With all-time favorites like the Choco Pie and Milkis, Lotte Confectionery and Lotte Chilsung Beverage have dominated Koreans’ tastes for the nibbles.
The two are not just the largest Korean companies in their respective industries, but their stocks are also the two most expensive on the local bourse, traded at over 1.5 million won per share.
And they are now pleasing the palates of people worldwide.
Lotte Confectionery’s overseas sales are estimated to have grown from 450 billion won ($410 million) in 2011 to over 500 billion won last year.
The company has exported to about 60 countries in Asia, North America and Europe, in addition to taking over confectioners in China, Vietnam, India, Pakistan and Belgium.
In China, Lotte built chewing gum, candy and pie factories in Beijing in 1995, a biscuit factory in Chengdu in 2005 and a chocolate factory in Shanghai in 2007.
In India, Lotte began with acquiring Parry’s Confectionery, which mostly produced candy, in 2004. Lotte added a chewing gum production line and built a Choco Pie factory in 2010.
In Vietnam, it took over major local confectionery Bibica in 2008 and established a choco pie production plant two years later.
Having gained fame in Russia for the two small, round chocolate-covered layers of cake packed with marshmallow filling, Lotte set up a high-tech factory in the state of Kaluga.
Lotte also entered Pakistan, a country long considered a wasteland for Korean firms, and took over local confectionery Kolson in Karachi.
In 2008, Lotte surprised the world by acquiring global chocolate company Guylian of Belgium.
Aiming to reach 4.5 trillion won in overseas sales and become Asia’s top confectionery by 2018, Lotte is streamlining its production systems and bolstering marketing efforts abroad.
It has been stepping up advertising and sales promotions for mega brands Choco Pie, Pepero, Xylitol Gum and Ghana Chocolate, in addition to revamping its enterprise resource planning system.
At home, Lotte Confectionery is scheduled to absorb local confectionery Kirin in April.
Lotte Chilsung Beverage’s products are also popular abroad, with its milk-containing soda Milkis selling like hotcakes in Russia.
Lotte Chilsung’s soft drink and juice products entered Russia’s Vladivostok in 1990. Exports stopped, however, for 18 months as Russia declared a moratorium in 1998.
But after exports resumed in 2000, Lotte targeted the market with a more specialized line of products, making sales jump an average 53 percent per year.
Sales in Russia shot up over 108-fold since 2000 to $28 million last year, nearly half of which came from Milkis. Some 290 million of Milkis’ 250-milliliter cans worth $62.7 million were sold in Russia in the 12 years since 2000.
“Milkis seems to have attracted Russian consumers because it offered a taste which they had never experienced before, and comes in 10 different flavors that aren’t available in Korea,” said Lotte Chilsung spokesman Kim Seok-jin.
“Since Russia lacked diversity in fruit production due to geographical reasons, we introduced orange and strawberry-flavored Milkis, which turned out to be major hits. So we’ve launched a new fruit flavor each year.”
Lotte Chilsung also attributes the success to the use of carefully selected ingredients, strong quality control and a rigorous manufacturing process which kept other firms from unveiling similar products.
Lotte’s canned coffee brand Let’s Be boasted exports of $9 million last year, more than $6.5 million of which went to Russia. The company’s active supply of equipment to keep the coffee warm helped in the tundra.
Exported to about 20 countries including Japan, China and the U.S., Let’s Be sales are on a sharp rise in Russia.
“Russians, who have experienced Milkis, have developed an affinity for the Lotte brand, and the seven different flavors of Let’s Be ― latte, espresso, Americano, cappuccino, choco latte, mocha and Arabica ― are satisfying their needs,” Kim said.
Lotte Chilsung exported $79.7 million worth of alcoholic beverages including Seoul Makgeolli and non-alcoholic beverages worth $38.7 million to around 40 countries in the 12 months to June 2011.
By Kim So-hyun (
sophie@heraldcorp.com)
