Management reshuffles at Orion and Lotte surprise market insiders
From left, new Orion CEO Lee Seung-joon and new chief of Lotte Group Food & Beverage Business Unit Lee Young-goo / Courtesy of Orion and Lotte Confectionery
By Kim Jae-heun
Management reshuffles at the country's two top confectioners, Orion and Lotte, came as a surprise to market insiders.
Orion performed well this year, but decided to change its top executives, while Lotte changed its CEO, but retained its high-level staff despite lackluster earnings.
“It is understood that two companies may have the same goal of expanding their businesses, but they are using different strategies to achieve this,” an industry source said.
In 2020, Orion beat Lotte to become Korea's top confectioner by sales, achieving 2.22 trillion won in annual revenue, surpassing its rival's 2.07 trillion. This year was no different with Orion bringing in 1.72 trillion won in cumulative sales as of the third quarter compared to Lotte's 1.59 trillion won. The last time Lotte was ahead of Orion was in 2019.
Orion is making bigger profits too. It earned 376.1 billion won last year, which is more than triple Lotte's 112.5 billion won. This year, Orion achieved 271.1 billion won in cumulative operating profit through September, beating Lotte by 16.9 billion won.
Lotte's performance has been disappointing, despite an average 12.2 percent increase in its prices; compared to Orion which has kept the prices tags for its snacks unchanged since 2013.
Nonetheless, Orion decided to change its CEO as well as other senior managers. Lee Seung-joon, the head of research and development, was appointed to the top slot in a move showing its focus on product development.
Lee created recent hit products such as “Kkobuk Chip,” “Dr. You” protein bars and granola snacks.
As the head of Orion Food China, the confectioner appointed Kim Jae-sin, who led the company's R&D center in China.
Meanwhile, Lotte named Lee Young-goo as the new chief of Lotte Group's food and beverage business unit, as it seeks to recapture the No.1 position in the market. Lee led Lotte's beverage and liquor business until 2020.
This year, he also successfully improved the sales of Lotte Chilsung Beverage and reduced the deficit at Lotte GRS, an operator of Lotte Group's fast-food restaurant chain, Lotteria. The company expects Lee to control Lotte Confectionery's overall food business, while creating synergy between the subsidiaries.
“How to respond to market changes after COVID-19 is the main interest of the food industry here. We are all curious to find out how the two different personnel reshuffles will turn out in 2022,” an industry source said.