SEOUL: South Korea’s confectionery giants – Lotte Wellfood and Orion – seemed to thrive on paper last year, as brisk overseas demand pushed sales to record highs.
Yet, their earnings fortunes ultimately diverged due to a single ingredient: cocoa.
Lotte Wellfood posted all-time high annual sales of 4.22 trillion won (US$2.9bil) in 2025, up 4.2% from a year earlier, while operating profit fell 30.3% to 109.5 billion won, putting margins under strain.
Although combined revenue from exports and overseas operations rose 14.4% to 1.2 trillion won, many of Lotte Wellfood’s best-known products, such as Ghana chocolate and Pepero sticks, remain heavily chocolate-based, leaving the company exposed to cocoa price volatility.
Battered by climate disruptions and crop disease in West Africa, cocoa has become one of the world’s most volatile commodities in recent years.
Cocoa prices, usually hovering around US$2,000 to US$3,000 per metric tonne, surged past US$12,000 at their peak in December 2024, sending raw material costs soaring across the confectionery sector.
Prices have since fallen below US$4,000 as of press time, but industry officials caution that it will take time for lower input costs to be reflected in improved earnings.
“Raw materials are bought in advance under supply contracts, so products now on shelves are still being made with higher-priced ingredients, meaning the cost burden from last year’s surge is still lingering,” said one industry official.
Lotte raised prices twice over the past two years, by an average of 12% and 9.5%, respectively, but higher sticker prices failed to fully offset the cost shock, especially as Korean consumers tightened spending amid persistent inflation.
Orion, on the other hand, followed a different script, with operating profit edging up 2.7% to 558.2 billion won on sales of 3.33 trillion won. — The Korea Herald/ANN
