[Herald Interview] Lotte Confectionery pushes to lead Asian snack market

Lotte Confectionery, the country’s No. 1 snack maker, said it aims to become Asia’s largest snack producer by 2018 through aggressive mergers and acquisitions, in addition to building more local production plants.

By adding Africa, the Middle East and European markets to its expansion plans over the next four years, the company expects to generate more than 7.5 billion won ($7.4 billion) in annual global sales. Further, it believes overseas sales will, for the first time, swing into the black this year.

“We are in the process of streamlining our global management system, and through benchmarking and innovation, we hope to soon establish a successful global business model,” Kim Yong-su, CEO of Lotte Confectionary, told The Korea Herald by email.

Expanding through M&As

In 2008, Lotte bought Belgian premium chocolate brand Guylian, which generates 200 billion won in annual sales. Guylian has become strategically important because its success proved that Lotte is capable of preserving and enhancing high-end global labels, company insiders said.

In 2010, it became the largest shareholder of Pakistani confectionery K.S. Sulemanji & Sons. With the new firm on board, the company plans to carve out a leading market share in Pakistan by 2015.

“About 37 percent of the Pakistani population is under 14 years old, and we see a lot of potential from their interest in snacks,” Kim said.

Lotte also recently acquired a number of snack makers in Vietnam, Kazakhstan, India and elsewhere around the world, and is among the few local confectionery firms to set up plants overseas. 


Europe, Middle East and Africa

In 2010, Lotte completed its so-called Eurasia Choco Pie Belt by establishing 10 Choco Pie production facilities across Vietnam, India and Russia.

The chocolate-coated biscuit sandwich with a marshmallow filling has been at the forefront of its efforts in penetrating the Russian and Chinese markets even before the two countries forged diplomatic ties with South Korea.

“Choco Pies are sold at only high-end department stores in China and Russia, but it is fast gaining popularity among all ranges of consumers in the Eurasia region,” a company spokesman said.

Lotte has also been upping the ante in social contribution in the region with efforts to help out flood victims in China and sponsoring various activities for local distributors.

Lotte currently operates plants in Beijing, Qingdao and Shanghai.

In India, Lotte’s Chennai factory has started producing Lotte chewing gum brand Spout, which is also gaining popularity in the Middle East. The company said Spout has a 70 percent market share in Saudi Arabia and Kuwait, and is likely to be sold in other Arab nations in the near future. Some products will also be exported to Africa, according to Lotte.

As for the European market, the firm hopes to capitalize on Kazakhstani food maker Rakhat, which it acquired in 2013, and its production facilities in the country. “I am confident that the output would help us become a fully global company,” said the Lotte Confectionery CEO.

The company aims for 1 trillion won in sales from Europe, the Middle East and Africa.

By Bae Ji-sook (baejisook@heraldcorp.com)