As Korea's frozen treats market shrinks, competition in the premium ice cream segment is heating up. Following Baskin-Robbins, Hanwha Galleria's "Benson" and the U.S. brand "Van Leeuwen" are joining the fray. Industry observers say ice cream consumption is shifting from a national snack centered model to a premium dessert experience and taste-driven spending.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 14th, Korea's retail ice cream (frozen treats) market shrank from 2.0184 trillion won in sales in 2015 to about 1.4864 trillion won in 2024. Last year's market size is estimated at 1.41 trillion won. The market contracted 30.2% in roughly 10 years.
This appears to have affected the results of Lotte Wellfood and Binggrae, the two leading players in the frozen treats industry. Lotte Wellfood's domestic operating profit (separate basis) last year was 84.2 billion won, down 23.7% from a year earlier. Among its major businesses, only the frozen treats institutional sector posted negative growth. Lotte Wellfood's frozen treats sales last year were 607.1 billion won, down 0.5% year over year. Binggrae, where frozen treats account for about half of overall results, recorded 88.4 billion won in operating profit last year, a 32.7% decline from a year earlier. It is the first time in three years since 2022 that Binggrae's operating profit fell below 100 billion won.
The industry cites a shrinking core consumer base due to low birthrates and the spread of health-focused consumption as reasons for the slump in the frozen treats market. A frozen treats industry official said, "In the past, when summer temperatures rose, frozen treats sales naturally increased, but recently, children and teen-centered ice cream consumption has declined, and preferences for low-sugar, low-calorie, high-protein foods have strengthened." The official added, "It has also become harder to produce hit products like Melona and World Cone that span all generations and lead the market."
The discount-centered sales structure unique to the frozen treats market is also cited as a factor weakening profitability. As convenience store 1+1 promotions and the expansion of ice cream discount shops and unmanned stores have grown, consumers have increasingly come to view frozen treats as "products to buy cheaply." A food industry official said, "Costs for raw milk, sugar and other raw and subsidiary materials keep rising, but in a market where discount sales are routine, it is not easy to raise prices," adding, "With volumes down, there are inherent limits to improving profitability through small margins and large sales."
◇ U.S. Van Leeuwen enters too… intensifying premium ice cream competition
While Korea's overall ice cream market is contracting, competition over premium ice cream is growing. Baskin-Robbins, operated by BR Korea, an affiliate of Sangmidang Holdings, maintains the No. 1 market share on the back of about 1,700 stores, while Benson, the premium ice cream brand of Veruscoop Creamery, a Hanwha Galleria subsidiary, is expanding its stores. Benson plans to open 30 stores by July and expand to 100 stores nationwide by 2027.
With the U.S. premium ice cream brand "Van Leeuwen" also preparing to enter Korea, the industry is watching whether a three-way battle will take shape. Van Leeuwen recently signed a master franchise (MF—a model in which the headquarters, instead of entering a foreign market directly, contracts with a local company to receive brand royalties and fees while providing technical support and brand licensing) agreement with A TWOSOME PLACE and is preparing to open its first store in Korea.
Van Leeuwen started in 2008 with a single ice cream truck in Brooklyn, New York, and grew centered on scoop shops into a premium ice cream brand. Emphasizing products based on minimized artificial additives and materials and supplies, and a vegan line using a Dairy Free approach, it has expanded its presence in the premium market. It now reaches consumers through roughly 100 company-operated scoop shops across the United States and about 10,000 distribution channels.
Industry observers also see the expansion of the premium ice cream market as aligning with the polarization of consumption. In the past, frozen treats consumption centered on convenience stores and supermarkets, but recently demand has grown for premium dessert experiences and taste-driven purchases.
A frozen treats industry official said, "In the past, a single new product could set the tone for the entire summer season, but as consumer tastes have segmented in recent years, it has become difficult for a particular product to lead the market," adding, "Premium brands have instead exploited that gap."
Lee Eun-hee, a professor of consumer studies at Inha University, said, "Today's consumers continuously seek new experiences and differentiated products, but the existing frozen treats market had limits in terms of product changes and freshness," adding, "The growing demand for premium ice cream is also the result of consumers' experience- and taste-driven spending tendencies."