Preferred Negotiation Partner to Be Selected by End of July
The Bottled Water Market Doubled in Five Years
'Formidable' Kwangdong Pharmaceutical... Bidding Fatigue
As the bidding process for the entrusted sales rights of Jeju Samdasoo, the top brand in the domestic bottled water market, officially begins, the food and beverage industry is paying close attention. Since Samdasoo holds an unshakable No. 1 market share in the bottled water sector, the outcome of the sales rights bidding could significantly impact the financial performance of the companies involved. However, as Kwangdong Pharmaceutical, which has distributed Samdasoo for over a decade, is putting everything on the line for this bid, some industry insiders are skeptical about fierce competition, coining the term "Eosamgwang" (meaning 'Samdasoo distribution will inevitably go to Kwangdong Pharmaceutical').
According to the distribution industry on June 5, Jeju Special Self-Governing Province Development Corporation (Jeju Development Corporation) announced the start of the bidding process to select an entrusted sales company responsible for distributing Jeju Samdasoo in domestic regions outside of Jeju Island.
Preferred Negotiation Partner to Be Selected by End of July
The bidding application will be open for 38 days until July 24 through the Nara Marketplace (Korea Online E-Procurement System). After the bidding closes, a preferred negotiation partner is expected to be selected by the end of July. The contract period is four years, running from January 1, 2026, to December 31, 2029. Afterward, if Jeju Development Corporation and the entrusted sales company reach an agreement, the contract can be extended for an additional year.
Previously, Jeju Development Corporation conducted a five-day preliminary specification disclosure from May 30. This stage involves disclosing the main contents of the request for proposal in advance, prior to the main bidding process, which follows a general competitive bidding method.
Jeju Development Corporation signs contracts for Samdasoo sales rights in four-year terms. Currently, Jeju Development Corporation directly handles distribution within Jeju Island and to the three major hypermarket chains (Emart, Homeplus, Lotte Mart), while distribution to other regions and online sales are managed through a separate entrusted sales system.
From 1996 to 2012, Nongshim was responsible for distributing Samdasoo. Since 2013, Kwangdong Pharmaceutical has been the entrusted sales partner, marking its 13th year in charge of retail sales this year. Based on its nationwide distribution network, Kwangdong Pharmaceutical successfully secured a four-year contract with a one-year extension once, and two additional four-year contracts, achieving three consecutive re-contracts for a total of 12 years. The current contract will expire in December.
The Bottled Water Market Doubled in Five Years
The Samdasoo sales rights are often referred to as the "goose that lays golden eggs." As of the first quarter of this year, Samdasoo holds more than 40% of the domestic bottled water market, making it the No. 1 brand. Since Jeju Development Corporation handles production, companies with an established distribution network can easily boost sales. In fact, out of Kwangdong Pharmaceutical's total sales of 974.8 billion won last year, Samdasoo alone accounted for 319.7 billion won, representing 33% of total sales.
The domestic bottled water market continues to grow rapidly. According to market research firm Euromonitor, the domestic bottled water market grew from 1.69 trillion won in 2019 to 3.1761 trillion won last year, nearly doubling in the past five years. This figure includes only purchases made by general consumers at hypermarkets, convenience stores, and e-commerce platforms, excluding large-scale supplies to schools and organizations.
However, industry insiders say that this round of bidding is unlikely to be highly competitive. The prevailing analysis is that it is difficult for other companies to compete, given Kwangdong Pharmaceutical's extensive experience of distributing Samdasoo for over a decade.
'Formidable' Kwangdong Pharmaceutical... Bidding Fatigue
In fact, Kwangdong Pharmaceutical is expected to make every effort in this bidding process, as it has relied heavily on Samdasoo sales. The company stated, "We are a responsible partner that has consistently delivered Samdasoo's excellent quality and premium value to consumers," and added, "We will actively participate in this bidding based on our accumulated expertise."
The requirement to re-bid for Samdasoo sales rights every four years is also seen as a burden. Bidding companies must devise distribution strategies for Samdasoo and plans to contribute to the Jeju local community, which adds to the fatigue. Rising cost of goods sold ratios and selling and administrative expense ratios are also cited as obstacles to improving profitability.
The increased diversification of bottled water brands, with more companies focusing on their own products, is another reason for reluctance to participate in the bidding. In addition to Lotte Chilsung Beverage's Icis and Nongshim's Baeksansu, companies such as Orion, Pulmuone, LG Household & Health Care, and Dongwon F&B have already entered the bottled water market and are working to expand their own brands. There has also been a significant increase in private brand (PB) products, which are planned, manufactured, and sold directly by hypermarkets and convenience store retailers, greatly reducing distribution margins.
An industry insider commented, "Companies whose own bottled water brands have low recognition and market share may be interested in Samdasoo sales rights, but the presence of the incumbent (Kwangdong Pharmaceutical) is significant," and added, "It has been over 30 years since bottled water sales were permitted in Korea, so there are doubts about whether profits will be as high as before. It is questionable how many companies are willing to endure the fatigue of bidding competition under these circumstances."
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