans to launch silver care services starting with a pre-arranged service in the first half of this year. Attention is focused on whether the goal of achieving 5 trillion won in revenue by 2027 can be realized.
◇Domestic revenue of 2.5817 trillion won, a record high
According to the industry on the 18th, Coway's annual sales last year recorded 4.3101 trillion won, an 8.7% increase compared to the previous year. Operating profit rose by 8.8% to 795.4 billion won during the same period. Coway's projected revenue for 2023 is 3.9665 trillion won, solidifying the expectation of entering the '4 trillion club' this year. Both domestic and overseas businesses are sailing smoothly.
Last year, Coway's domestic revenue reached 2.5817 trillion won, a record high. The company explained that not only its major products such as water purifiers, bidets, and air purifiers contributed to the performance, but also the BELEX massage chair and mattress brand, which Coway is focused on developing.
BELEX is a new brand launched by Coway in December 2022. Compared to competitors such as Ceragem and Bodyfriend, it has entered the market relatively late. However, it has been evaluated as rapidly advancing with differentiated points and aggressive marketing.
For instance, BELEX's massage chair 'Pebble Chair' attracted attention with its sleek design resembling something that could be seen in a café. While similar designs exist among competitors, the Pebble Chair is unique in that it can rotate. Additionally, Coway has expanded its direct stores and is conducting experiential marketing by collaborating with companies such as Lotte Hotels, Shinhan Bank, and Mercedes-Benz to allow consumers to experience BELEX products.
Coway's overseas subsidiaries also performed well. Last year, overseas revenue reached 1.5452 trillion won, an 8% increase from the previous year. The Malaysian subsidiary recorded 1.1584 trillion won, the U.S. subsidiary 214.2 billion won, and the Thai subsidiary 125.7 billion won. Coway holds the number one market share in the Malaysian water purifier market.
Coway aims to achieve 5 trillion won in sales by 2027. To this end, it stated that it plans to achieve an average annual sales growth rate (CAGR) of 6.5% by 2027. Overseas, it will seek to discover new countries for market entry and pursue the establishment of subsidiaries. As part of its localization strategy, Coway will develop services and products that consider cultural differences in each country.
◇Declaration of entry into the red ocean pre-arranged service market… Anticipations of increased oversight from the Fair Trade Commission
Coway has set a goal to enter the silver business, including the pre-arranged service, through 'Coway Life Solution,' established in October last year. The plan is to provide a comprehensive care service that encompasses not only funeral services but also nursing services throughout the life cycle. The goal is to combine various life solutions such as culture, travel, accommodation, marriage, pets, nursing, and funerals with its core rental business for differentiation.
Coway is currently testing a product that combines rental services and pre-arranged services. By subscribing to the pre-arranged product, customers receive a discount on Coway's rental product usage.
The reason the industry is watching Coway enter the red ocean of pre-arranged services is due to its established KODI (rental managers) network nationwide. The pre-arranged service industry is fiercely competitive, with companies such as Freed Life, Boram Pre-arranged Services, and Kyowon Life engaged in intense rivalry.
An industry official noted, "Coway has information on over 7 million rental subscribers in the domestic market, and more than 10,000 rental managers are involved," adding that "While success is challenging based on the network alone, at least in the early stages of business development, it can grow with the already established databases and sales networks."
However, the Fair Trade Commission has stated early this year that it will strengthen oversight of pre-arranged service companies. Pre-arranged service providers collect advance payments from customers in preparation for future funeral procedures. According to the Fair Trade Commission, as of the end of March last year, the scale of advance payments by pre-arranged service companies reached 9.4486 trillion won, and the number of subscribers totaled 8.92 million.
The Fair Trade Commission sees advance payments as money that should be returned to consumers, stating that if the financial situation of pre-arranged service companies deteriorates, it would directly harm consumers. This is due to the lack of regulations to protect consumers in the event of bankruptcy or restructuring of pre-arranged service companies. An industry official remarked, "Given that uncertainties have increased both domestically and internationally, each company will engage in fierce competition to secure competitiveness."