Big ice cream is consolidatingThe gap appears to be narrowing between the country’s top ice cream makers, with Lotte and Binggrae slated to each occupy about 40 percent of the domestic market.
Binggrae, the ice cream company best known for the popular Melona bar, announced Tuesday it is acquiring the country’s fourth-largest ice cream seller, Haitai Icecream.
Binggrae said it will buy the company for 140 billion won ($125 million). The combined companies will together occupy more than 40 percent of the ice cream market.
Currently the country’s second largest ice cream company, Binggrae’s sales last year accounted for 26.7 percent of the domestic market, according to data published by Nielsen Korea. A subsidiary of Haitai Confectionery & Foods, Haitai Icecream has a 14 percent market share and reported 180 billion won in sales last year.
Lotte affiliates account for much of the remaining market share. No. 1 ice cream company Lotte Confectionery had 28.6 percent of domestic sales last year, and Lotte Foods accounted for 15.5 percent.
Binggrae said its goal is to introduce Haitai’s ice cream products to a wider market, using its existing distribution channels. Haitai’s ice cream has proven popular in Korea, with products including its chestnut-flavored Babambar and Walnut Maroo.
Binggrae exports ice creams to 20 countries, with overseas sales totaling 33 billion won last year. The United States was the top importer, accounting for 30 percent of the total, while Vietnam bought up 18 percent.
“Considering that young people are the primary consumers of ice cream, the ice cream market hasn’t been in its best state due to the continuous drop in birth rates [in Korea],” IBK Securities analyst Kim Tae-hyun said. “The rise in consumption of ice cream substitutes like shaved ice is another factor that is disturbing the ice cream market.”
The ice cream market in Korea has seen a steady drop in recent years, from 2.03 trillion won in 2015 to 1.62 trillion won last year, according to market research firm Euromonitor International.
A spokesperson for Haitai said the deal will allow the smaller company to invest in equipment and build a new plant, while paying off its debt. Haitai last year recorded a net loss of 34.68 billion won.
Haitai Confectionery & Foods separated its ice cream business and established its Haitai Icecream subsidiary in January.
BY JIN MIN-JI [email@example.com]