COVID-19 pushing Orion to target in China, Vietnam

Orion Vice Chairman Huh In-cheol introduces the company's mineral water Jeju Yongamsu during a press conference in Gangnam, Seoul, last November. / Courtesy of Orion

By Kim Jae-heun

Orion is aiming to increase its presence in China and Vietnam by launching its signature Jeju Yongamsu mineral water as the confectionary company is seeing faltering sales in the local market.

The firm has been hit hard by the spread of COVID-19 as stores around the country have suspended operations or closed amid a shift toward online shopping by customers. Additionally, the government ban on the spending of financial relief payments at conglomerates' offline stores could have contributed to a weak demand for Orion products.

The firm decided to focus on Asia after seeing a respective increase of 11 percent and 13 percent in revenue and operating profit there years-on-year. In China, Orion increased its market share to 18.5 percent, earning 88.3 billion won in sales, last year.

“Retail businesses in China and Vietnam are continuing to grow faster-than-expected with Orion seeing an increased profit margin in these countries,” said Lee Kyung-shin, a researcher at Hi Investment & Securities. “The growth of Orion in international markets has been driven by the popularity of its snacks.”

Jeju Yongamsu is considered a “flagship water product” that could help it increase its market share in the sector as initial responses in Vietnam and China have been positive, company officials said. In China, Orion is targeting customers in their 20s and 30s who live in affluent cities such as Shanghai, Beijing and Guangzhou. It recently launched the bottled water at major convenience stores and JD.com, one of the two largest B2C online retailers in China.

“A growing number of Chinese consumers are paying more attention to health-related issues. This trend is helping us a lot,” an official said.

In Vietnam, Orion's Jeju Yongamsu has been selling well in cities with a high Korean population. Ho Chi Minh and Hanoi are the South Korean company's target markets.

Jeju Yongamsu is made by combining ingredients that can help human health. Not only it utilized state-of-the-art facilities and new technologies from Germany and Switzerland to improve the product power, but its researchers also participated in the mineral blending to make the best taste of water.

“We are going to print Orion Jeju Yongamsu in Korean on the label on the water bottle to let customers know it is a Korean product,” an Orion official said. “We will firmly establish a premium image from Jeju Island's excellent water resources and continue to expand overseas exports to make Orion's Jeju Yongamsu one of Korea's best.”