Korean food companies are accelerating their push into new growth channels such as Daiso and warehouse discount stores, moving beyond traditional retail channels like domestic hypermarkets and super supermarkets (SSM), where growth has slowed. Overseas, they are also focusing on rapidly expanding emerging distribution networks such as China's snack stores, ramping up efforts to diversify sales channels and boost revenue.
According to industry sources Tuesday, Orion's (271560.KS) Korean unit posted double-digit sales growth at Daiso last month. Over the same period, e-commerce and convenience store sales each rose just 8%. The expansion of products such as "Dr. You Energy Bar Low-Sugar Mini" into Daiso stores was seen as a key factor.
Lotte Wellfood (280360.KS) is focusing on warehouse stores such as Traders, along with Daiso, as core channels to target in the domestic market. With growth stagnating in the conventional retail channels for frozen and dry confectionery, the company's strategy is to expand exclusive products in these channels, where store numbers are growing relatively quickly and attracting new customers. The company is strengthening channel-tailored product operations, offering weight-adjusted products to fit Daiso's uniform pricing policy of 1,000 won and 2,000 won, while separately presenting large-volume (bulk) products for warehouse stores.
Lotte Wellfood set a target of double-digit sales growth in the Daiso channel this year. "Among domestic retail channels, Daiso and warehouse stores continue to grow, so internally we are naturally increasing supply," a company official said.
In fact, Daiso's food and beverage category sales rose about 40% last year from a year earlier. That is double the 20% growth rate in 2024. By contrast, according to the Ministry of Trade, Industry and Energy, hypermarket sales have continued to decline. In May, hypermarket sales fell 5.1% year-on-year, with food sales in particular dropping 8.1%, dragging down overall performance. SSMs also fell 8% on weak food category sales, posting negative growth for the sixth consecutive month.
Food companies are also expanding channels overseas. A prime example is China's snack stores. Snack stores are a discount-style distribution channel that sells snacks, ramen, and beverages at lower prices than supermarkets or hypermarkets through a high-volume, low-margin strategy, similar to Korea's Daiso.
Nongshim (004370.KS) is currently boosting sales by entering 42,000 Chinese snack stores. In 2024, it entered about 14,000 stores of the major snack store chain "Wanchen," generating 22.3 million yuan (about 5 billion won) in sales. Last year, it signed a contract with another snack store chain, "Mingming Henmang," expanding its store presence to about 40,000. Sales last year also increased to 62.65 million yuan. Starting this year, it has entered small and mid-sized snack stores, recording 39.1 million yuan in sales from January to May this year.
Orion also saw its Chinese snack store channel sales rise more than 60% last month from a year earlier, far exceeding the e-commerce channel growth rate of 11%. The strategy of expanding into snack stores such as Mingming Henmang and Wanchen since 2024 and successively launching channel-exclusive products and new products is proving effective.
Experts believe that while the new distribution channels food companies are focusing on still account for a small share of total sales, their growth is steeper than other channels, suggesting high potential for additional growth. In particular, with prolonged high inflation raising consumer price sensitivity, analysts say the influence of value-focused distribution channels is growing. "The central axis of distribution channels is shifting from hypermarkets to emerging channels," an industry official said. "Food companies are also strengthening their strategy of moving their sales networks to where consumers gather."
