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Lotte Chilsung

Lotte Chilsung Beverage Co., Ltd.
Native name
롯데칠성음료 주식회사
Company typePublic
KRX: 005300
FoundedMay 1950; 74 years ago (1950-05) (original)
December 1974; 49 years ago (1974-12) (current form)
Headquarters
Seoul
,
South Korea
Key people
Yun gie Park
ParentLotte Corporation
Websitelottechilsung.co.kr
Chilsung Cider Zero

Lotte Chilsung Beverage Co., Ltd. (Korean: 롯데칠성음료 주식회사; RR: Rotde Chilseong Eumnyo Jusik Hoesa) is a drink manufacturer in South Korea affiliated with Lotte Corporation. The company's name, Chilsung (Korean: 칠성; Hanja: 七星; RR: Chilseong), signifies "Big Dipper" or seven stars, and its logo displays seven stars aligned in a row.[1]

History

Chilsung was founded in May 1950, then known as the Dongbang Beverage Company, and began with the launch of Chilsung Cider, a lemon-lime soft drink.[2]

In 1967, they became Hanmi Foods Industry Co., then changing to Chilsung Hanmi Foods Corporation in 1973, eventually becoming the Chilsung Beverage Company.[3] In 1975, the company acquired Busan Joint Beverage Corporation and signed a technology partnership agreement with PepsiCo in 1976.

In 1985, it was appointed the official beverage supplier for the 1986 Seoul Asian Games and 1988 Seoul Olympics, merged with Lotte Brewery in July 1986 and introduced CIP in December. In 1987, the Opo plant became the first in the industry to receive the KS mark.

By 2009, Chilsung products accounted for 36.7% of the Korean beverage market, compared to Coca Cola's 17.6%.[4]and rebranded it as Lotte Liquor BG and built a logistics centre in Gwangmyeong, Gyeonggi-do, and acquired PepsiCo Products Philippines Inc (PCPPI) in 2010 and merged with Lotte Liquor BG the following year.

As Lotte founder Shin Kyuk-ho's health was deteriorating, his sons vied for control of the conglomerate.[5] The fraternal feud hit a peak in 2015 when eldest son Dong-joo was removed from his position as Vice President of Lotte Holdings and his younger brother Shin Dong-bin assumed control.[6] News of the leadership struggle created doubts about Lotte's future, and Lotte Chilsung Beverage's market value dropped 6.85% in August.[7]

In 2016, amidst a police probe into embezzelment, Lotte Group companies lost a combined market value of ₩1.21 trillion (US$1.06 billion) in just four days, with Lotte Chilsung's shares falling by 3.93% in a single day.[8]

In February 2018, Chairman Shin Dong-bin was convicted on charges of bribery as part of the 2016 South Korean political scandal and sentenced to 2.5 years' incarceration.[9] After serving for 234 days, an appeals court released him from prison, and he went back to his duties as Chairman shortly after.[10] When news of his release broke, Lotte Group's market value was boosted by 4.2%.[11]

In 2018, Chilsung Beverage was fined ₩105.4 million (US$92,136.89) by the Securities & Futures Commission of Financial Services for underreporting the losses of an affiliate. It was found that the drinks company masked net losses of ₩21.4 billion (US$18.71 million), reporting them as just ₩2.76 billion (US$2.41 million).[12]

Corporate governance

As of October 2023.

Shareholder Stake (%) Flag
Lotte Corporation 45.00%
Lotte Aluminium 7.64%
Lotte Scholarship Foundation 5.41%
Shin Young-ja 2.66%
Lotte Holdings 1.18%
Shin Dong-bin 0.47%
National Pension Service 10.09%
VIP Asset Management 5.25%

Products

Chilsung Cider

By the end of 2013, Lotte had sold over 18.5 billion bottles of Chilsung Cider.[3] In December 2019, they had to retire the iconic green bottle due to new government regulation about PET plastic.[13] The bottles are now clear.

Cola

Vending machines with Chilsung Cider advertisement

American military presence as a result of the Korean War in the 1950s led to carbonated beverages appearing in South Korea for the first time. Chilsung released their own version of Cola in 1961, prior to Coca-Cola's official entry into the Korean market. It was first named Speci Cola, but then changed to Chilsung Cola to match its sister product Chilsung Cider, but this has since been discontinued.[14]

Nowadays, Lotte Chilsung does not produce their own cola but instead bottles & distributes Pepsi Cola across Korea.[15][16]

Milkis

See Milkis.

Juices

Sac Sac, an orange drink produced by Lotte Chilsung

Lotte Chilsung Beverage currently produces a range of natural fruit juices in orange, grape, apple, tangerine, pear, and mango flavors. In 1982, the company established a partnership with US-based, Del Monte, and now manufactures the Premium Orange and Del Monte Cold products. In 2009, the license for Tropicana was acquired and Tropicana Homemade style blends and other popular choices were produced.[citation needed]

Coffee and tea

The lineup in coffee include Let's Be, South Korea's No. 1 canned coffee; Cantata, a coffee blend made with Arabica beans from plantations worldwide; and black tea drinks Ceylon Tea and Lipton.

Other beverages/bottled water

Other beverages range from soy milks to traditional beverage and health drinks. Other varieties in the catalog include the sports drink Gatorade, the carbonated water Trevi, the purified water Icis, and France-imported Evian and Volvic.[17]

Alcoholic drinks

Lotte Chilsung Beverage has been marketing Scotch Blue, Korea's local whiskey brand, along with fruit liquor, traditional Mirin, and other alcoholic beverages. Other alcoholic drinks include soju, cheongju Baekhwasubok, plum liquor Seoljungmae Plus, and South Korean wine Majuang.[18]

Their soju brand Chum-Churum (Korean: 처음처럼; RR: Cheoeum Cheoreom; lit. 'like the first time') is the world's first soju made from alkaline-reduced water. In 2021, the spirit brand recorded sales worth ₩41.9 billion (US$36.63 million) in 37 countries.[19]

Expansion Abroad

In 1966, Lotte Chilsung began exporting its Chilsung Cider to Vietnam. In 1989, Lotte Chilsung acquired a JAS mark. In the late 1990s, the manufacturer grew to be the largest beverage company in Asia, holding 35% of the domestic market share.[citation needed] Lotte Chilsung continued to grow signing a contract with Gatorade in 2001.[20]

By the end of 2024, a Lotte spokesperson claimed overseas sales will make up more than 30% of Chilsung Beverage's total revenue.[21]

US

In 2017, Lotte sought to expand their presence in the US beverage market, promoting Cider, Milkis and energy drink Hot6.[22] They first began exporting their flavoured soju brand Cheom-cheoreum Soonhari to the US in 2019.[19]

China

In 2016, the South Korean government chose Lotte Skyhill Country Club as the site to install a new advanced anti-missile system, THAAD.[23] This led to a sharp rise in anti-Korean sentiment in China, with much of the frustration targeted at Lotte.[24] There were widespread boycotts and protests, with employees of a mall in Xuchang protesting Lotte as they sung the Chinese national anthem.[25]

As a result, Lotte's Chinese business operations suffered greatly, with four out of six of Lotte Confectionery and Lotte Chilsung Beverage’s factories in Beijing, Qingdao, Henan and Qingbai shutting down in Q1 2019.[26] All of Chilsung Beverage & Lotte Confectionary's Chinese operations had ceased by 2019.[27]

Despite this difficult diplomatic backdrop, Lotte Chilsung was still able to sell beverages into Chinese markets. In 2021, Chilsung sold more than 25 million cans of Milkis to Chinese markets, with Taiwan's consumption increasing 1100% in just a year.[28] Between January and August 2022, they had exported over 10 million cans of Milkis to Taiwan.[29]

The Philippines

Chilsung Beverage first entered the Filipino market in 2010 by purchasing a 34.4% stake in Pepsi Cola Products Philippines (PCPPI).[21] In 2020, Chilsung paid ₩71.4 billion (US$62.42 million) to increase their stake to 72.9%.[30] They completed their acquisition of the country's 2nd largest beverage producer in October 2023.[31]

Use of Celebrities

As a Korean brand, Lotte Chilsung has incorporated many famous Korean entertainers into their advertising.

Singer Lee Hyori represented their soju brand Chum-Churum (Korean: 처음처럼; RR: Cheoeum Cheoreom; lit. 'like the first time') between 2007 and 2012.[32] Then, a marketing campaign with the idol nicknamed the "nation's first love", Bae Suzy, ran from 2016 to 2018.[33] BLACKPINK's Jennie led the brand from 2021 to 2023, with actress Han So-hee becoming their latest representative.[34]

For one soju campaign with BLACKPINK's Jennie, Chum-Churum released a special promotional gift box which included Jennie photo cards, a Jennie mini cutout, a Jennie soju glass and a Soonhari Bluetooth microphone.[35]

In 2014, Korean BBQ restaurant owner, Ham Sun-bok, went viral for making 'so-maek', a cocktail of beer and soju. Lotte made her a brand representative for Chum-Churum, reportedly signing a contract for more than ₩20 million (US$17,483.28).[36]

In 2017, Chilsung Cider released an advertisement with actor Park Seo-joon and LABOUM singer Solbin.[37] In 2023, actor Jung Hae-in became the face of Chilsung Cider.[38]

In 2024, Lotte Chilsung Beverage's "Saero" is launching new animation content for their new product "Saero Apricot". Actors Park Ji-hoon and Kim Hye-yoon were selected as the endorsers and participated in dubbing the animation for the advertisement campaign.[39][40]

Antitrust violations

The Fair Trade Commission (FTC) fined Chilsung along with four other beverage producers for colluding to raise the prices of their products. The FTC reported that the companies co-ordinated price hikes four times between February 2008 and February 2009. Chilsung was fined ₩21.7 billion (US$18.97 million).[41]

Just a few months later, Chilsung Beverage, in conjunction with three other companies, was found to have been forcing retailers to not lower the price of their products, receiving the largest fine of ₩500 million (US$437,082.04).[42]

In 2021, Lotte Chilsung was fined almost ₩1 billion (US$874,164.08) by the Korean Fair Trade Commission for violating antitrust regulations.[43]

See also

References

  1. ^ Cho, Hyee-su (May 19, 2019). "[Behind the Brand: 1] Lotte inspired by a Goethe heroine; Naver helps us navigate". The Korea Herald.
  2. ^ "LOTTE Chilsung Beverage Co Ltd". lottechilsung.tradekorea.com. Retrieved 2023-08-31.
  3. ^ a b Lee, Seung-ah (23 December 2014). "Iconic soft drink for 64 years: Chilsung Cider". Korea.net. Retrieved 2024-01-20.
  4. ^ Kim, Hyun-cheol (2009-11-03). "4 Beverage Makers Fined for Price Fixing". The Korea Times. Retrieved 2024-01-20.
  5. ^ Kim, Hyun-bin (2021-01-21). "Lotte still stays in bad shape". The Korea Times. Retrieved 2024-01-18.
  6. ^ Son, Jiyeong (2015-10-08). "Disgraced Lotte heir reignites family feud". The Korea Herald. Retrieved 2024-01-18.
  7. ^ "(2nd LD) Lotte heir vows all-out efforts to end family feud". Yonhap News Agency. 2015-08-03. Retrieved 2024-01-18.
  8. ^ Choi, He-suk (2016-06-14). "[LOTTE CRISIS] Lotte firms' market cap lose another 400 billion won". The Korea Herald. Retrieved 2024-01-18.
  9. ^ Ju-min Park & Christine Kim (17 April 2017). "South Korea charges ousted leader Park and Lotte chief with bribery". Reuters. Retrieved 18 January 2024.
  10. ^ Kim, Sohee (5 October 2018). "Lotte Chairman Shin Freed as Court Suspends Corruption Sentence". Bloomberg. Retrieved 2024-01-18.
  11. ^ Yang, Heekyong (17 October 2019). "Lotte Group chairman stays out of jail as South Korea court ruling upheld". Reuters. Retrieved 18 January 2024.
  12. ^ Jin Young-tae and Kim Hyo-jin (6 September 2018). "Daeho AL and three Korean firms accused of accounting fraud - Pulse by Maeil Business News Korea". Pulse News. Retrieved 2024-01-20.
  13. ^ Jin, Min-ji (2019-12-23). "Lotte says fizz will live after green bottle retired". Korea JoongAng Daily. Retrieved 2024-01-20.
  14. ^ Choi, Hyun-joo (2016-08-16). "Domestic brands attempt to battle Coke, Pepsi in cola war". Korea JoongAng Daily. Retrieved 2024-01-20.
  15. ^ Na-young, Kim (2023-07-14). "Food industry scrambling to deal with WHO's classification of aspartame as possible cancer cause". Yonhap News Agency. Retrieved 2024-01-20.
  16. ^ CHOI SUN-EUL, SOHN DONG-JOO (2023-07-03). "Aspartame scandal freaks out Korea's zero sugar industry". Korea JoongAng Daily. Retrieved 2024-01-20.
  17. ^ "volvic - company info - about us". 2009-06-21. Archived from the original on 2009-06-21. Retrieved 2023-02-06.{{cite web}}: CS1 maint: bot: original URL status unknown (link)
  18. ^ "The first Korean wine, Majuang". Korea.net. Retrieved 2023-02-06.
  19. ^ a b "Leading Korean beverage company to increase market penetration in Philippines". Philstar Global. 3 August 2022. Retrieved 20 January 2024.
  20. ^ "History". Lotte Chilsung Beverage (in Korean). Retrieved 2023-09-02.
  21. ^ a b Ahn Byung-joon and Minu Kim (5 October 2023). "Lotte Chilsung completes acquisition of Pepsi Philippines". Pulse News. Retrieved 2024-01-20.
  22. ^ Jin, Eun-soo (2017-02-09). "Lotte looks to U.S. to boost sales of 3 drinks". Korea JoongAng Daily. Retrieved 2024-01-20.
  23. ^ Park, Byeong-su (2016-10-01). "Why was the Lotte Skyhill golf course chosen as the new site for THAAD deployment?". Hanyoreh. Retrieved 2024-01-19.
  24. ^ "South Korea's Lotte seeks to exit China after investing $9.6 billion, as Thaad fallout ensues". The Straits Times. 2019-03-13. ISSN 0585-3923. Retrieved 2024-01-19.
  25. ^ Hernández, Javier C.; Guo, Owen; Mcmorrow, Ryan (2017-03-09). "South Korean Stores Feel China's Wrath as U.S. Missile System Is Deployed". The New York Times. ISSN 0362-4331. Retrieved 2024-01-19.
  26. ^ Reyes, Jean (13 March 2019). "Lotte Group to sell food production sites in China". S&P Global. Retrieved 2024-01-19.
  27. ^ Kim, Jae-heun (2022-05-23). "Lotte to pull out of China, focus on Southeast Asia". The Korea Times. Retrieved 2024-01-19.
  28. ^ Kim, Min-jee (2022-01-10). "Lotte Chilsung exports 25 million cans of 'Milkis' to China last year". The Korea IT Times (in Korean). Retrieved 2024-01-19.
  29. ^ Moon-hee, Choi (2022-09-20). "Lotte Chilsung Beverage Exports 10mn Cans of Milkis to Taiwan in 2022". Businesskorea (in Korean). Retrieved 2024-01-19.
  30. ^ Kim, Hyo-jin (11 September 2020). "Lotte Chilsung Beverage wins back control over Pepsi Philippines, Lotte Liquor Japan - Pulse by Maeil Business News Korea". Pulse News. Retrieved 2024-01-20.
  31. ^ Seo, Ji-eun (2023-10-04). "Lotte Chilsung acquires Pepsi Philippines, eyes expansion in the region". Korea JoongAng Daily. Retrieved 2024-01-20.
  32. ^ "Lee Hyori, No Longer The Face Of Soju". world.kbs.co.kr. Retrieved 2024-01-20.
  33. ^ Toh, Jamielynne (2021-04-23). "Will Blackpink's Jennie dethrone Bae Suzy as Korea's 'CF queen'?". South China Morning Post. Retrieved 2024-01-20.
  34. ^ "Soju brand Chum Churum remove Jennie from Blackpink as model". The News International (Pakistan). Retrieved 2024-01-20.
  35. ^ Moon-hee, Choi (2022-10-04). "Lotte Chilsung Beverage to Promote Sunhari in Overseas Countries". Business Korea. Retrieved 2024-01-20.
  36. ^ Ko, Dong-hwan (2014-03-31). "YouTube celebrity 'boilermaker' signs liquor ad deal with Lotte". The Korea Times. Retrieved 2024-01-20.
  37. ^ "≪식약일보≫ 박서준·솔빈모델 "칠성사이다" 신규광고 선보여". 식약일보. Retrieved 2024-01-20.
  38. ^ "롯데칠성음료, '칠성사이다' 새로운 얼굴로 정해인 선정". 뉴스락 (in Korean). 2023-04-12. Retrieved 2024-01-20.
  39. ^ Jeong Ga-yeong (April 23, 2024). "'구미호' 박지훈X'인간' 김혜윤, '새로 살구' 세계관서 만났다" ['Gumiho' Park Ji-hoon X 'Human' Kim Hye-yoon, met in the world of 'New Apricot']. World Biz & Sports World (in Korean). Archived from the original on July 24, 2024. Retrieved July 24, 2024 – via Naver.
  40. ^ Lee So-jeong (April 23, 2024). "김혜윤, '3살 연하' 박지훈과 새로운 호흡…주류 애니메이션 광고 주인공 발탁" [Kim Hye-yoon teams up with Park Ji-hoon, who is three years younger, as they are chosen as the main characters for a new beverage animation advertisement]. Ten Asia (in Korean). Archived from the original on June 4, 2024. Retrieved July 24, 2024 – via Naver.
  41. ^ "Lotte Chilsung Fined for Collusion". The Korea Times. 2009-08-16. Retrieved 2024-01-20.
  42. ^ Kim, Hyun-cheol (2009-11-03). "4 Beverage Makers Fined for Price Fixing". The Korea Times. Retrieved 2024-01-20.
  43. ^ Soo-yeon, Kim (2021-04-06). "Lotte Chilsung fined 1 bln won over unfair practice". Yonhap News Agency. Retrieved 2023-09-02.
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