Lotte Confectionery

Lotte Confectionery (Hangul: 롯데제과) (KRX: 004990) is a South Korean company headquartered in Yangpyeong-dong Yeongdeungpo-gu, Seoul, Korea. It is a subsidiary company of Lotte Group and a sister company of leading Polish confectionery company E. Wedel after the parent Lotte group completed a takeover from Kraft Foods in June 2010.

Lotte Confectionery was established in 1967 and its plants are located in Seoul, Daejeon, Yangsan, Pyeongtaek and Siheung.Currently, it is the third largest chewing gum manufacturer in the world.

History

Bubble Gum Beginnings in the 1940s

Although later considered one of South Korea's largest companies, Lotte's origins actually traced back to post-World War II Japan. During the war, Shin Kyuk-ho, a native of Korea, came to Tokyo to study at a technical college in 1941 at the age of 19. After graduating, Shin remained in Japan, adopting the Japanese name of Takeo Shigemitsu. By 1946, Shigemitsu decided to go into business for himself, launching the Hikara Special Chemical Research Institute. This company produced soaps and cosmetics from surplus chemicals stocks left over from the war.

That company, although small, provided the basis for Shigemitsu's first fortune, and within a year he had amassed enough capital to launch a new company, dedicated to production of chewing gum. Introduced by American soldiers following the war, chewing gum quickly became popular among Japanese consumers eager to embrace all things American. In 1948, Shigemitsu founded Lotte Co., with ten employees. Shigemitsu's choice of the company's name came from his admiration for Goethe's Sorrows of Young Werther, particularly the character of Charlotte. Using natural chicle, Lotte launched a number of chewing gum brands, including Orange Gum, Lotte Gum, Cowboy Gum, Mable Gum, and the highly popular Baseball Gum. The company backed up its products with strong advertising support, becoming one of the first in Japan to sponsor television programs, as well as its own baseball team and other event s, such as beauty pageants. In the mid-1950s, the company sponsored the country's Antarctic Research Expedition Team, developing a chewing gum for the effort's training program. The company then launched the gum, known as Cool Mint Gum, for the consumer market, in 1956. The gum featured a penguin on the package, which became one of the country’s most prominent consumer logos into the next century. Another Lotte sponsoring effort was the Lotte Music Album show on television, a popular music-oriented program that ran through the late 1970s. Shigemitsu expanded his production interest to include candies, cookies, and snack cakes, and by the early 1960s, the company had established itself as a rival to Japan's two largest confectionery groups, Meiji and Morinaga. The company's true breakthrough came during the 1960s, with its entry into the chocolate market. In 1964, the company launched its first milk chocolate, called Ghana, adapting Swiss-styled chocolates for the Japanese palate. The company supported this launch with a massive television advertisement campaign, firmly positioning the brand in the minds of consumers. The launch paved the way for Lotte's emergence as the number one chocolate manufacturer in Japan by the end of the century. Although Lotte had successfully established itself as a truly Japanese company--in a country where ethnicity had always been a prominent p art of the national identity--Shigemitsu had not abandoned his Korean roots. Lotte had established a presence in Korea as early as 1958, opening a factory producing chewing gum and other confectionery, as well as instant noodles, for the Korean market. The normalization of diplomatic relations between Japan and Korea in 1965, however, presented a new opportunity for the company. Lotte decided to move into Korea on a full scale, and in 1967, the company established a dedicated operation for South Korea, called Lotte Confectionery Co.^[1]

Adding Korean Operations in the 1960s

It was not long, however, before Shigemitsu--or, rather, Shin--found himself in trouble with the Korean government, then still under military dictatorship. The South Korean government was then in the process of building up its military strength as part of its cold war with North Korea. Seeking to establish its own industrial defence capacity, the government approached Shin with a request for him to contribute to this effort, encouraging him to enter military production as well.

Yet Shin, perhaps mindful of the negative publicity that a move into arms production would bring to the company's confectionery sales, refused. The refusal brought a series of difficulties for Lotte Confectionery, which finally were resolved by the direct intervention of then president Park Chung-Hee. Rather than agree to invest in the country’s defence effort, Shin agreed to transfer the centre of Lotte's operations to South Korea. Lotte Confectionery now became the core of Shin's growing empire; nonetheless, the original Lotte Co. and the Japanese market remained the company's largest confectionery operation. ^[1]

International Success in the New Century

In the 1990s and 2000s, Lotte turned to the international market for further growth. The company had made its first international extension, other than in Korea, in the late 1970s. In 1978, Lotte set up a subsidiary in the United States, opening production facilities in Battle Creek, Michigan. The group's U.S. presence later expanded to include a sales office in Chicago, supporting sales of the group's chewing gums and cookies.

In the 1990s, Lotte turned to markets closer to home. The company established a subsidiary in Thailand in 1989, where it began producing and distributing candy and confectionery. In 1993, Lotte entered Indonesia, launching a subsidiary in Jakarta. This was followed by the creation of a joint venture for the mainland Chinese market, which established production facilities in Beijing in 1994. The company acquired full control of its Chinese operations in 2005. The Philippines became part of the Lotte empire in 1995, with the launch of a sales and distribution subsidiary in Manila. One year later, the company added production and sales operations in Ho Chi Minh, Vietnam, as well.

Continuing product development brought the company new successes as w ell. In 1996, the company launched its Chocolate Zero, claiming to be the world's first sugarless chocolate. The following year, Lotte became the first in Japan to launch a xylitol-based chewing gum. Because xylitol, unlike other sweeteners, did not produce acid when chewed, the company was able to promote its chewing gum as a cavity-fighting product. The company's interest in developing xylitol-based products continued into the 2000s, including the launch of the Xylitol Family Bottle, a beverage containing xylitol as a sweetener. In 2005, the company launched its Lotte Notime tooth-polishing chewing gum.

Lotte expanded its frozen dessert operations in 2002, forming a joint venture with troubled Snow Brand Milk Products, then involved in a beef-labelling scandal. The joint venture, Lotte Snow Co., was owned at 80 percent by Lotte, and launched production of Snow-branded ice cream products. In 2005, the company expanded its operations in China, buying up control of Qingdao-based Jinhu Shipin. That move was seen as part of the group's strategy to become a major confectionery group o n a global scale. Lotte remained controlled by Shin Kyuk-ho, joined by his children and other family members. In less than 60 years, Shin had built Lotte from a small chewing gum producer into one of the world's top confectionery groups.^[1]

Products

Many of Lotte's products are sold internationally in areas with Japanese and/or Korean immigrants and in Asian supermarkets around the world.

Confectionery

The confectionery line-up covers a wide range of snacks including gums, candies, biscuits, and chocolates. The Juicy Fresh, Spearmint, and Freshmint chewing gums and Lotte Ghana Chocolate have served as long-time favorites for more than four decades, while the Xylitol chewing gum is enjoying tremendous popularity since its launch, thanks to its ability to reduce the risk of tooth decay.^[2]

Lotte Confectionery also produces the Crunky candy bar^[3] and the Chic-Choc cookie (a chocolate chip cookie), one of the most famous brands in South Korea. Additionally, they produce other baked snacks, including the Margaret cookie. Lotte is also well known for their cookies called Koala's March, which are small cream-filled cookies shaped like koalas, packaged in a unique hexagonal box, and Pepero, a product inspired by Pocky.

To extend the reach of products of both companies in China, Lotte has established a joint venture with Hershey's.^[4] Also, in 2008, Lotte also took over Guylian, a Belgium company that makes chocolate.

Ice Cream

Lotte Confectionery has been taking a lion’s share of Korea’s ice cream market by offering an array of popular bar, cone, cup, pencil, and bucket ice creams that cater to all tastes. With the latest premium natural-ingredient brand Natuur, they are now offering a wider range of products, from regular day-to-day items to more sophisticated premium flavors.^[5]

Health supplements

As part of the efforts to boost the well-being of modern men who live in an increasingly demanding atmosphere, Lotte Confectionery launched a health supplement brand Health 1 to produce various supplements with vitamins, minerals, granules, red ginseng extracts, and other animal- and plant-based extracts.^[6]

See also

• Economy of South Korea
• List of companies of South Korea
• Lotte

References

External links

• Official website (Korean)

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