'Convenience Store = Tobacco Shop' Is Now a Thing of the Past... CU Sees Decline in Tobacco Sales and Increase in Food Sales

Product Optimization Strategy: Food Sales Up, Tobacco Sales Down
Difference in Sales Proportion Between Food and Tobacco Reaches 19.5 Percentage Points
'Product Innovation' Proposed as Key Management Strategy This Year

CU is increasing the sales proportion of food products while relatively reducing the proportion of tobacco. This product optimization strategy is said to enhance store profitability while expanding its role as a consumer channel.

Convenience store CU, operated by BGF Retail, announced on the 19th that the sales proportions of food and tobacco products last year were 56.8% and 37.3%, respectively.

CU Baek Jong-won Lunchbox.
Photo by BGF Retail

CU's food sales proportion has steadily increased over the past five years. The food sales proportion, which was 54.0% in 2019, decreased to 53.2% in 2020 during the early stages of the COVID-19 pandemic. After the endemic phase, it has steadily risen each year to ▲54.9% in 2021 ▲55.6% in 2022 ▲56.8% in 2023.

On the other hand, the tobacco sales proportion shows a clear downward trend. The tobacco sales proportion was 40.1% in 2019 and 40.8% in 2020, but dropped below 40% for the first time in 2021 at 39.5%. It continued to decline to 37.8% in 2022 and 37.3% in 2023.

The difference in sales proportions between food and tobacco last year was 19.5 percentage points, which has gradually widened compared to 13.9 percentage points five years ago in 2019.

CU was the first in the industry to launch the ultra-discount private brand (PB) "Deuktem" series, achieving sales of 23 million units over about two years. Since last year, it has expanded its product range to include ingredients such as rice, vegetables, fruits, meat, and seafood, which were mainly sold at large supermarkets. Recently, CU partnered with Kurly to open a convenience store specialized in grocery shopping.

Mega hit products like Yonsei Milk Cream Bread have also driven product changes, according to CU. This product surpassed 50 million cumulative sales within two years of its launch earlier this year. In response to the high inflation era, CU is expanding ready meals such as Baek Jong-won, The Healthy Diet, and the Amazing series, and enhancing product competitiveness in ready-to-drink (RTD) highballs, healthy snacks, low-sugar ice cream, overseas direct sourcing products, and freshly brewed coffee.

CU Special Find Series.
Photo by BGF Retail

This year, CU is continuing to prioritize product innovation as a key management strategy, launching collaborative products with experts under the slogan "Delicious Encounters with Experts" from the beginning of the year. Alongside this, to stabilize grocery prices, CU recently released the industry's lowest-priced cup ramen, the 880 Yukgaejang Ramen, along with a 1,000 won value-for-money triangular gimbap.

Jinyoungho, Head of Product Division at BGF Retail, said, "We are pursuing a strategy to increase both sales and profitability by enhancing the competitiveness of food products that can continuously generate additional demand, rather than fixed tobacco purchases." He added, "Going forward, CU will continue to improve customer satisfaction through the launch of high-quality and trendy differentiated products while striving to grow store sales and profitability."

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