Lotte Tycoon Invades Siblings’ Realms
By Kim Tae-gyu
Staff Reporter
South Korean conglomerates, dubbed chaebol, are famous for relentlessly extending business horizons. The Lotte Group even reaches into the realms of its tycoon's siblings and their spouses.
The country's fifth-largest chaebol, founded by Chairman Shin Kyuk-ho, established Lotte JTB midway through 2007 together with Japan's leading tourism group, the Japan Tourism Bureau (JTB).
But an entity using the group's title, Lotte Tour, already existed, spearheaded by Shin's brother-in-law, Kim Ki-byung. The company was not a subsidiary of the group but had used Lotte's title and logo since 1973.
The Lotte Group wasted no time in bringing the case to court, asking for Lotte Tour to give up the title and logo and only partially won; Lotte Tour was ordered to forfeit the logo in 2008 but was allowed to employ the title.
Early last year, Lotte acquired Doosan's spirit-making division to wade into the soju-making industry where Shin's youngest brother, Joon-ho, managed another soju producer Daesun Distillery.
Joon-ho is the chairman of dairy firm Purmil, formerly Lotte Milk affiliated with the Lotte Group. The title change to Purmil and the independence from Lotte completed in January 2009, the month when Lotte took over Doosan's spirit-producing unit.
Daesun sells briskly in Busan, holding the lion's share in the area's market for soju, a popular distilled beverage native to Korea, while Lotte's newly-acquired brand was a no-name there.
But Lotte is striving to raise its market share to double digits there based on its strong brand power built thanks to the widely-loved baseball team, the Lotte Giants. This will pose quite a challenge for Daesun and Joon-ho.
Joon-ho now faces prosecution on charges of wrongdoings when he owned Daesun. Although he sold off Daesun to a private equity fund, he practically controls the firm as he has a stake in the fund.
The latest turf war took place in the market for popular instant noodles, dubbed ramyeon.
The market is currently dominated by Nongshim, formerly the Lotte Industrial Company, established by Lotte tycoon Shin's younger brother Shin Choon-ho.
Choon-ho's relationship with his older brother became estranged for some reason in the 1960s and the former changed the company name to Nongshim in 1978 after a ramyeon brand with the same title reaped huge success.
Nongshim has ruled the market thereafter without strong challenges but Lotte butted in early last year when its subsidiary Lotte Mart launched a private-brand ramyeon in alliance with a local maker.
The product had sales of around half a million last year at Lotte Mart, the sixth-highest figure at the discount chain.
Late last month, Lotte Mart released another private-brand, Lotte Ramyeon, whose sales at Lotte Mart reached 7,200 during the first 11 days of February. Only perennial market leader, Shin Ramyeon of Nongshim, sold more over the same period ― 146,000.
``We aim to take the No. 2 spot in the ramyeon market this year at our distribution channels,'' a Lotte Mart spokesman said.