As Samdasoo struggles, richer retailers rejoice

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As Samdasoo struggles, richer retailers rejoice

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Samdasoo

As Jeju Samdasoo, the nation’s best-selling brand of bottled water, has been short on supply, sales of private label (PL) rivals made by retailers are soaring.

The retail industry acknowledged yesterday that large discount chains’ cheaper alternatives are benefitting from the bottleneck at Jeju Samdasoo, which had to stop production at some of its facilities as it moves to expand them.

Lotte Mart said yesterday that demand for its Choice L Saemmool bottled water has jumped significantly. The product, which is 40 percent cheaper than Samdasoo, saw sales surge 34.5 percent last month from a year earlier.

Samdasoo owned 54.4 percent of its market segment at Lotte Mart in September 2011 but this dropped to 33.5 percent last month.

Private labels, especially bottled water, instant noodles and coffee, rarely dominate their market categories in Korea due to strong brand loyalty to more established rivals.

However, PL bottled water tipped the scales this month at Lotte Mart.

At E-Mart, the nation’s largest discount chain, Samdasoo controlled 42.2 percent of bottled water sales in September 2011, but this dropped to 18.6 percent last month. The store’s own Saemmool Blue saw sales climb from 5.2 percent to 8.1 percent over the same period.

Samdasoo said it is also running low on inventory for sale on its home turf of Jeju, as well as in other parts of the country.

Nongshim, one of its distributors, said it is working to fix the supply shortage, which was partly caused by surging demand in the wake of a nationwide hot spell in September.

However, large discount chains and retailers have increased production of their own rival products and are promoting them aggressively to gain from Samdasoo’s travails.

By Kim Jung-yoon [kjy@joongang.co.kr]

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