Back to Basics: A New Strategy for a Stagnant Market

Faced with a saturated and increasingly segmented fermented milk market, HY is shifting its focus back to the core benefits of lactic acid bacteria. This move aims to revitalize the entire market by reminding consumers of the fundamental importance of these bacteria for intestinal health. Kim Il-gon, head of HY’s marketing division, recently articulated this strategy, marking the first time HY has launched a company-wide campaign centered on lactic acid intake.

The fermented milk sector, while significant at KRW 2.2 trillion in Korea last year, has experienced sluggish growth, averaging only 1.5-2% annually over the past five years. This slowdown is attributed to factors such as declining population growth, overall economic stagnation, and the proliferation of option health functional foods. Competitors like Binggrae, Namyang Dairy, Maeil Dairy, and Pulmuone Danone have contributed to market saturation.

HY’s Heritage and Future Plans

With a rich history in domestic lactic acid bacteria research and development, HY is uniquely positioned to lead this renewed focus. The company plans to leverage its “fresh Manager” distribution network, comprising 11,000 frontline subscription economy workers, to promote lactic acid bacteria intake and offer customized products. This initiative will also synergize with HY’s online mall, Predit.

I want to do back to the basics. I will emphasize how vital and why it is important to eat lactic acid bacteria every day.

Kim Il-gon, Head of Marketing Division, HY

Global Expansion with Localized Strategies

HY is also pursuing strategic expansion in overseas markets, tailoring its approach to specific regions. Such as, HY plans to produce a drinkable version of its ‘Will‘ product in collaboration with Thailand’s leading dairy company, Dutch Mill, in the first half of this year. This involves exporting HY’s proprietary ‘HP7’ strains and manufacturing products locally to overcome shelf-life limitations. Furthermore, HY recently entered the US market by selling products at H-Mart, a major Korean-American supermarket chain.

This localized approach is crucial, considering that the global probiotics market is projected to reach $91.14 billion by 2030, growing at a CAGR of 7.6% from 2023, according to a report by Grand View Research. HY’s strategy of adapting its products and distribution methods to local preferences positions it well to capture a significant share of this growing market.

The science Behind the Strategy: Why Lactic Acid bacteria?

The renewed emphasis on lactic acid bacteria is grounded in scientific understanding of their health benefits.These bacteria play a crucial role in maintaining a healthy gut microbiome, wich is increasingly recognized as essential for overall well-being. A balanced gut microbiome supports digestion, nutrient absorption, and immune function. Furthermore,research suggests that specific strains of lactic acid bacteria may have additional benefits,such as reducing inflammation and improving mental health.

as consumers become more health-conscious and seek natural ways to improve their well-being, HY’s focus on the fundamental benefits of lactic acid bacteria is a timely and potentially highly effective strategy.