LOTTE Wellfood, Nongshim, and ORION, among other domestic confectionery companies, have centered their focus this year on maintaining domestic operations while seeking growth opportunities abroad. However, they cannot afford to neglect the domestic business sector. They are devising intense management strategies to counteract the population decline due to low birth rates and sluggish domestic demand, asserting that they must defend their revenue.
① The reason TV commercials with CM songs have disappeared… “First, let’s reduce expenses”
According to the distribution industry on the 30th, confectionery companies are focusing on reducing expenses right away. A prime example is marketing expenses. Cutting costly television (TV) advertisements is typical. Thanks to this, opportunities to hear nostalgic CM songs have diminished. Representative examples include Nongshim's shrimp chips ad, with the phrase “Hands reach for it, hands reach for shrimp chips,” ORION's “Gorilla rice, fun to eat and delicious,” and “LOTTE gum is the best choice for gum.”
In the confectionery industry, there were occasional large-scale snack advertising plans until 2020, but recently, they are not considering them at all. This is due to the diversification of other marketing methods, such as short videos on social media (SNS) or pop-up stores (temporary stores), combined with the need to cut expenses.
A source in the confectionery industry noted, “If you spend about 2 billion won on TV advertising, you have to sell more than that, but recently, it should be regarded as an expense entirely,” adding that “the past consumer pattern of consumers buying once they are informed is no longer valid, so TV commercials are only considered for special occasions.” This reflects their intent to minimize marketing expenses to preserve revenue amid worsened domestic sluggishness.
The change in the situation is largely attributed to low birth rates. During the baby boomer era, TV snack advertisements were common. A source in the distribution industry mentioned that “the first product to have a TV advertisement among snack foods was Haitai Confectionery's 'Matdongsan,'” noting that it aired for the first time in 1976, the year after its launch, and because of its effective advertising, it sold out from the beginning. It is now difficult to expect such effects.
② New products actively reflect the times… Meal replacements and nutrition enhancement in the spotlight
The types of new products launched by confectionery companies have also changed. It is rare for snacks that produce sweet, salty, or sour flavors to be launched under a new brand. Most new brands are meal replacement snacks or nutrition-enhanced snacks.
A prime example is ‘Comfort Eats Enough’ launched by LOTTE Wellfood. This product focuses on consumers who want convenient, balanced nutrition at the moment instead of traditional meals three times a day, allowing them to use their time efficiently. ORION's ‘Dr. You’ is a similar case. Dr. You is a nut-based energy bar. Since its launch in 2008, it has expanded its market by introducing Dr. You protein bars with added protein. According to ORION, last year, Dr. You's brand revenue was about 912 million won, more than 2.5 times the 340 million won from five years ago in 2019.
This aligns with the current trend of matching the balance of nutrients while having light meals. According to market research firm Coherent Market Insight, the meal replacement market is expected to grow at an average annual rate of 5.8% until 2032.
③ “Familiar names with new flavors”… Remake of retro snacks
Releasing new products in a retro style is also one of the main movements of confectionery companies' domestic business divisions. This involves giving a new flavor to already known snacks or reviving discontinued snacks. This is beneficial because utilizing a widely recognized brand reduces the expense needed for awareness promotion, and the market response can be broadly anticipated. It is a decision-making process aimed at minimizing risks.
A representative product is ORION's candy brand ‘Beatles.’ After halting sales in June of last year due to many consumer requests for its re-release, production was decided. ORION also reintroduced a limited edition product, ‘Strawberry Songi,’ under its ‘Choco Songi’ brand. Nongshim's hit product ‘Shrimp Chips Wasabi’ has successfully targeted the market by adding the new flavor of wasabi to the steady seller shrimp chips.
A source in the distribution industry stated, “When a product that has been successful once is re-released, the response is generally good,” adding that “even children's snacks are ultimately chosen by the 40-60 age group. Parents must have tried it and feel it is safe for them to buy it.”