Binggrae to achieve 1 tril. won revenue this year

Binggrae's headquarter in Seoul / Courtesy of Binggrae

By Kim Jae-heun

The country's No.2 snack maker Binggrae is likely to achieve a 1 trillion won sales breakthrough this year after acquiring Haitai Icecream, the No.4 player in the market.

Binggrae's revenue has stagnated in the 800 billion won range for almost eight years since it first recorded 790 billion in 2012.

The confectionery titan has been satisfying in its comfort zone with steady sellers like “Together,” “Melona” and “B.B.BIG” but it fell short of the 13-digits threshold. It did made efforts to establish a strategic alliance with overseas companies to import popular frozen treats and develop a premium line called “Cled'or,” but they were not enough.

However, Binggrae's acquisition of Haitai Icecream is not only expected to give them over 1 trillion revenue but also put them in the top position according to market share.

Last year, Binggrae and Haitai Icecream's sales recorded 878.3 billion won and 150.7 billion won, respectively. Simply adding the two numbers equals to 1.29 trillion won.

Haitai Icecream's revenue is declining slightly at the moment but it is managing to stay in the 160 billion won range and it does not look like it will affect Binggrae from achieving its craved short-term goal.

Binggrae is currently behind Lotte Confectionery in the market share with 26.7 percent. Haitai Icecream takes 14 percent of the market share and if it combines with that of Binggrae, they can secure 41 percent to rise as the top player in the market.

Binggrae has only paid 10 percent of the 140 billion won full purchase price for Haitai Icecream to acquire 100 percent of the company. The remaining amount will be paid after the Korea Fair Trade Commission's approval of the acquisition.

Binggrae's popular ice cream product line Together / Courtesy of Binggrae

However, danger lies over weakening profitability as a result of acquiring the money-losing firm.

Binggrae's operating profit has declined from 45.8 billion won to 42.8 billion and its rate dropped down by 1 percent to record 4.2 percent. But this is not a big concern for the confectionery titan when it stabilizes operation and personnel of Binggrae and Haitai Icecream facilities and its business profitability will improve naturally.

“Ice cream is our main business and we took over Haitai Icecream to beef up our portfolio in the sector. There are concerns over acquiring a firm running a deficit but we will continue to focus on improving profitability by managing our business efficiently,” a Binggrae official said.

The confectionery company also gave a positive outlook on exports of its ice cream items.

“We export the most ice cream products among domestic manufacturers. There are many good ice creams from Haitai but they were not exported well because of the company's lack of a distribution system in oversea. If they can sell on our network, we can achieve good performance abroad together,” a Binggrae official said.