South Korea is seeing the world’s worst fertility rate of 0.8%, and with such negative projection on population growth, local confectionery players are seeking bigger markets overseas.
They hope to expand in markets where the population of children and young teenagers contribute a significant proportion of the population, a huge contrast to the rising elderly population in the home market. One such market is India, which has the world’s 2nd largest population and a confectionery market valued at approximately US$15 billion.
Korea’s leading snack producer, Orion had already established a production plant in Rajasthan, India in February 2021, as part of its global expansion strategy with overseas sales targeted to contribute 65% of its overall sales. Apart from India, Orion had also expanded its sales to Russia, China and the US. In Russia, Orion had introduced 11 types of Choco Pie in Russia since 2019 and built 2 factories there to target consumers that drink hot beverages together with biscuit snacks.
Another major player, Lotte Confectionery has also expanded overseas. It constructed a large-scale production factory for its Choco Pie product in the Indian cities of Chennai and Delhi, which helped boost snack sales to US$3.36 million in 2021. Respecting that 30% of Indian consumers are vegetarians, Lotte uses vegetable ingredients instead of eggs to make the marshmallow filling of its Choco Pie products in India.
Apart from India, Vietnam is also an attractive market for confectionery players as it has a relatively young population averaging 32.5 years old. China is also attractive due to its huge 1.4 billion population with a rising number of middle income consumers.
The long term success of Korean confectionery players now rely so much on their success in overseas markets, as the domestic confectionery market is faltering at 2% annually, all thanks to its aged population.