Korea's food industry is targeting new growth channels such as Daiso and warehouse-style discount stores, moving beyond established distribution networks like hypermarkets and super supermarkets (SSM), where growth has stalled. Overseas, companies are also broadening their sales outlets to fast-growing new channels such as Chinese snack shops, seeking fresh sources of revenue.
According to the industry, Lotte Wellfood (280360) is focusing on Daiso and warehouse-style stores like Traders as key channels to target the domestic market. With growth stagnating in retail channels for ice cream and dried snacks, the strategy is to expand exclusive products in these channels, where store numbers are growing relatively quickly and new customers are flowing in. The company is strengthening channel-tailored product operations by offering Daiso products with adjusted weights to match flat-price policies of 1,000 won or 2,000 won, while presenting large-volume (bulk) products separately at warehouse-style stores.
Lotte Wellfood has set a target of double-digit sales growth in the Daiso channel this year. "Among domestic retail channels, Daiso and warehouse-style stores continue to grow, so internally we are naturally increasing our supply to them," a company official said.
Orion's (271560) Korean unit recorded double-digit sales growth at Daiso last month. Over the same period, e-commerce and convenience store sales each rose only 8%. The expansion of products such as "Dr. You Energy Bar Low-Sugar Mini" into Daiso is seen as a key factor. The retro packaging of Choco Pie and Gorae Bap, introduced at Daiso early this year, drew a strong response, with all prepared stock selling out.
Indeed, Daiso's food and beverage category sales rose about 40% last year compared with the previous year. That is double the 2024 growth rate of 20%. By contrast, according to the Ministry of Trade, Industry and Energy, hypermarket sales continued to decline. Hypermarket sales fell 5.1% year-on-year in May, with food sales in particular dropping 8.1% and dragging down overall results. SSM also declined 8% on weak food sales, marking six consecutive months of negative growth.
In China as well, sales networks are being expanded around emerging distribution channels such as snack shops similar to Korea's Daiso. Snack shops are a discount-store-type distribution channel that sells snacks, instant noodles, and beverages more cheaply than ordinary supermarkets or marts, leveraging a high-volume, low-margin strategy.
Nongshim (004370) is currently boosting sales by entering 42,000 snack shops in China. In 2024, it entered about 14,000 stores of the major snack-shop chain "Wanchen," generating sales of 22.3 million yuan (about 5 billion won). Last year, it signed a contract with another snack-shop chain, "Mingming Henmang," expanding the number of stores it operates in to about 40,000. Last year's sales also rose to 62.65 million yuan. Starting this year, it has entered small and mid-sized snack shops, recording sales of 39.1 million yuan from January to May this year.
Orion also saw its Chinese snack-shop channel sales grow more than 60% last month from a year earlier, far exceeding its e-commerce channel growth rate of 11%. This reflects its full-scale expansion into snack shops such as Mingming Henmang and Wancheng since 2024, along with the successive launch of channel-exclusive products and new products. "Orion plans to continue releasing exclusive products targeting the high-growth snack-shop channel," said Shim Eun-joo, an analyst at Hana Securities. "Store expansion by major players in the snack channel is expected to continue in the second half as well."
The industry sees ample room for growth in these new distribution channels. Although they still account for a limited share of total sales, they are drawing a steeper growth curve than existing networks. In particular, analysts say the influence of channels with price competitiveness is growing further as value-for-money consumption spreads amid high inflation. "The trend of the distribution channel's center of gravity shifting from hypermarkets to emerging channels is becoming clear," an industry official said. "Food companies are also naturally expanding their sales networks around channels with high consumer contact."
