Profitability at domestic ice cream companies deteriorated as costs rose and domestic demand weakened. The industry is seeking a breakthrough by entering global markets, but analysts say there are many challenges to solve due to local regulations and other factors.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 12th, as of 2024, retail sales in Korea's ice cream industry were 1.4864 trillion won, down about 28% from 2.0184 trillion won in 2015, 10 years earlier. In the fourth quarter of last year, the dairy and ice cream segment of the industry business conditions index recorded 88.9, down 13.9 from the previous quarter. With 100 as the baseline, a reading below that means more enterprises in the sector answered that conditions worsened from the previous quarter than those that said they improved.
The sector is struggling as several factors coincide: a declining core customer base of children due to low birthrates, intensifying competition in the dessert market, a growing pursuit of health, and rising costs.
The market slump also showed up in the results of major companies. Korea's ice cream market is currently a duopoly, with Lotte Wellfood and Binggrae (including Haitai Ice Cream Co.) holding about an 80% share. Lotte Wellfood's operating profit last year was 109.5 billion won, down 30.3% from the year before. During the same period, Binggrae's operating profit was 88.3 billion won, down 32.7%.
The ice cream industry cites low birthrates as the biggest driver of changes in consumption structure. The youth population (ages 0 to 14), the core consumer group for ice cream, fell sharply over 10 years from 7.03 million in 2015 to about 5.25 million last year, and is expected to drop below 5 million this year. A wider range of dessert options such as coffee, bakeries, cakes, and bingsu has also dispersed consumption. The spread of the healthy pleasure trend has reduced consumption of high-sugar ice cream, contributing to the market's contraction. With cost burdens for inputs such as coconut oil rising, the government's stronger stance on price stability also hit profitability.
A lack of new products is another concern. Many of the top market-share items are long-running products launched before the 1990s, such as Melona and World Cone. No mega-hit products like Buldak spicy ramyeon, which helped fuel the spread of K-ramyeon, have emerged.
An ice cream industry official said, "Ice cream's main consumer age group skews young, and steady population declines from low births have had a negative impact. Also, the category is highly weather-sensitive, and last year's heat did not last long, which hurt sales," adding, "Existing hit products have very high barriers, and new products often lack strong differentiation."
Ice cream companies are looking overseas for a breakthrough. Binggrae is exporting products to about 30 countries, including the United States and Europe, centered on its flagship product Melona. It is also pursuing localization strategies, such as launching plant-based Melona for the European market, which has dairy import restrictions. Overseas, a variety of Melona flavors are sold, including the original melon as well as strawberry, mango, banana, and coconut. Binggrae's ice cream exports more than doubled from 71.1 billion won in 2020 to 154 billion won in 2024.
Lotte Wellfood has designated India as a key strategic market and is expanding its business centered on local ice cream company Havmor. It is building a new plant in Pune, India, to boost capacity and is focusing on targeting populous emerging markets such as Southeast Asia and India.
Even so, competitiveness in global markets is still seen as limited. In Europe, major ice cream exporters such as France are strong. France, the world's largest ice cream exporter, has more than 400 manufacturers, making competition intense. The channels that currently carry Korean ice cream products are centered on Asian grocery stores. Expanding into major local retail networks is cited as a task.
The European Union's dairy import restrictions also act as a barrier. Because products containing animal-based ingredients face import limits, domestic corporations are responding by developing separate plant-based products. In Europe, where gelato culture is strong, there is a sense that ice cream is less competitive than other K-foods.
An ice cream industry official said, "Common flavors such as chocolate, vanilla, and strawberry are not very competitive in the global market," adding, "Products with unique flavors that are popular at home are competitive. We are pursuing a strategy of finding and exporting such products."