Purmil's heir CEO avoided new products as the dairy slid into liquidation

Purmil, the dairy maker spun off from Lotte Group in April 2007 by chairman Shin Jun-ho — younger brother of the late Lotte honorary chairman Shin Kyuk-ho — went into liquidation in 2022, fifteen years after the separation. CEO Shin Dong-hwan, the founder's second son, who had taken office in 2018, publicly took the blame.

The numbers tracked his tenure: sales of ₩257.5 billion ($180.5 million) in 2017 decreased every year to ₩180 billion by 2021, while operating profit went into a ₩1.5 billion deficit in 2018 and losses widened to ₩12.4 billion. Meanwhile local competitors such as Maeil Dairy, Seoul Milk and Yonsei Milk had been expanding new milk products and pushing into health functional foods since the early 2010s.

Industry sources said the younger Shin was too complacent: Purmil's greatest selling point became its prices, not quality, it was said to run the oldest production facilities in the local market, and it only made slight changes to existing products while rivals invested in equipment to launch new lines. The company union agreed, saying in an 18 October statement that the CEO 'was not aware of the changing market trends and he neither pursued business diversification nor invested in new production facilities.'

Purmil competed on price alone while rivals reinvested in production equipment and new product development.

No diversification into health functional foods, the growth engine competitors had pursued for a decade.

Performance declined every year after the founder's second son took office in 2018, with no strategic response.

Inheriting a brand is not inheriting a strategy: the founder's cost discipline was a bet on price, and price alone loses to rivals that reinvest.

The company entered liquidation in 2022, fifteen years after its spin-off from Lotte Group, with the CEO publicly accepting blame.