Once Family Competitors... Woongjin and Coway Clash in the Funeral Service Market

Woongjin Aims to Acquire Industry Leader Freed Life
Coway Pursues Differentiation Through Rental and Funeral Service Integration
Challenges: Acquisition Funding for Woongjin, Securing Funeral Service Expertise for Coway

Woongjin Group and Coway are competing in the rapidly growing funeral service market. Woongjin is expected to solidify its market dominance by acquiring the industry leader Freed Life, while Coway is aiming for full-scale market penetration based on combined rental and funeral service products.

Coway's predecessor was Korea Coway, established by Woongjin in 1989. After changing its name to Woongjin Coway in 1992, it swept the domestic water purifier market and played a dual role alongside ThinkBig as Woongjin's twin engines. After sales, acquisitions, and resales, the two companies, which became completely separate in 2019, have met again as competitors in the funeral service market after about five years.

According to the industry on the 20th, Woongjin, which secured exclusive priority negotiation rights to acquire shares of Freed Life held by VIG Partners, is conducting due diligence for 4 to 5 weeks and aims to complete the acquisition by May. Freed Life is the number one funeral service company in Korea. As of the first half of last year, it had a cumulative membership of 2.21 million, cumulative advance payments of 2.398 trillion KRW, and total assets of 2.76 trillion KRW.

Through this acquisition, Woongjin plans to maximize synergy by combining the nationwide sales personnel and sales networks of Woongjin ThinkBig and Freed Life. A Woongjin official said, "Considering credit ratings and financial soundness, we are preparing a funding plan without excessive burden," adding, "We will proceed with the acquisition without causing shock to the market."

Coway chose a straightforward approach. In October last year, it directly entered the funeral service market by establishing its subsidiary 'Coway Life Solution.' Coway's strategy is to differentiate itself through combined marketing targeting existing rental customers. It has trial-launched combined products such as 'Coway Life 499,' which offers discounts on home appliance rental fees when joining funeral services, and plans to launch full-scale funeral products in the first half of this year.

Coway plans to sequentially introduce care products and services that cover the entire life cycle of the silver generation, including culture, travel, marriage, and nursing, beyond existing funeral services.

The reason these two companies simultaneously entered the funeral service market is due to the market's growth potential and new profitability through business diversification. Demand for funeral services is rapidly increasing due to population aging and demographic changes.

According to the Fair Trade Commission, the size of advance payments in the domestic funeral service industry surged from the 4 trillion KRW range in 2016 to 9 trillion KRW as of March last year. The number of subscribers reached 9 million. This means one in five Koreans has subscribed to funeral services. Following the industry's trend to expand service scope from traditional funeral-centered services to life-wide services such as marriage and travel, the number of subscribers in their 20s and 30s has recently been increasing.

Both companies face challenges they must solve. Woongjin's biggest variable is its ability to raise acquisition funds. The market estimates the acquisition price for Freed Life to be around 1 trillion KRW. Woongjin has a precedent of management difficulties due to reckless acquisitions such as Far East Construction in the past. Coway's challenge is to secure expertise in funeral services. The funeral service industry requires professional services such as funeral ceremonies beyond simple product sales.

An industry insider said, "Kyowon Group, which was in the education business like Woongjin, also faced considerable difficulties due to lack of know-how when it first entered the funeral service market in 2010, but it is now considered a strong player in the industry," adding, "The key for Coway is how quickly it can secure core competencies such as ceremonial services."

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