During the first half of 2024, offline sales of fast-moving consumer goods (FMCG) in South Korea decreased by 2.2% year-on-year, with both food and non-food categories experiencing a decline in sales.
Specifically, coffee and tea product sales significantly decreased, and the non-food category saw a decline in sales across all product categories except foot care.
Due to the continued high inflation, the sales share of private brand (PB) products has expanded, leading to an increase in PB product sales across distribution channels, including large supermarkets.
Food and non-food offline sales in the first half of this year decreased by 1.7% and 7.2%, respectively, compared to the same period last year.
Due to the continued high prices, the sales share and importance of private brand (PB) products within offline channels are increasing.
Global consumer intelligence company NielsenIQ (NIQ) has released the ‘Korea Market Overview Report’, which provides an outlook on the distribution market trends in the first half of 2024.
According to this report, which is based on offline channel sales data for 201 categories in the domestic daily consumer goods market, the size of domestic daily consumer goods sales in the first half of this year (January-June) was approximately KRW 20.7 trillion, a 2.2% decrease year-on-year. In terms of sales, the food category declined by 1.7% and the non-food category by 7.2%, both showing negative growth compared to the same period last year.
In the food category, the performance of RTD coffee, coffee mix, RTD tea, and instant categories all declined year-on-year, with coffee and tea (-5.7%) experiencing the largest decrease in sales. Beverage items also showed a 4.7% decline year-on-year. However, driven by the continuing ‘healthy pleasure’ trend, the zero-calorie beverage category grew by 7.7% year-on-year despite the overall beverage market contraction. However, with some demand for zero-calorie carbonated drinks shifting to zero-calorie non-carbonated products, zero-calorie carbonated drinks saw a reversal of growth at -2.4%, while zero-calorie non-carbonated drinks recorded a growth rate of 46.7%.
The non-food category saw a decrease in offline sales across all items. However, the foot care category recorded a 13.1% year-on-year increase in sales, the only double-digit growth rate among non-food categories, even within the personal care (-9.4%) market, which experienced the largest decline. This is attributed to the creation and consumption of user-generated content, which has led to the emergence of a new demand for a separate ‘foot cleansing’ category, attracting consumers who previously used soap or body wash for foot cleaning.
The PB market grew slightly by 1.1% year-on-year from July 2023 to June 2024, as consumers sought more value-conscious options due to the prolonged economic downturn caused by high prices. The food PB market continued to grow with a 1.5% increase in sales year-on-year, while non-food PB saw a negative shift at -2.4%. However, this decline was relatively moderate compared to the 5.5% decrease in overall non-food daily consumer goods sales during the same period. By channel, hypermarkets accounted for the largest share of overall offline PB market sales at 58.3%. Convenience stores (34.6%) and chain supermarkets (13.1%) continued their growth streak for the second consecutive year, with PB sales increasing by 6.6% and 11%, respectively.
NielsenIQ Korea Managing Director Park Chun-nam noted, “While the inflation rate has slowed, consumer behavior reflecting high prices continues to be observed, with a higher proportion of promotional purchases and continued consumer interest in PB products.” He added, “Although the market conditions are challenging, brands and retailers should focus on the fact that consumers continue to prioritize value-conscious shopping with a focus on health and convenience. They should develop strategies for survival and growth during this prolonged economic downturn.”
The Korea Market Overview Report, published twice a year, analyzes quarterly distribution performance through the NIQ Retail Index, which tracks the sales performance of over 200 major consumer goods. It provides information on key issues and quarterly trends in the distribution and consumption market for major channels, including hypermarkets, chain supermarkets, convenience stores, and online channels. In addition to NIQ’s own data, this report provides a comprehensive analysis of the overall distribution environment using Statistics Korea data, such as the Consumer Price Index.
Website: https://nielseniq.com/global/en/
Contact NielsenIQ (NIQ) Public Relations KPR Cho Hye-in +82-2-3406-2262