While the COVID-19 pandemic benefited the sales of many packaged food items, it forced the baby food industry to sink into a deep stagnation in South Korea. A modest recovery is expected in 2021, for baby food as a whole, although all the categories are still in stagnation apart from prepared baby food.
The milk formula category has been on a downward trend in South Korea over recent years due to several changes in South Korea, such as delayed marriage and falling birth rates. Moreover, amid mounting competition from imported brands, domestic brands have been losing their reputation in the marketplace.
Online purchases were already significant in baby food before the COVID-19 outbreak thanks to its benefit in bulk purchases, especially milk formula where this channel accounts for nearly half of total sales. However, the pandemic further strengthened the growth of e-commerce by upgrading its share in 2021.
The competitive landscape in milk formula will likely be diversified towards the end of the forecast period. Traditionally, South Korea’s milk formula category was led by two domestic leading players: Maeil Dairies and Namyang Dairy Products with nearly three-quarters of the market mid review period.
When it comes to domestic brands, Lotte Food is increasing its presence in the market, despite mounting threats from imported brands, thanks to its ongoing efforts to uncover and appeal to demand in this niche market, especially as the company was a late starter in South Korea’s milk formula category. Even during the pandemic period when the top two players (Maeil Dairies and Namyang Dairy Products) experienced a plummeting in their category shares, Lotte Food successfully defended against drastic decline and instead increased its brand share considerably, which indicates the company’s product innovation is on the right track.
Prepared baby food is expected to see continued sales growth, despite a falling birth rate, in the post-COVID-19 era, with value-added offerings in line with a shift in lifestyles as the driving force behind this. When lifestyles return to normal, demand for prepared baby food will resume its original growth trajectory due to a shortage of cooking time, especially for young parents.
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Understand the latest market trends and future growth opportunities for the Baby Food industry in South Korea with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Baby Food research and analysis database.
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