Following Coupang, Lotte Also... "CJ CheilJedang, Pulmuone, Daesang Order Suspension" (Comprehensive)

Distribution Industry Delivery Price Conflict Continues
CJ CheilJedang, Pulmuone, Daesang, Lotte Confectionery
Lotte Mart Suspends Orders from 4 Companies

[Asia Economy reporters Yuri Kim and Seungyun Song] As Lotte has stopped transactions for some products of CJ CheilJedang, the number one company in the food industry, (Asia Economy December 27 issue '[Exclusive] "Conflict over supply prices" Following Coupang, Lotte also stops transactions with CJ CheilJedang' article reference) it has also decided to halt transactions with other food companies such as Pulmuone and Daesang. Following Coupang, a dispute over supply prices with food companies is escalating at Lotte as well.

According to the distribution industry on the 27th, Lotte Mart recently decided to stop orders for some products from CJ CheilJedang, Daesang, and Pulmuone during the supply price negotiation process. Lotte Confectionery was also included in the order suspension. Through a notice, Lotte Mart announced, "Currently, frozen meal kit products from CJ, Daesang, and Pulmuone are not being supplied normally temporarily due to circumstances with the suppliers and our company. We will normalize this as soon as possible." Regarding this, a Lotte official said, "This is a temporary suspension of transactions during the opinion coordination process," and added, "We will promptly negotiate to prevent inconvenience to consumers."

This order suspension incident was triggered recently during the process of integrating product codes between Lotte Mart and Lotte Super. Lotte Mart and Lotte Super had been receiving products separately from these companies, but a problem arose when it was confirmed that the supply prices for the same products differed between Lotte Mart and Lotte Super.

Notice Regarding Product Supply at Lotte Mart.
Photo by Lotte Mart

Lotte Mart proposed supply under the same conditions as the Super, but it is reported that CJ rejected this, leading to the suspension of transactions. The CJ CheilJedang products supplied redundantly to Lotte Mart and Lotte Super reportedly include hundreds of items, including major popular products. According to the industry, CJ CheilJedang's annual sales to Lotte Mart and Super amount to about 400 billion KRW, which corresponds to about 4% of CJ CheilJedang's total food sales last year (9.56 trillion KRW).

A CJ CheilJedang official explained, "Depending on the discount rate, prices for some items may differ between marts and supers, but it is not possible to match them unconditionally," and added, "Unlike other food companies, we are not in a one-on-one conflict with Lotte." Daesang and Pulmuone are also continuing negotiations with Lotte on supply prices for each product.

However, this situation is not expected to be prolonged. An industry insider said, "This is a temporary phenomenon caused by Lotte Mart and Lotte Super trying to align supply prices during the integration process," and added, "From the food companies' perspective, they cannot supply at unconditionally low prices, so they are negotiating by setting prices according to the items."

Previously, CJ CheilJedang also had conflicts with Coupang over supply prices and profit margins. Since mid-last month, Coupang has stopped ordering popular CJ CheilJedang products including Hetbahn, Bibigo dumplings, and kimchi, and negotiations are currently underway.