The performance of food companies that actively targeted overseas markets last year is outstanding. Lotte Chilsung is expected to record sales of more than 4 trillion won, and Orion and Pulmuone are expected to enter the ‘4 trillion club’ and ‘3 trillion club’ respectively, with sales of more than 3 trillion won.
According to market research company FnGuide on the 5th, Lotte Chilsung’s estimated sales last year are expected to be KRW 4.0766 trillion, a 26.4% increase compared to the previous year (KRW 3.2247 trillion). This is the first time that Lotte Chilsung has exceeded 4 trillion won in annual sales. Among domestic food companies, it is the fifth following CJ CheilJedang, Dongwon F&B, Daesang, and Lotte Well Food. Lotte Chilsung changed the first digit of its sales just one year after joining the ‘3 trillion club’.
Lotte Chilsung, which had remained in the 2 trillion won range in sales for over 5 years, exceeded 3 trillion won in sales for the first time in 2023 due to the rapid growth of its soju brand ‘Saero’ and the effect of the acquisition of ‘Philippine Pepsi (PCPPI)’.
Since acquiring a 34.4% stake in Philippine Pepsi in 2010, Lotte Chilsung has purchased additional shares in 2013, 2018, and 2020. At the end of September 2023, the company secured up to 73.6% of the shares, secured independent management rights, and significantly increased sales volume. Philippine Pepsi, which recorded total sales of KRW 944.8 billion in 2023, was included in Lotte Chilsung’s consolidated performance starting from the fourth quarter of the year (October to December).
Orion and Pulmuone are also expected to enter the ‘3 trillion club’ with sales exceeding 3 trillion won for the first time last year. According to FnGuide, Orion and Pulmuone’s estimated sales last year were KRW 3.2144 trillion and KRW 3.0926 trillion, respectively, an increase of 6.2% and 7.4%, respectively, compared to the previous year.
These companies showed continued growth in overseas business and increased sales despite the slump in domestic consumer sentiment. In the case of Orion, overseas sales account for 64%. According to Orion, sales at its Chinese, Vietnamese, and Russian subsidiaries from January to November last year increased by 5.6%, 7.6%, and 13.3%, respectively, compared to the same period last year. An Orion official said, “Korean food has become popular overseas, and sales have increased despite difficult circumstances.”
Pulmuone also maintained a high market share of 67% in the U.S. tofu market and was well-established overseas, which was cited as the reason for its strong performance. A Pulmuone official said, “As of the third quarter of last year, cumulative overseas sales increased by 21.1% compared to the same period last year due to customer acquisition through channels such as Costco and increased preference for local Asian food.”
However, operating profit, which does not increase as much as sales, is a problem that must be solved. Additionally, excessive dependence on specific overseas corporations must be overcome.
Lotte Chilsung is working to improve profitability by sending dispatchers from its headquarters as Philippine Pepsi’s operating profit margin is only around 1%. Orion has a high presence in China among overseas countries. Chinese subsidiary sales account for 40% of Orion’s total sales, so if the Chinese business falters, it could affect overall performance. In the third quarter (July-September) of last year, when Orion’s business in China was not good, operating profit fell by 2.6% even though sales increased by 1.1%. Seo Ji-yong, a professor of business administration at Sangmyung University, said, “For overseas-based sales, exchange rate volatility can be a risk,” and added, “Profitability can be improved by using protection strategies against exchange rate fluctuations, such as fixing the exchange rate when placing an order.”
Reporter Jeong Seo-young [email protected]
-
- great
- 0dog
-
- I’m sad
- 0dog
-
- I’m angry
- 0dog