South Korean convenience stores producing private brands

Convenience stores are producing their own private brands in South Korea.

According to a report by The Korea Herald, private brands at convenience stores have been made possible by the chains’ wide distribution capacities.

“The private brand business here will continue to grow across all industries, centered on firms with strong distribution channels,” Suh Yong-gu, a professor of marketing at Sookmyung Women’s University, told The Korea Herald. “South Korea has a relatively low private brand penetration rate compared to other OECD [Organization for Economic Cooperation and Development] countries.”

According to the report, the launch of 7-Eleven Korea’s private coffee brand Seven Café is a solid example of how an affordable private brand product has become a serious threat to existing brands. According to 7-Eleven Korea, Seven Cafe ranked No. 1 in terms of the number of products sold at the chain’s stores between July 1 and Nov. 16, marking the first time that a private brand outperformed established branded items sold at 7-Eleven outlets in South Korea. Seven Cafe began operations at 20 vendors in January 2015 and had expanded to 4,200 vendors by the end of November.

Suh also told The Korea Herald that an affordable price tag is one of the biggest advantages of private brands.
Convenience store retail brands in South Korea are also collaborating with consumer goods manufacturers on added-value products, according to the report. For instance, South Korea’s leading convenience store chain CU worked with dairy company Seoul Milk to release CU Big Yogurt, a 270-millileter bottle that’s about 4.5 times bigger than the original smaller-size yogurt drink.

CU told The Korea Herald that over 1 million bottles have been sold every month since last April, topping the list of yogurt beverages sold at its outlets.