Hy focuses on B2B amid deepening losses

(Hy)

South Korean dairy and health food products manufacturer hy Co. is accelerating its push into business-to-business (B2B) probiotics and low-sugar product development in a bid to recover from deepening financial losses and operational headwinds.

The company recorded 1.68 trillion won ($1.2 billion) in revenue in 2024, up 10.8 percent from the previous year. However, its operating loss widened to 64.5 billion won, more than double the 27.4 billion won loss posted in 2023.

The downturn was largely driven by underperformance in core dairy operations and mounting losses from subsidiaries in food delivery and medical robotics.

To reverse this trend, hy is betting on probiotics as a high-margin, scalable growth engine—especially through B2B deals that do not require heavy marketing expenditures.

The company supplies patented probiotic strains to other health and wellness companies, including CKD Healthcare. It expects this channel to become a pillar of future profitability.

“The B2B probiotics segment offers strong margins and stable demand,” said a company official. “Many leading brands now use our individualized probiotics as the core ingredients in their premium products.”

Hy launched its dedicated B2B brand, hyLabs, in 2020.

Last year, the division posted 11 billion won in revenue. The company is now expanding its probiotic product range to include functional ingredients that target memory enhancement, immune support, hangover relief, and digestive health.

New products based on fermented red ginseng and fermented deer antler were added in 2024. Hy is preparing additional applications for regulatory certification through the Ministry of Food and Drug Safety.

As of 2025, hy holds over 5,000 strains of probiotics, more than 250 types of natural extracts, and six proprietary ingredients certified under individualized regulatory approval.

According to the Korea Health Functional Food Association, the domestic health functional food market was valued at about 6.04 trillion won in 2024, representing a 16.8 percent increase from 2020.

Market analysts say that as probiotics are increasingly recognized for benefits beyond gut health—such as brain function and skin improvement—product diversification and functional targeting have become critical for growth.

In parallel with its B2B efforts, hy is also responding to consumer demand for lower-sugar offerings. The company has introduced new SKUs and reformulated existing products under the low-sugar banner.

Most notably, it recently launched YakultXO, its first zero-sugar fermented drink under the Yakult brand. The product contains no sugar, fat, or added calories, with just 10 kilocalories per 100 milliliters.

It has also introduced a reduced-sugar version of its flagship vegetable and fruit juice line, Haruyachae. These moves are aimed at capturing market share in the rapidly growing segment of health-conscious consumers, particularly among younger demographics.