The continued COVID-19 situation has led to enormous changes, not only in the retail environment, but also in shoppers’ behaviours and attitudes toward brands. Brands must use this opportunity wisely, taking this time to check their brands from various perspectives – shoppers’ behaviour, distribution environments, and products, as well as key communication messages – and act accordingly. By dealing with these changes in the market, we can expect to see better performance during these difficult times.
South Korea
The FMCG market in Korea has experienced a number of changes in the past year, including the rapid growth of ecommerce platforms, and an increase in the variety of pack sizes available. In terms of categories, COVID-19 had the greatest impact on food and beverages, as shoppers changed their out-of-home consumption to in-home consumption.
Accelerated by the pandemic, ecommerce is continuing to grow, with platforms offering wider ranges of products as well as promotions across various pack sizes. Next day shipping and rapid delivery have provided further ways for platforms to differentiate themselves.
Right now, Korea’s major offline hypermarkets are pushing their online platforms, targeting high intensity ecommerce shoppers in particular as they tend to purchase from hypermarkets’ online stores more than medium and low intensity users. This trend is most evident in the food and beverage sector.
Ottogi – Korea’s most chosen brand – has maintained its stronghold in the FMCG market. The main drivers of its rise in Consumer Reach Points (CRP) over the year have been its expansion into Home Meal Replacement (HMR) products, combined with an increase in purchase frequency.
Expanding their consumer base was the key growth driver for the Top 10 risers, with lots of new buyers added throughout the year.
With the exception of Chungjungone, the brands that grew fastest sit outside of the overall Top 10 most chosen brands, with the majority outside the Top 20. This is mainly due to the impact of COVID-19 on the increase in in-home consumption. All of the top risers are food and beverage brands, again reflecting the behavioural changes driven by the pandemic, which led shoppers to cook and snack more at home.
Notably, all of the brands within the Top 50 that achieved high CRP growth were conveniently packaged food and drinks, which gave shoppers easy access to the brand as well as an easy way to consume the products.
It is no surprise that food and beverage brands have maintained their position at the top of the ranking of the most chosen FMCG brands in Korea, thanks to the high frequency of usage which significantly increased their CRP over the year.
Marketing activities and strong advertising campaigns also supported brands’ non-stop efforts to drive high brand awareness and purchasing.
Seoul Milk, the well-known local dairy manufacturer, is still being chosen more times than any other brand in the dairy sector. It markets its products differently, emphasising that its milk is ‘Me100%’ milk, to convey its premium quality to shoppers. Consumer spend has increased as a result of this campaign.
Coca-Cola’s shoppers also significantly increased their spend, following aggressive marketing that conveyed a hopeful message around delivering a thrilling taste, together with the offering of free samples and the chance to win prizes. The company’s products also successfully matched changing trends in consumer needs.
Kleenex, too, increased its shoppers’ spend by focusing on the launch of new products, including premium quality cleaning and eco-friendly products.
All the major health and beauty brands recorded negative growth in 2020 due to COVID-19. LG Body Care suffered the least, which enabled it to take first place as the most chosen health and beauty brand in Korea, and the no.51 spot in the overall FMCG ranking. This was due to increased spend, especially in the handwash and bodywash segments as cleanliness became a consumer priority.
Coca-Cola has overtaken Maxim to become Korea’s most chosen beverage brand, with a significant increase in shopper spend. In contrast, Maxim’s spend decreased compared with 2019, which meant that the brand lost its first place in the ranking. A notable new entrant to the Top 5 is Jeju Samdasoo, which attracted the attention of shoppers with lighter, low sugar drinks and products that emphasise environmentally friendly packaging. Consumers’ need to relieve stress increased during the pandemic, and at the same time they wanted drinks that were healthy. As a result, zero or low-calorie beverages gained in popularity.
Maeil has entered the dairy Top 5 for the first time, having increased its shopper base as well as spend. Its success is due to the release of nutritious new products such as soy milk. Seoul Milk remains in first position owing to a marketing campaign that emphasised the premium quality of its milk.
The other three brands in the Top 5 have lost shoppers and spend compared to last year, and as a result their CRP has decreased.
The Top 5 for the food sector remains unchanged from 2019, with Ottogi continuing to dominate the market due to its expansion into Home Meal Replacement (HMR) products. All five brands increased shopper spend, as well as frequency of purchase, emphasising their value to consumers as providers of convenient and easy-to-cook meals. Ottogi leads in CRP, due to a higher purchase frequency than any other food brand. All brands reacted well to the changes in consumer behaviour that resulted from COVID-19, focusing on online channels and local supermarkets, and expanding their product portfolios.
Kleenex remains Korea’s most chosen home care brand, with Downy and Saffron switching positions compared to last year, while Kleannara and Yuhan Lax’s positions are unchanged. Kleenex and Downy have recently focused on releasing new products, with both brands launching cleaning products that have added health benefits in order to retain existing shoppers and lure new ones. Many home care brands focused on products that clean and sanitise, with the majority targeting ecommerce platforms to attract and retain buyers.
Due to the impact of COVID-19, the penetration of major beauty and health brands decreased compared to 2019 due to fewer shoppers buying their products. However, beauty brand LG Body Care has moved up the ranking and established its position as the most chosen health and beauty brand, due to an increase in spend which compensated for the loss of shoppers. In contrast, Innisfree, last year’s no.1 brand, has dropped down the ranking after a decrease in shoppers that was significantly higher compared to other brands.
Korea’s most chosen beverage brand wins with a new diverse product portfolio
Coca-Cola Korea was established in 1974. In the last year it has grown by enhancing its range of Coke products with Zero sugar-free variants, and expanding into other non-alcoholic beverage categories such as coffee and sports drinks.
In 2020 Coca-Cola successfully grew its spend by 27.5% and its CRP by 12.0%, by reaching more customers and building greater interaction with shoppers.
The main driver of Coca-Cola’s growth was increased consumer choice through the launch of new products, and meeting shoppers’ needs at a time when their outdoor consumption of soft drinks had decreased, and their need for stress relief was high. Coca-Cola took good advantage of the opportunity, successfully retaining shoppers by converting out-of-home consumption to in-home consumption, with Zero products as the primary driver.
In terms of distribution, Coca-Cola prepared for and reacted well during the pandemic, placing more products on ecommerce platforms in the knowledge that shoppers would switch to online purchasing.
Coca-Cola is the brand to watch out for. It grew not only by focusing on the product itself, but also by finding the right distribution channel, striving to be more environmentally friendly, and – most importantly – identifying what shoppers needed and giving it to them.
