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| Lotte Confectionery's frozen dessert products / Courtesy of Lotte Confectionery |
By Kim Jae-heun
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| Lotte Confectionery CEO Lee Young-goo / Courtesy of Lotte Group |
Lotte Confectionery and Lotte Foods are considering a merger in order to boost their ice cream businesses' profit by cutting costs in production and retailing.
This comes slightly more than two years after Lotte Confectionery's main rival Binggrae acquired Haitai Icecream in March 2020 to become the No.1 player in the market with a 40.7 percent market share. Binggrae reported the merger deal to the Fair Trade Commission two weeks later and the antitrust watchdog approved it in September the same year.
In the ice cream market, Lotte Confectionery now holds a 28.6 percent share followed by Lotte Foods with 15.5 percent, Haagen-Dazs with 4.4 percent and Hershey's with 2.8 percent. For the two Lotte affiliates, combining their businesses would give them a 44.1 percent market share thereby overtaking Binggrae by a small margin.
Lotte Confectionery, however, said it is too early to confirm a merger deal.
"We are looking into various measures of combining the ice cream business with Lotte Food to create synergy, but nothing has been fixed yet," a Lotte Confectionery official said.
The market is also facing potential risks such as a sharp decrease in the child population and the introduction of new types of desserts that could replace ice cream products.
Lotte made a reshuffle last year to appoint Lee Young-goo as the head of Lotte Group's Food & Beverage business unit. He is charged with improving the affiliates' profitability while the COVID-19 pandemic wears on. Lotte's food and beverage business units include Lotte Chilsung Beverage, Lotte Foods and Lotte Confectionery.
Seeking to combine the ice cream businesses of Lotte Confectionery and Lotte Foods could be an attractive option for Lee as it would be possible to both enhance competitiveness against Binggrae and improve profitability through synergizing the two affiliates.
Some of Lotte Confectionery's steady-sellers are Screw Bar, Watermelon Bar and World Cone while Lotte Food's popular items include Piggy Bar, Jewelry Bar and GooGoo.
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