GDP growth in South Korea was lower than expected in 2015 and the slowest since 2012. One of the factors behind this was the Middle East Respiratory Syndrome (MERS), which saw many consumers preferring to stay at home instead of venturing to malls. In addition, tourist arrivals also dipped sharply during the epidemic, as many airlines allowed customers to modify their trip. Other factors include the uncertain global economy, as well as the slowdown in the Chinese economy, which saw a decline in exports from South Korea. Economic uncertainty and high living expenses are resulting in more South Koreans prioritising their careers and delaying settling down and starting a family. This has led to a growing number of smaller households and rising demand for smaller pack sizes and convenient innovations which help consumers cope with their hectic lifestyles.
Smaller pack sizes increasingly preferred
The birth rate in South Korea in 2015 was the lowest recorded since 1970. This highlights the shift in demographic trends over the review period, with people marrying and having children at a later age, thus resulting in fewer children and an ageing population. With higher education levels, more young adults are choosing to focus on their careers first, instead of starting a family, while more female South Koreans are also joining the workforce. This has resulted in a shift in demand towards smaller pack sizes across various products, particularly packaged food and non-alcoholic drinks.
More manufacturers using packaging as a marketing tool
As competition across various FMCG areas intensifies, with more players entering categories such as instant noodles or home care, companies have more incentive to differentiate themselves from competitors and stand out to attract customers. For example, more home care manufacturers are switching from HDPE to PET bottles. Transparent packaging looks more modern and brings out the distinct bright colours of the liquid detergent and helps to attract consumers and differentiate brands from those of competitors.
More efforts by government to promote “green” practices
The Ministry of Environment in South Korea launched a number of initiatives over the review period to promote a greener environment. The number of packaging players continues to be regulated within a number of areas, including packaged food, beauty and personal care products and home care products. In 2015, the authorities also conducted random checks at retail outlets during the festive season to ensure manufacturers complied with packaging regulations. In addition, the government has announced a plan to raise refunded deposits for used Soju and beer bottles in 2016 to further promote recycling as it believes higher cash payments will give further incentive for consumers to recycle.
Convenience expected to drive innovation over forecast period
Over the forecast period, consumers are expected to continue leading hectic lifestyles and juggling between busy work and personal agendas. As a result, demand for more convenient packaging which provides greater convenience is expected to increase. Examples include formats which facilitate on-the-go consumption, are lightweight, easy to carry around or store, microwavable or have resealable closures. Convenience is expected to remain a key consideration for packaging innovation over the forecast period as it helps to simplify usage and thus save time for busy consumers.