Baby Food in South Korea

2021 DEVELOPMENTS

Uptick for baby food in 2021, but not even across all categories

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.

Lotte Food is growing its presence via product innovation despite mounting threats from imported brands

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.

E-commerce outperforms offline sales channels

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.

PROSPECTS AND OPPORTUNITIES

Changes likely in traditional competitive landscape due to external and internal factors

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.

Despite mounting challenges from imports domestic brands grow their presence

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 continues to grow, backed by diversified options of baby meals

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.