Purmil Incident 'Spreading Like Wildfire' Franchisees and Dairy Farmers Also "Hopeless"... Morality Controversy Too

'Business Closure' Purmil Fallout Grows
Employees 'Angry'... Protests Continue Next Week
Dealers and Dairy Farmers Also Affected... "It's Like Being Told to Die"
Distributors Searching for Alternatives... Potential for Multiple Lawsuits

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-yoon] The repercussions of Purmil's business closure are growing uncontrollably. Along with irresponsible management leading up to the closure, allegations have surfaced that Chairman Shin Junho took 3 billion KRW in severance pay when he resigned earlier this year, igniting a controversy over ethics.

According to industry sources on the 22nd, Purmil decided to end its business on the 30th of next month and sent emails on the 17th notifying about the business closure and layoffs to about 400 full-time employees. The company cited continuous losses over several years, a sharp decline in sales due to the COVID-19 pandemic, and an inability to find a solution to the growing accumulated deficit as reasons. Previously, LG Household & Health Care attempted to acquire Purmil but the deal ultimately fell through.

Immediately affected are approximately 350 full-time employees who received layoff notices, 50 employees from partner companies, about 150 delivery drivers, and over 1,000 people including owners and employees of around 500 dealerships.

Purmil employees and dealership owners alike are strongly protesting in unison, saying, "This is basically a death sentence." Kim Yong-seok (41, pseudonym), a dealership owner operating a Purmil dealership in the Jeonnam region, lamented, "Our families are on the brink of destruction in an instant, and we have no idea what to do." He added, "Some dealership owners have been running their businesses for less than a year or even just a few months, and their situation is even more dire." Lee Jae-hwan (34, pseudonym), a 6-year employee at Purmil headquarters, said, "Many anticipated this to some extent, and employee turnover increased about two years ago, but no one dreamed it would end like this. Quitting a job voluntarily and preparing to change jobs after being laid off are very different experiences."

The Purmil labor union issued a statement on the 18th, saying, "All losses stem from the owner's managerial incompetence, but the company is shifting responsibility onto all employees and conducting illegal layoffs," adding, "This is a murderous act driving employees' families to ruin and death." The union reportedly sent a certified letter requesting the company to revoke the business closure decision and is considering legal action.

[Image source=Yonhap News]

The union, dairy farmers who supplied raw milk, and truck drivers who transported Purmil products plan to hold protests in front of the Seoul headquarters next week. Prior to this, Kim Sung-gon, chairman of the Purmil labor union, held a one-person protest in front of the Sejong Ministry of Employment and Labor the day before. Chairman Kim urged the labor ministry to conduct a fact-finding investigation regarding the Purmil incident.

Retailers such as Homeplus, E-Mart, CU, and E-Mart24, which had supply contracts for Purmil and private brand (PB) products, are equally dismayed as they received no prior notice about the business closure. They are currently searching for alternative manufacturers to replace Purmil immediately. The dairy farmers who supplied raw milk to Purmil are in the same situation. There is also speculation that some parties, including institutional catering companies and the military with remaining contracts, may file lawsuits.

Dealerships handling Purmil products are also suffering significant losses. It is common to pay goodwill when acquiring dealerships, and many have lost this investment due to the business closure. The dairy farmers are similarly affected, as their supply destinations have vanished overnight. They are also reportedly planning to visit Purmil headquarters on the 25th to lodge complaints. Some analysts suggest that these parties, along with institutional catering companies and the military with remaining contracts, may seek damages.

Purmil's website has been inaccessible since the business closure notice on the 17th. Purmil is a dairy processing company famous for products such as 'Bifidus,' 'Milk with Black Beans,' and 'Banana Kick Milk.' It was spun off from Lotte Dairy under the Lotte Group in April 2007 and renamed Purmil in 2009. Since last year, the company has been solely operated by CEO Shin Dong-hwan, the younger son of Chairman Shin.

This content was produced with the assistance of AI translation services.