By Kim Jae-heun

Korea is seeing the world's worst total fertility rate of 0.8 percent and its life expectancy is increasing. Local confectionery companies and retailers are pushing into overseas market ― particularly of China, Indian, Russia and the U.S. ― to prepare for the future in these areas with high populations.

Confectionery firms are mostly driven to expand their sales in foreign countries with dense populations of children and adolescents, the main consumers of snack foods. India is an attractive market with the second-largest population in the world. Its confectionery market value reaches nearly 17 trillion won ($14.3 billion).

Orion, the country's No.1 snack food manufacturer, established a production facility in Rajasthan, India, in February, as part of its plan to target cities with high incomes. Thanks to its strategy of expanding global markets in China, India and the United States to increase its overseas sales to 65 percent of total sales, the confectionery firm beat Lotte Confectionery to become the No.1 player. As of the third quarter of this year, Orion's accumulated sales showed 1.72 trillion won and its operating profit rate recorded 18.3 percent, the highest among food and beverage firms here.

Orion's sales in Russia reached 105 billion won ($8.83 million) as of last month, which is up by 29.6 percent. It was the first time for the confectionery firm's revenue there to rise above 100 billion won.

Orion has introduced 11 types of Choco Pie in Russia since 2019 and built two factories there to aggressively target locals who consume hot beverages and biscuit-type snacks together.

"Russia has the world's ninth-largest population at 145 million. In a situation where domestic consumption is not increasing, it is important to expand business in countries like Russia," an Orion official said.

Lotte Confectionery has also jumped into an overseas market expansion scheme. It erected a large-scale production factory for its Choco Pie product in the Indian cities of Chennai and Delhi, which helped boost snack sales to 40 billion ($3.36 million) last year alone.

Considering that more than 30 percent of India's population consists of vegetarians, due to the influence of Hinduism, the confectionery firm uses vegetable ingredients instead of eggs to make the marshmallow filling of its Choco Pie products made there.

"The company's future is at stake. The success or failure of its business abroad is key as the local confectionery market is shrinking by 2 percent every year, affected by population aging in the country," a Lotte Confectionery official said.

SPC Group, an operator of the market-leading franchise brand Paris Baguette, opened its first bakery chain there last month in the central commercial district of Sudirman, Jakarta's largest downtown area in Indonesia. Indonesia is home to the world's fourth-largest population.

On Dec. 15, SPC Group also opened a Paris Baguette store in Shenyang of Liaoning Province, China. In the world's most densely populated country, SPC Group operates nearly 300 stores alone.

"We are already running 430 stores around the world, mainly in the United States, China and Indonesia. In the upcoming year, we plan to invest more in the overseas market," an SPC Group official said.

Dairy firms are also facing pressure. Local dairy manufacturer Maeil Dairies acquired an Australian powder factory earlier this year and established a subsidiary there to cope with the domestic milk powder market that is shrinking by 20 percent annually. Maeil Dairies plans to use this chance to target the Australian and Asian markets.

The dairy firm is also struggling to enter the Chinese powdered milk market, which is 50 times bigger than Korea's. In 2018, Maeil Dairies founded a local subsidiary in China to launch three company brands there.

Markets with young population are key

Local retailers are focusing on countries that have a lot of young consumers because even if the markets in those locations are small now, there is a high possibility for future growth.

Vietnam is the most attractive for local firms for this reason. Vietnam's population has an average age of 32.5 and more than half of its population are in their 20s and 30s.

Korea's top convenience store brand GS25 opened its first franchise store run by a local owner. It's an accomplishment of GS Retail, coming three years after the company entered the Vietnamese market in collaboration with local firm SonKim Land in 2018. GS Retail has plans to expand the number of its convenience stores to 700 by 2027.

The country's largest retailer E-mart, owned by Shinsegae, and LF are striving to establish a presence in the Mongolian market. Mongolia has a population of about 3.29 million, but 70 percent of the people are under 40 years old.

E-mart opened its third supermarket store in partnership with a local firm and its sales there rose by 47 percent year-on-year.

LF launched its casual clothing brand "Hazzys" in October to sell its products online through Mongolia's largest e-commerce platform Shoppy.