With sluggish domestic demand, the confectionery industry is focusing more on extending existing flagship brands than on fostering new ones. Companies are seen aiming for both sales stability and marketing efficiency by giving long-running steady sellers with high consumer recognition new flavors and concepts.
According to the confectionery industry on the 4th, Orion(271560) launched a Choco Pie Jeong mango lassi flavor in May and expanded its lineup by unveiling the premium pie Shall We, which increases the cream content, early this year. Lotte Wellfood(280360) is targeting both low-sugar and premium demand by strengthening its Zero Choco Pie products and its premium Mon Cher lineup. Both companies chose a strategy of leveraging the recognition of existing flagship brands while adding new flavors and concepts to broaden their consumer base.
Competition is fierce in the potato chip market as well. Orion is expanding its Pocachip production capacity by up to 50% and stepping up marketing that highlights new-crop potatoes. On the 3rd, it released a new product applying the well-received "hwang cheese" flavor to Pocachip made with new-crop potatoes.
Nongshim(004370) moved to differentiate by rolling out in succession potato chips in collaboration with popular dining brands such as Yupdduk and Kyochon Chicken through its "Pochelin Guide" project. Nongshim is focusing on reinterpreting restaurant menu items as snacks by leveraging the strengths of potato chips.
A food industry official said, "As trends shift faster, it is not easy to respond by building entirely new production lines for completely new products," and added, "As a result, we are seeing a trend where development concentrates on brands whose consumer response has been verified."
The need for "long-running brands" to maintain touchpoints with younger consumers is also cited as a reason for product variations. A food industry official said, "Choco Pie and potato chips are long-running brands everyone knows, but they also face the task of continuously maintaining a fresh image," and added, "We are trying various variations to reflect flavors and trends favored by younger generations so we can communicate not only with existing consumers but also with new ones."
The strategy of cultivating flagship brands is continuing not only in the domestic market but also overseas. In particular, in India, Choco Pie has become a key growth driver for both Orion and Lotte Wellfood, spurring competition to expand production capacity. Lotte Wellfood, which has about a 70% share of the Indian Choco Pie market, has recently expanded its production lines to strengthen its market dominance.
Orion, too, is expanding local production capacity and introducing a variety of flavors. Orion said last year its India subsidiary's sales rose 30.3% from a year earlier, and its sales volume in the first half increased 81%. With the utilization rate of its Choco Pie production lines exceeding 130%, it plans to operate new lines for Choco Pie and Custard in the second half.
The industry believes that in downturns the value of mega brands, whose marketing efficiency and distribution competitiveness are proven, grows even larger, so for the time being product expansion strategies centered on flagship brands are likely to continue.
A food industry official said, "In downturns, consumers tend to look first for familiar brands, and from the perspective of corporations, products with established distribution networks and brand recognition have a higher chance of success than new products," adding, "For the time being, strategies to expand products centered on verified flagship brands are highly likely to continue."