As Korea's frozen dessert market enters a stagnant phase, competition to secure market share is intensifying. While Binggrae expanded its scale by absorbing Haitai Ice Cream Co., Lotte Wellfood is countering by expanding its zero-calorie and premium product lines. Both companies also appear to be accelerating efforts to tap overseas markets to break through sluggish domestic growth.
◇ Binggrae and Haitai unify sales, marketing and logistics
According to the industry on the 13th, Binggrae completed its absorption merger with its subsidiary Haitai Ice Cream Co. on the 1st. It reorganized its organization and logistics network into a single system five years after the 2020 acquisition. Binggrae said it plans to unify its dispersed organization and sales network to improve operating efficiency.
It is also reshuffling the product lineup. Overlapping categories will be consolidated around flagship products with strong brand recognition and sales performance, while low-profit items will be scaled back in parallel with other efficiency measures. As a result, Binggrae's "Melona" and "Together," and Haitai's "Bravo Cone" and "Babamba" will be grouped under a single corporate portfolio. Kim Tae-hyun, an analyst at IBK Securities, said, "The merger is expected to reduce duplicate expense in sales, marketing, logistics and transportation, and improve the cost structure through joint purchasing of raw and subsidiary materials," adding, "Although a temporary rise in expenses seems inevitable during the process of integrating organizations and tasks, profitability improvement from removing overlapping costs and business synergy effects are expected to kick in in the second half."
A shift in the market share landscape is also expected. According to Food Industry Statistics Information, as of 2024 the No. 1 share in Korea's ice cream market is Lotte Wellfood (39.9%). A simple sum of Binggrae (27.6%) and Haitai Ice Cream Co. (14.1%) comes to 41.7%, putting Binggrae slightly ahead of Lotte Wellfood. If distribution and organizational efficiencies take hold, it could secure an advantage in the market share race.
Lotte Wellfood is responding with product diversification and a high value-added strategy. Ahead of peak season, it is expanding zero-calorie, low-sugar and premium lines around its long-running brands to target consumer demand. Recently, Lotte Wellfood completed a manufacturing item report with the Ministery of Food and Drug Safety for "Jaws Bar 0kcal Grapefruit Honey Black Tea." This is seen as an indicator that the product is in development for commercialization. Following the 2024 launch of "Jaws Bar/Skewer Bar 0kcal," the company appears intent on continually expanding its zero line. In tandem, it is varying "Pig Bar" into forms such as low-sugar and yogurt, and is focusing on strengthening high-priced offerings by rolling out dessert-type products through the "World Cone" premium line.
The reason frozen dessert makers are focused on securing share is the deterioration of the domestic market environment. A shrinking core consumer base due to low birthrates, coupled with rising prices of raw materials such as milk and sugar and seasonal demand fluctuations, has made both revenue growth and profitability difficult.
This sense of crisis is evident in actual results. Binggrae's sales last year were 1.4896 trillion won, up 1.8% from a year earlier, but operating profit fell 32.7% to 88.3 billion won. Lotte Wellfood's operating profit last year also dropped 30.3% from a year earlier to 109.5 billion won. Lotte Wellfood cited the slump in its frozen dessert business, which accounts for 14% of sales, as one of the main reasons for the weaker results. Analysts say that if it loses market dominance, the structure makes it hard to shoulder fixed costs such as production and logistics maintenance, making market share expansion essential.
◇ Binggrae targets "the United States," Lotte Wellfood targets "India"… pushing overseas expansion
To overcome the limits of the domestic market, both companies are accelerating their push overseas. Binggrae's U.S. subsidiary posted 97 billion won in sales last year, up 20.6% from a year earlier. It also plans to use the Australian subsidiary it established in Dec. last year as a production and export hub for targeting Oceania and Europe. In particular, with Haitai Ice Cream Co. set to share Binggrae's overseas distribution network, the expansion of export items bears watching.
Lotte Wellfood is focusing on gaining a foothold in India. Last year it acquired local frozen dessert maker "Havmor" and expanded production lines to nine. As a result, led by core products such as World Cone and Pig Bar, sales at the India subsidiary alone reached 290 billion won last year, up 20% from a year earlier. This exceeds Binggrae's total exports and is driving top-line growth overseas.
Jang Ji-hye, an analyst at DS Investment & Securities, said, "Lotte Wellfood is expected to improve profitability this year by streamlining its domestic portfolio around core brands," adding, "Overseas, continued top-line growth in India, Pakistan and Russia should support a recovery in results. In particular, in India, growth and profitability improvement should be possible as the new Pune frozen dessert plant stabilizes operations, sales networks expand into the southern region, and capacity additions on the dried confectionery and Choco Pie lines take effect."