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Kwang Dong, Coca Cola, Lotte compete for sales rights of Korea's top-selling bottled water brand
By Lee Hyo-sik
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Kwang Dong Pharmaceutical, which has been selling the brand since 2012 on behalf of Jeju Province Development (JPD), is desperate to extend its sales contract for four more years as SamDaSoo accounts for nearly 30 percent of its revenue.
But it will face stiffer competition from Lotte Chilsung and other companies that seek to change the status quo to do business with JPD, which owns the SamDaSoo brand.
JPD plans to receive bids from those looking to sell SamDaSoo on Aug. 30 and 31. After reviewing bidders, it will announce a preferred bidder Sept. 6.
It directly markets the bottled water on Jeju Province and selects a company for distributing the brand in Seoul, Busan and other inland areas.
JPD directly deals with Emart and other discount store chains, while Kwang Dong supplies the bottled water to convenience stores and small retailers nationwide.
JPD officials said it will thoroughly review each bidder in a fair manner, adding the one presenting the most optimal marketing and sales strategies will be selected.
"We have formed a judging committee that will review all bidders," a JPD marketing manager said. "In accordance with a set of criteria, the committee will evaluate the firms in a fair and transparent manner."
When assessing the bidders, judges will take into account of their annual sales, logistics networks and credit ratings, as well as sales and marketing strategies for SamDaSoo, he said.
Kwang Dong, famous for its Vita 500 vitamin drinks, signed a four-year sales contract with JPD in 2012, stealing SamDaSoo from Nongshim. Its contract expired last December but extended the deal by one year until this December.
If the pharmaceutical firm loses the SamDaSoo sales rights, this will deal a severe blow to the company.
It earned 183.8 billion won from selling the bottled water in 2016 when its revenue totaled 636.3 billion won. In 2015, SamDaSoo sales were 167.6 billion won, up from 147.9 billion won in 2014.
"We will take part in the upcoming bid to retain our sales rights for SamDaSoo," said a Kwang Dong official, who declined to elaborate more on the matter.
Can Kwang Dong retain SamDaSoo?
According to AC Nielson, Korea's bottled water market was worth 740.3 billion won last year, up from 640.8 billion won in 2015 and 553.6 billion won in 2013. The market is projected to expand at a double-digit rate this year.
About 70 companies are selling bottled water under 200 different brands. However, SamDaSoo accounted for 41.5 percent of the market in 2016, followed by Lotte Chilsung's Icis at 9.7 percent and Nongshim's Baeksansu at 8 percent.
Coca Cola, Lotte Chilsung, Namyang Dairies and other food companies, which participated in the 2012 bidding, are widely expected to throw their hats again to steal SamDaSoo from Kwang Dong.
But Nongshim, which lost the sales right in 2012, said it will not take part in the upcoming bid, stressing it will instead mobilize all available resources to nurture its Baeksansu as the nation's top brand.
"We tried to retain SamDaSoo back in 2012. But things have changed over the past few years." a Nongshim official said. "Rather than going after SamDaSoo, we decided to make more efforts to foster Baeksansu as the nation's top-selling brand. It is much better to nurture our own brand rather than rely on the one that we don't own."
After losing SamDaSoo, Nongshim launched its own bottled water brand in 2012 and two years later, it opened a 200 billion won plant in northeastern China, near Mt. Baekdu.
But other firms are eager to do business with JPD.
"We are considering taking part in the bid to win the sales right for SamDaSoo," a Lotte Chilsung official said. "But we haven't made a final decision yet. We are closely watching what others do."
A Namyang Dairies official also said it is interested in selling the bottled water via its sales network.
"We haven't made a final decision yet, but if we deal with SamDaSoo, this will significantly boost our sales and improve our brand image among consumers," the official said.
"We believe we are best qualified for SamDaSoo, among possible candidates. Namyang operates an extensive, efficiently-operating network with convenience stores and other small retailers."
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