The convenience store industry is speeding up its market penetration by making health products a new growth driver. Following the COVID-19 pandemic, the increasing demand for health management, growth of single-person households, and the trend of convenient consumption have combined to elevate 'easily consumable health products' like collagen jelly into a new growth category.
The convenience store industry is increasing specialized health product stores, and recently it has been encouraging franchise owners to register for health functional food (HFF) sales licenses after acquiring certification from the Ministry of Food and Drug Safety (MFDS). This strategy aims to diversify its existing revenue structure focused on tobacco and beverages by strengthening a product lineup that has high unit prices and customer loyalty.
According to industry sources on the 17th, BGF Retail, which operates the CU convenience store chain, is currently expanding its specialized health product stores. According to CU, the sales in the health product category increased by 5.3% year-on-year in 2021, followed by a 27.1% increase in 2022, and an 18.6% growth in 2023.
In particular, last year, products developed in collaboration with companies like Yuhan Corporation and Chong Kun Dang, which feature dual forms (with tablets or capsules in the lid and liquids in the bottle), gained popularity, resulting in a 137% increase in sales compared to the previous year. Sales from January to March this year also increased by 71% compared to the same period last year.
Sales of health products at GS25 also rose by 33.7% compared to the previous year. In the first quarter of this year, sales increased by 63% compared to the same period last year. GS25 collaborated with professional pharmaceutical companies to launch 'Krill 56' and 'Ever Collagen Time' in smaller quantities.
The background behind the convenience store industry adopting health products as a new food source is due to changes in demographic structure, consumer trends, and the need to diversify revenue streams. As the number of single-person households and the elderly population increases, the demand for easily manage health has risen, and the MZ generation (those born from 1980 to 2000) shows active interest in self-care, such as 'slow aging', making health products no longer exclusive to pharmacies.
Health products are known as attractive items for the distribution industry, as they have a high potential for repeat purchases. Earlier, Daiso began selling health functional foods (HFF) in over 200 stores nationwide from February. Collaborating with IL-YANG PHARM, Daewoong Pharmaceutical, and Chong Kun Dang, it sold over 30 types of products, including lutein, omega-3, and vitamin C, priced between 3,000 and 5,000 won. However, due to some pharmacists' backlash, IL-YANG PHARM decided to withdraw just five days after the launch. Currently, Daewoong Pharmaceutical and Chong Kun Dang are maintaining their sales.
However, most products currently sold at convenience stores are health products rather than HFF. HFF are products recognized by the MFDS for specific functions, and to sell them, stores must register separately as 'HFF sales businesses.' Most convenience stores have not made this registration, so they cannot sell HFF that allow for functional expressions such as 'helps with eye health' and 'improves gut health.'
Accordingly, convenience stores primarily handle products classified as health products, which include functional ingredients like collagen jelly, concentrated red ginseng drinks, and gummies that contain vitamins. While indirect expressions such as 'may be good for the body' are permissible, direct advertising or claims about specific diseases or improvements in bodily functions are not allowed.
Recently, at the corporate level, convenience store headquarters has encouraged franchise owners to register as HFF sales businesses and has been actively moving to expand sales categories by installing dedicated HFF display stands.
A BGF Retail official noted, "Registering as an HFF sales business is relatively simple, so participation from store owners is rapidly increasing," adding that "we are gradually laying the foundation for expanding HFF sales."
A representative from the convenience store industry stated, "HFF allows for functionality to be emphasized, and with higher prices, it is viewed as an attractive product category for convenience stores. We believe that through expanding license registrations by store, the inclusion of high-functionality products will become a reality."