Expecting 110 Billion Won in Hotteok Sales... 15% Increase from Last Year
Born as Winter Bread Hit... Secret to Growth in Trendy New Products
Customized Strategies by Distribution Channel Also Play a Role... Reborn as a National Brand
[Asia Economy Reporter Lee Seon-ae] A white bread sold only in winter, with a diameter of 10 cm, a height of 5 cm, and a weight of 90g. The hotteok, which used to bake in a steamer in front of neighborhood stores during childhood and still occupies a corner of convenience stores, is on the verge of reaching a cumulative sales volume of 6 billion units this year (5.9 billion units until 2019). The records set so far are astonishing. Over half a century, more than 100 million units have been sold annually on average, and based on South Korea's population, it means that more than 2.5 hotteoks have been eaten every winter each year. Considering the six-month period during which hotteok is sold annually, 7.6 hotteoks are sold every second (based on 120 million units sold in 6 months).
According to SPC Group on the 14th, sales of Samlip Hotteok are rapidly increasing. Last month's sales rose 15% compared to the previous year, setting a record high growth rate. The monthly growth rate in December 2018 was about 3% compared to the previous year, and the cumulative growth rate from October to December last year reached 10%. It is expected that by February to March, when winter ends, the target sales of 110 billion KRW and cumulative sales volume of 6 billion units will be achieved.
Hotteok, named as a shortened form of "bread that is hot and blown on before eating," is a product that fully benefits from the winter cold wave boom. However, the industry evaluates that the records set by hotteok so far are remarkable to interpret simply as "the economics of weather." Especially considering the recent economic downturn and consumption decline trend, the growth is surprising. Unlike the past when hotteok was considered a premium bread in times when food options were limited, it is exceptional that hotteok continues to sell like hotcakes even now when there are numerous types of bread and snacks as substitutes.
Hotteok was launched in October 1971 as the "first domestic winter bread." At that time, heating was poor in winter, and bread on the shelves of SPC Samlip dealerships often froze. SPC Samlip and dealerships had to suffer from poor sales in winter. The late Heo Chang-seong, Honorary Chairman of SPC Group, thought that making winter bread was the way to overcome poor sales and came out with hotteok after research and development. The response was explosive. Even though it was sold only during a limited period from mid-October, when the cold season began, to February of the following year, it accounted for 15% of SPC Samlip's annual sales at that time.
Heo Young-in, son of Honorary Chairman Heo, Chairman of SPC Group, brought various changes to hotteok. Based on the traditional steady sellers, red bean and vegetable hotteok, new products reflecting new trends are introduced every year. New products using new ingredients such as pizza, sweet potato, spicy chicken, milk, burger, and golden egg hotteok are released annually. Since 2016, they have applied a domestically developed "native yeast" to improve the quality of hotteok. As a result, hotteok is consumed not only by middle-aged consumers buying nostalgia but also by younger generations. The sales proportion of new hotteok products released annually reflecting trends steadily increased from 10-20% (new product sales rate among all hotteok) until 2016 to 30% last year. This winter, they introduced 58 products, the most in any season so far. They also launched meal replacement hotteok comparable to convenience foods, such as "Sausage Vegetable Stir-fried Manppang" with tangy sausage and vegetables, and "Cube Steak Manppang" with diced steak.
Customized product strategies by distribution channel are also a driving force. SPC Samlip launched "Manjindubbang" exclusively for warehouse-type stores such as E-Mart Traders in 2018. Last year, they introduced hotteok with witty product names targeting young consumers who frequently visit convenience stores. Targeting the delivery market and online channels in line with lifestyle changes also led growth. The collaboration product with Baedal Minjok, "ㅎㅎ Hotteok," received a good response as it matched the delivery culture trend. The "Samlip Hotteok Special Edition," which includes a mini humidifier and Samlip Hotteok, sold out within an hour of release on KakaoTalk Gift and online shopping malls.
An SPC Samlip official said, "We plan to carry out various promotions and marketing campaigns," adding, "We will continue to strive so that Samlip Hotteok can not only achieve the highest-ever performance but also become a true national brand loved by everyone."
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