The food industry's "loconomy (local + economy)" strategy is evolving. In the past, it largely took the form of ESG (environmental, social and governance) activities such as limited-edition products using local specialties or support for farms. Recently, however, it has shifted into a long-term strategy that treats a region's name as a brand asset and builds a stable raw material supply chain.
According to the food industry on the 30th, Nongshim(004370) has used kelp from Geumildo, Wando, South Jeolla, for more than 40 years since launching Neoguri in 1982. The cumulative purchase volume totals about 18,500 tons. Since 2021, it has run the "With Young Farmers" program, purchasing a cumulative 1,793 tons of potatoes from young farmers for use in potato chips.
Lotte Wellfood has worked with Uiseong County for about 20 years to grow the "Uiseong Garlic Ham" brand, and McDonald's Korea, through its "Taste of Korea" project, has continued to roll out menus that prominently feature regional names such as Changnyeong garlic, Boseong pork, Jindo green onion and Jinju chili, recording cumulative sales of 30 million items.
Analysts say a strategy is spreading that goes beyond simply using local specialties and instead accumulates the origin itself as a differentiator by cooperating with a specific region over the long term.
Changes in the materials and supplies procurement environment also underpin this shift. As climate change and volatility in international materials and supplies prices grow, corporations are treating the securing of a stable domestic supply chain as an important management task. Through contract farming, they can stably secure materials and supplies of consistent quality, while giving consumers confidence that the ingredients used have a clear origin.
A Nongshim official said, "The biggest advantage of contract farming is that corporations can receive a stable supply of materials and supplies with the required quality," adding, "For example, the potatoes used in potato chips are a different variety from common table potatoes, so we ask farms to grow specific varieties and purchase the entire crop."
The official added, "From a corporation's standpoint, it can stably secure materials and supplies of the desired quality, and farms can secure sales channels, which is why contract farming is meaningful."
Shifting consumer perceptions are also supporting the spread of loconomy. In the past, whether something was "domestic" was key, but recently, materials and supplies with a clear origin—such as "Changnyeong garlic" and "Wando kelp"—are seen as factors that enhance a premium image and trust.
Some note, however, that not every food company can actively use regional names. A food industry official said, "For processed foods, it isn't easy to continuously use materials and supplies from a specific region," and added, "If you look at loconomy cases, many are restaurant chains that run seasonal limited menus, like McDonald's or franchise cafes, for this reason."
The official added, "Because of limits in sourcing materials and supplies, broad application in general processed foods is difficult, but there is a clear trend in which ESG activities are feeding into consumer branding."
Recently, there have also been more attempts to imprint the region itself as content on consumers, beyond the product. Daesang Group is running a pop-up store that combines regional tourist spots and local specialties through its "Respect for Knowledge" project to promote areas with declining populations. In September, it plans to hold an event themed on Goesan, North Chungcheong, introducing university glutinous corn alongside local tourist attractions.
A food industry official said, "Loconomy isn't just about making products that use local specialties, but is meaningful in connecting a region's story with brand identity to offer a differentiated consumer experience," adding, "Most pop-ups run on a reservation basis and sell out early, indicating strong consumer response."
◇ Consumer touchpoints expand through loconomy marketing
Experts see loconomy not as a single long-term brand strategy but as an evolution in marketing aimed at sparking consumer interest. They say it is expanding beyond product-centered promotions to widen consumer touchpoints by combining pop-up stores, tourism content, and online and offline experiences.
Lee Jong-u, a professor in the Department of Distribution and Marketing at Namseoul University, said, "Recently, loconomy can be seen less as a single long-term project and more as a concept for expanding marketing in various forms," adding, "Rather than continuously highlighting just one region or product, it is effective to consistently introduce new regions and content to match new product launches or seasonal promotions."
Seo Yong-gu, a professor in the School of Business at Sookmyung Women's University, said, "Recently, consumers are increasingly valuing 'brand authenticity' in which the origin and production process are clear, rather than a simple brand," adding, "Local brands can be differentiators because their origins and production backgrounds are clear and they contribute to revitalizing the regional economy."