[Beautiful Journey] Relay Interview
② Lotte Mart - Cherrybro & Cherry Food
Interview with Kim Kangheung, President of Cherrybro
[Asia Economy Reporter Cha Min-young] There is a mid-sized food company behind Lotte Mart’s budget-friendly hits like 'Tongkeun Chicken,' 'Gukmin Samgyetang,' and 'Choice L Smoked Chicken Breast.' In June, when interest in health foods peaked due to the COVID-19 pandemic, the company launched 'Yorihada Ganghwa Island Samgyetang' in collaboration with Lotte Mart, selling over 63,000 units to date. This company is Cherrybro, which has grown alongside Lotte Mart for eight years.
On the 11th, we met Kim Kang-heung, president of Cherrybro, who launched Ganghwa Island Samgyetang. Lotte Mart has been collaborating with Cherrybro, a chicken-specialized food company, and its processed food subsidiary Cherry Food since 2012. Representative private brand (PB) products include Lotte Mart’s 'Tongkeun Chicken,' 'Maepssak Soy Sauce Chicken,' 'Beef Broth' retort products, 'Gukmin Samgyetang,' and 'Choice L Smoked Chicken Breast.'
President Kim Kang-heung said, "While previous large retailers focused only on supplying affordable products to consumers and supporting corporate sales channels, recently they have declared the third generation of PBs, adopting a strategy to offer not just cheap products but first-class goods. Cherrybro has also developed its capabilities to elevate PB products to premium quality and taste beyond that of specialty stores."
Lotte Mart’s 'Yorihada' series’ first product, Ganghwa Island Samgyetang, underwent a rigorous verification system from the development stage. The two companies conducted 12 rounds of product evaluations and 30 rounds of ingredient blending experiments. They plan to continue releasing a series of island samgyetang using local specialties. Having gained confidence from large mart PB products, Cherrybro is rapidly growing in the samgyetang market by expanding distribution channels. Their 'Traditional Samgyetang,' made with antibiotic-free high-quality raw meat and sold on the food specialty mall Market Kurly, ranked first in Market Kurly’s Chobok (seasonal health food) promotion. 'Galbi Samgyetang' and 'Maesaengi Samgyetang,' Rocket Delivery products on Coupang, also utilize nutritious ingredients galbi (short ribs) and maesaengi (a type of seaweed), respectively, capturing unique textures and nutrition.
Since early this year, the home cooking trend triggered by COVID-19 has also been felt. While the school meal channel, which previously contributed significantly to Cherrybro’s sales, has stagnated, online sales have more than doubled. President Kim Kang-heung said, "We feel that more customers are choosing online over offline due to COVID-19. Not only has the preference for contactless consumption increased, but the improved quality of convenience foods has also played a role in the current situation."
Cherrybro and Cherry Food, which have grown in scale, are enhancing manufacturing competitiveness through facility investments. They applied air chilling, a method that lowers temperature with air to prevent bacterial growth, boosting freshness competitiveness. Through vertical integration, they diversified the use of raw meat, increasing raw material competitiveness. Earlier, in 2018, they undertook a biosecurity infrastructure project to reduce the risk of poultry deaths caused by avian influenza (AI), and last year, they built the Gamgok Farm covering 29,800㎡ (about 9,030 pyeong).
Bold facility investments in the processed food subsidiary Cherry Food are also part of efforts to secure future growth engines. Cherry Food established a hamburger line and a bottled product line. They expanded retort facilities and upgraded the frozen fried line. In this process, the 'White Angel Foie Gras,' launched in June, was born. The White Angel Foie Gras spread is made using eco-friendly breeding methods instead of forced feeding. There is also a chicken steak product developed in collaboration with the chicken breast brand. At the extraordinary shareholders’ meeting on the 10th, Cherrybro resolved to add business objectives such as 'import, manufacture, processing, and sale of food and related additives,' 'manufacture and sale of health functional foods,' and 'development of natural antibiotics and antibacterial substances' as part of business diversification.
So, where can small and mid-sized food companies find their competitiveness in the chaotic home meal replacement (HMR) market, comparable to the Warring States period? According to President Kim, it lies in core muscle training. He said, "Rather than satisfying all consumers, companies should focus on specific markets based on their best and most optimized capabilities. As society respects diversity and tastes become more segmented, dividing target customers and concentrating capabilities will surely open the market."
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