Lotte Wellfood, Japan's Lotte to Launch Joint Venture; Shin Yu-yeol Named Chairman

Lotte Group will launch a joint venture in Singapore next month combining the food affiliates of its Korean and Japanese operations. The plan aims to strengthen global competitiveness by establishing an entity that oversees the Asian businesses of the two countries' food companies. Shin Yu-yeol, head of the Future Growth Office at Lotte Holdings, will serve as chairman of the joint venture's board, leading the overseas business strategy of both nations' food companies.

According to Lotte Group on Tuesday, Lotte Wellfood and Japan's Lotte have completed board approvals from both companies and obtained merger review approvals from relevant countries, with the official launch set for next month. Shin Yu-yeol, head of the Future Growth Office at Lotte Holdings, will serve as chairman of the joint venture's board, leading synergy creation and overseas business strategy between the two countries' food companies. This marks the first time Shin has served as a board chairman at Lotte Group or its affiliates.

Earlier, Lotte Chairman Shin Dong-bin regularly chaired 'One Lotte Food Strategy Meetings,' emphasizing expanded synergy between the two companies and strengthened global competitiveness. With growth slowing in the Korean and Japanese domestic markets, the strategy is to develop overseas business as a key growth driver. Lotte's 'One Lotte Strategy' was also pursued in the hotel division in September last year.

Lotte Wellfood and Japan's Lotte have expanded the scope of their collaboration through securing raw materials, joint marketing, and cross-selling of products. However, there have been concerns that inefficiencies arose as some overseas business areas overlapped. While Japan's Lotte had targeted Southeast Asian markets such as Thailand and Lotte Wellfood had focused on markets such as India, the companies are expected to reduce overlapping elements and unify their overseas business strategy going forward.

Specifically, the new entity will oversee the Asian businesses of the Korean and Japanese Lotte food companies and integrate management and decision-making systems that had been divided by business. It plans to link the two companies' production, sales, and logistics infrastructure to improve operational efficiency and accelerate its push into global markets. It will also pursue the development of global mega brands, efficiency in production and sales processes including raw material purchasing, logistics, and marketing, the launch of new products through joint research and development, and entry into new markets with high growth potential.

The joint venture plans to first focus on developing Pepero, Xylitol, and Choco Pie into global mega brands. It will jointly pursue product development and marketing tailored to consumer characteristics in each country.

"With the establishment of this joint venture, we have brought together the Asian business capabilities of Korean and Japanese Lotte food companies," a Lotte official said. "We will combine the strengths of both companies to jointly develop mega brands and pioneer new markets to enhance global competitiveness."