Lotte, Emart expand private brand product lines as food prices soar

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Lotte, Emart expand private brand product lines as food prices soar

Published: 14 Aug. 2024, 17:51 Updated: 14 Aug. 2024, 19:15

Lotte Mart CEO Kang Sung-hyun, left, and French Ambassador to Korea Philippe Bertoux pose for a photo at Lotte Mart's French food sales event at the Zettaplex branch in Jamsil, southern Seoul, on July 11. [NEWS1]

Korean retailers are expanding their private brand (PB) product lines in response to global economic downturn and soaring food prices.

Retail giant Lotte Mart, for example, is ramping up its PB portfolio in partnership with European Marketing Distribution (EMD), Europe's largest retail alliance. Lotte joined the association in July, in a first for a Korean retailer, according to sources, after its codeveloped PB lineup of two chocolate products was received well in the first seven months of 2024.

EMD, founded in Switzerland in 1989, is Europe's largest retail. Fourteen major European retailers are regular members, including Germany's MaKant Europe GmbH & Co. KG, Spain's Euromadi, Italy's ESD Italia and France's Auchan Retail.

In January, Lotte Mart was able to introduce French chocolates at a price 30% lower than the average for comparable goods. The product became a hit, selling approximately 300,000 units in the first seven months and becoming the best-selling flat solid chocolate bar in the nation.

Building on this success, Lotte Mart is currently working with a Portuguese oil and fat products manufacturer, who is also an EMD member, to offer affordable olive oil and grape seed oil. The retailer is also exploring developing jelly products in partnership with a major German confectioner. “European food products, especially dairy, oils and confectionery, are highly competitive in terms of price,” said a Lotte Mart official. “We plan to expand our product range to include dairy products, frozen foods and meal replacements.”

Another retail giant, Emart, cut the prices of its PB food brand, Peacock, by as much as 40% last month. The price reductions were applied to 300 of the most popular products out of a total of 700. Supermarket chain Homeplus is focusing on strengthening its cost-effective PB products tailored to home-cooking consumers. The retailer has revamped its private label ready-to-eat brand, “Homeplus Home Meal” and is adding a series of new products to its lineup. A notable example is a large 1-kilogram (2.2-pound) jjajangmyeon (black bean noodle) product priced at 9,990 won ($7.37). “We are collaborating with expert researchers to use carefully selected ingredients and offer products at affordable prices to alleviate the burden on consumers,” said a Homeplus spokesperson.

A customer poses for a photo holding CU's affordable private brand products including HEYROO Tofu Deuktem. [CU]

Convenience stores are also intensifying competition in the low-priced PB product market. Convenience store chain CU has announced it will launch a series of new products under its “Deuktem (bang for your buck)” line starting this month. A prime example is the “HEYROO Tofu Deuktem,” priced at 1,000 won. The 300-gram (10.6-ounce) block of tofu is 45 percent cheaper than competitors.

GS25 has also been introducing its private label “Real Price” for price-sensitive products since the beginning of the year. The company currently offers 22 products under this brand and plans to add 15 to 20 more by the end of this year. Real Price products are typically 20 to 30 percent cheaper than similar products.

7-Eleven operates more than 2,000 PB products under the “Seven Select” brand and aims to further diversify its offerings. Last month, the company collaborated with Otoki, previously known as Ottogi, to launch “Seven Select Yeolpadak Bokkeummyeon” (spicy onion chicken stir-fried noodles). The company plans to continue collaborating with various brands to add new PB products to its line.

“As food prices rise and single-person households increase, the demand for affordable products will continue to swell,” said a convenience store industry official. “Strengthening the competitiveness of food PB products has become a major issue for the industry.”

BY JANG JOO-YOUNG [yoon.seungjin@joongang.co.kr]