Sector Trends Analysis – Snacks in South Korea

Market overview

The snack market in South Korea is experiencing consistent growth across most categories. Over the 2018 to 2022 period, snacks saw 1.0% growth annually to a market value of US$6.4 billion. Ice cream experienced the highest growth at 3.3% annually. Over 2023 to 2027, Sweet Biscuits, Snack Bars, and Fruit Snacks is projected to grow the strongest by 4.3% to 1.4 billion in 2027.

Confectionery

Confectionary retail sales declined by 3.3% annually over the 2018 to 2022 period, with gum and sugar confectionary sales falling the most. Sales of confectionery subcategories are expected to rebound over the next five years by 3.3%. Within chocolate confectionery, sales of seasonal chocolate is forecast to grow the most by 4.5% annually over the 2023 to 2027 period. Sales of sugar confectionery is expected to grow 4.3% and gum by 3.9% annually.

According to Euromonitor, chocolate confectionery is set to return to slight retail sales growth; however, recovery varies at the category level. Types of chocolate generally used for on-the-go consumption stagnated during the pandemic period due to the restrictions on movement and the mask mandate, while those for home consumption increased. following the lifting of the mask mandate, consumption patterns are returning to pre-pandemic habits. Retail value sales of countlines and chocolate pouches and bags are expected to recover over 2023 to 2027, whilst on the other hand, tablets are not expected to rebound, despite the end of the pandemic. A contraction of the celebration culture as a result of the pandemic had a negative impact on sales of chocolate confectionery on Valentine's Day, which also saw a growing number of alternative gift options other than chocolate, negatively impacting sales of seasonal chocolate.

Gum recorded double-digit sales declines over 2018 to 2022 with the mask mandate and restrictions on outdoor activities during the COVID-19 outbreak being the main factors. Despite the end of the indoor and outdoor mask mandates in 2022, many South Koreans still wear their masks outside. Retail gum sales are expected to rebound over 2023 to 2027, however, growth is expected to be short-lived amidst additional concerns that the repetitive chewing of gum can have a negative impact on the jawline. In addition, due to growing concerns that repetitive chewing of gum can negatively affect the jawline, the demand for replacement products has been increasing, especially amongst those in their 20s and 30s, who tend to be more concerned about such a negative impact.

Sugar confectionery saw sales fall by 1.7% over the 2018 to 2022 period with most subcategories registering sales declines. South Koreans tend to seek fruit flavours in mints, even though this makes the freshness sensation less strong, with medicated confectionery likely to follow the same trend. While the dominant brand in the category from Lotte Confectionery, Mok Candy, used to be famous for its freshness from ingredients of quince and herb extract, flavour is now considered the new sales driver, rather than the level of freshness. Another company, Orion, also innovated its best-selling jellies brand My Gummy. The product is the shape of a grape with a different texture on the outside and inside the jelly, by filling the inside with a soft texture jelly, like grape juice, to simulate the taste and texture of real grape flesh.

Ice cream

Ice cream in South Korea has experienced steady growth over the past five years by 3.3% annually over the 2018 to 2022 period. Impulse ice cream is the largest subcategory, however, the sales of take-home ice cream increased fastest by 8.2% annually over the 2018 to 2022 period. Ice cream consumption is expected to stagnate over 2023 to 2027. As ice cream sales are seasonal in South Korea, with high reliance on the summer months, the return of international travel for summer holidays is likely to weaken domestic sales of ice cream, as relatively fewer people will stay in the country. However, over the mid or long term, other different negative factors are likely to play in the ice cream category. The main consumer group for ice cream, children, continues to see a decline due to the country's low birth rate, while the elderly population is constantly increasing. The emergence of new dessert snacks as an alternative to ice cream is likely to further threaten sales of ice cream. In this regard, the industry sees declines in ice cream as a natural phenomenon, with a lack of new drivers that could appeal to adult consumers.

Savoury snacks

Sales of savoury snacks in South Korea were flat over the 2018 to 2022 period with the strongest sales growth in pretzels, popcorn, and meat snacks. Sales growth is expected to grow 2.5% annually over 2023 to 2027, as inflation brings price pressure over the next few years and may bring home consumption back over 2023 to 2027, boosting sales of savoury snacks.

While meat jerkies were originally positioned as healthy snacks in South Korea, due to their high protein content, consumption occasions with alcoholic beverages such as beer or wine are growing. A series of innovations have been launched by domestic brands. Flavour innovation has been the most common approach. The leading beef jerky brand, Ziller from Sempio Foods, is a pioneer in flavoured jerkies, with the development of unprecedented flavour combinations in packaged jerky products, which include butter-garlic, buttercorn and butter-soy sauce, apart from the spicy taste that is already popular across the category. Meanwhile, with the growing demand for vegetarian or vegan diets, a vegan jerky was also released by Unlimited, a food tech company that leads alternative meats domestically. The product not just embodies a rich taste and chewy texture similar to actual meat, and has a high protein content, but also has a clean label, as it does not contain cholesterol or trans-fats, and does not use artificial colourings.

Sweet biscuits, snack bars and fruit snacks

The total retail sales of this category grew 2.3% annually to reach US$1.1 billion in 2022 and is expected to continue growing steadily by 4.3% annually from 2022 to 2027. During the pandemic, the consumption of these products mainly took place at home due to pandemic related restrictions. With the lifting of these restrictions, people are returning to their pre-pandemic lifestyles and consumption is moving to schools, universities and workplaces.

Within this category, sweet biscuits is largest with projected sales of US$976.5 million in 2027 growing 3.8% annually. Protein/energy bars are forecast to have the highest growth by 10.8%, followed by snack bars with 7.6%. Growth of this category has been driven by consumers' increasing demand for healthier snacking options as the pandemic highlighted the importance of general preventative health, the need for regular exercise and protein intake. Impulse purchases have also started to rebound in convenience stores. However, on-the-go consumption is still limited as South Koreans are still reluctant to take their masks off outside.

Retail channels

In terms of distribution channels, ecommerce showed the highest growth during the pandemic, over the 2018 to 2022 period, and is expected to continue growing at the expense of retail offline channels.

From 2018 to 2022, offline channels, which accounted for 91.4% of total sales in 2022, experienced an annual decline of 0.1% in sales, while ecommerce saw a 15.1% annual increase in sales. The market share of non-grocery retailers, such as food/drink/tobacco specialists and health and beauty specialists, also grew steadily by 74.7% and 21.8% annually over 2018 to 2022.

New product launches

A total of 3,668 new snack products were introduced over the 2018 to 2022 period. Top claims were convenience and nutritional focused, such as "Microwavable", "Convenient packaging", "Wholegrain", and "High/added protein", which suggests that consumers still prefer convenience but with more health-conscious snacks. Top flavours included plain and roasted/toasted, followed by cheese, shrimp, and kimchi.

New product examples

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Resources

• Euromonitor International:
  • Snacks in South Korea (July 2022)
  • Savoury snacks in South Korea (July 2022)
  • Chocolate confectionary in South Korea (July 2022)
  • Gum in South Korea (July 2022)
  • Ice cream in South Korea (July 2022)
  • Sugar confectionary in South Korea (July 2022)
  • Sweet biscuits, snack bars, and fruit snacks in South Korea (July 2022)
• Mintel Global New Products Database, 2023

Sector Trends Analysis – Snacks in South Korea
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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