Food firms, cosmetics markers rush to expand in India

Indians in Gujarat enjoy Havmor, Lotte Wellfood's ice cream brand in India, in this 2021 file photo. Courtesy of Lotte Wellfood

By Kim Jae-heun

Korean food companies and cosmetics markers are rushing to enter and expand their presence in India, riding on their success in North America and Southeast Asia, according to industry officials, Monday.

India has emerged recently as a land of opportunity for a wide range of Korean businesses, as many have exited China in recent years amid the deteriorating Korea-China relations, they said. The South Asian nation is the world's second-most-populous country with 1.42 billion people as of last year, close to China's 1.425 billion. Its economy grew 6.3 percent in 2022, higher than China's 5 percent, according to the World Bank.

Seizing India's huge growth potential, Lotte Wellfood entered the Indian market in 2004 by acquiring Parrys Confectionery, the country's largest confectionery firm selling candy and chocolate products nationwide, for 22.4 billion won ($17.14 million). Lotte increased its production facilities gradually in India and now has five ― three for confectionery products and two for ice cream.

“When we first entered India, we had no information about the local market. We just went in as part of our general global business expansion plan. We counted on the country's large population and its economic growth potential. Now, our sales coming from India account for 31 percent of our overall global business,” a Lotte Wellfood official said.

Lotte Wellfood's Choco Pie sold in India / Courtesy of Lotte Wellfood

Lotte Wellfood's success in India can be attributed to its best-selling Choco Pie product, which accounts for 90 percent of its market share there. It sometimes generates annual sales of 40 billion won for Lotte.

Lotte's localization strategy adopted for Choco Pie ― changing animal oil and fat used in the product to vegetable-based alternatives ― played a crucial role.

Lotte is also selling ice cream under the local brand Havmor, which it acquired in 2017. In January, the company decided to invest about 70 billion won to build a new ice cream production plant in Pune City, Maharashtra, over the next five years.

The confectionery company's ice cream business has already shown year-on-year sales growth of 55 percent between 2021 and 2022, going from 99.4 billion won in sales to 154.4 billion won.

Orion's Choco Pie plant in Rajasthan, India / Courtesy of Orion

Meanwhile, Orion started its confectionery business in India quite recently. In February 2021, the company built its first production facility for the same Choco Pie products in Rajasthan and started selling them the following month. In December the same year, Orion launched a new strawberry flavor for Choco Pie targeting local consumers.

“We just started our confectionery business in India, although we began sales there in 2021. Considering how saturated the Korean market is, it was necessary to expand our business globally. India, which is home to a massive population, is one of the global markets we are targeting along with China, Russia and Vietnam,” an Orion official said. “As far as I know, the size of the Indian confectionery market reaches 17 trillion won.”

AmorePacific, Korea's largest cosmetics firm, chose India, North America and Europe to cope with its current business difficulties with China.

“India is a very important market for us. We are already seeing some notable achievements in North American and European markets and the Indian market is our next step,” an AmorePacific official said. “Indians have great interest in natural cosmetic products. Our skincare brand Laneige showed quite a good performance in the last three years with growth averaging 77 percent based on Lip Sleeping Mask, and Water Bank products.”

AmorePacific's Water Bank product sold in India / Courtesy of AmorePacific

According to global research firm Statista, the size of the Indian cosmetics market last year was $26.3 billion, the fourth-largest in the world.

AmorePacific is expanding its business in India focusing on e-commerce platforms and multi-brand shops. It formed a partnership with NYKKA, India's largest e-commerce cosmetics firm, to promote Korean beauty products.

The cosmetics maker currently has four brands selling their products in India ― Innisfree, Laneige, Etude House and Sulwhasoo.

“Right now, we are targeting all groups from teenagers to middle-aged consumers,” the company official said. “Our short-term goal is to secure a considerable market share in India and expand gradually. India is a market with big growth potential.”