Lotte Wellfood Announces Merger of Indian Subsidiaries to Strengthen Market Presence and Operational Efficiency

Lotte Wellfood Co., formerly Lotte Confectionery, has announced plans to merge its Indian subsidiaries, Lotte India and Havmor Ice Cream, to improve operational efficiency and strengthen its market presence. Approved by both boards, the merger will see Lotte India acquiring Havmor Ice Cream, with both brands continuing their product lines. The process is forecasted to conclude by year-end, with the new entity launching in early 2025. The merger aims to diversify product offerings and enhance logistics and manufacturing capabilities, targeting annual sales of USD 737.13 million (KRW 1 trillion). Lotte Wellfood also plans to expand its operations across India and open a new manufacturing facility next year.

Lotte Wellfood Strengthens Indian Market Presence with Strategic Investments and Factory Expansion

Lotte Wellfood has a long-standing presence in India. It entered the market in 2004 with the acquisition of Parrys Confectionery, which was later rebranded as Lotte India. The company further expanded its footprint by acquiring Havmor Ice Cream in 2017. In 2023, Lotte India reported sales of USD 76.21 million (KRW 103.4 billion), while Havmor generated USD 122.06 million (KRW 165.6 billion), maintaining its leadership in the Western Indian ice cream market.

To support its growth ambitions, Lotte Wellfood has invested heavily in India, including USD 51.59 million (KRW 70 billion) in a new ice cream factory in Pune, Maharashtra, which is set to begin operations in late 2024. In addition, Lotte India is investing USD 24.32 million (KRW 33 billion) in its Haryana factory to introduce a new Pepero production line by 2025. The company has also tailored its popular snacks, Pepero and Choco Pie, to the Indian market, contributing to its expanding product portfolio. The merger will consolidate six existing factories under one entity, enhancing operational efficiency and driving the company's long-term growth in India.

Lotte Wellfood to Invest in New Pepero Production Line in India, Expanding Local and Regional Market Presence

In Jan-24, Lotte Wellfood announced its plan to invest USD 25.3 million to establish an automated Pepero production line in its Lotte India factory in Haryana, near New Delhi. Utilizing unused factory space, this facility will begin producing popular Pepero variants by mid-25, including Original Pepero and Crunky Pepero. This marks the first time Pepero will be made outside of South Korea, enabling Lotte to meet local demand directly and reduce reliance on exports.

Figure 1. Original Pepero and Crunky Pepero

The investment aligns with Lotte Wellfood's strategy to expand its footprint in the USD 12.7 billion Indian confectionery market and strengthen its presence in the broader South Asian region. The company plans to leverage this new facility to increase local sales and support exports to neighboring countries, such as Pakistan, Singapore, Myanmar, and China. Lotte Wellfood is also committed to developing products tailored to Indian tastes and dietary preferences, such as Choco Pie with plant-based marshmallows, reflecting India's significant vegetarian culture.

Since entering the Indian market in 2004, Lotte Wellfood has steadily grown its presence. Lotte India's revenue rose from USD 69.6 million in 2022 to USD 80.6 million in 2023. The company aims to expand its market share further by nurturing Pepero as a global brand, initially targeting the premium segment through its existing distribution network before expanding to traditional retail channels.

Lotte Wellfood's strategic initiatives, including the merger of its Indian subsidiaries and substantial investments in new production facilities, underscore its commitment to enhancing its market presence and operational efficiency in India. By consolidating operations and tailoring its products to local preferences, Lotte Wellfood aims to strengthen its position in the Indian confectionery market and drive long-term growth across the region.