Velvet’s superpower growing in Korea

Richard Rennie in South Korea MARKETS Deer

BLENDING traditional medicinal uses for New Zealand deer velvet with an emerging health and wellness market is opening the sometimes lesser-known export to a wider audience in South Korea.

Deer Industry New Zealand (DINZ) is working with a Seoulbased brand marketing company in a first-time partnership between the sector and South Korea’s largest pharmaceutical company, Yuhan Corporation.

Yuhan’s subsidiary brand New Origin has taken a unique approach to boosting its health and wellness range in the intensely competitive South Korean health and wellness sector by creating a chain of healthfocused cafes throughout the country.

Now totalling 18, the cafes combine the traditional products of velvet and ginseng in beverages, and retail assorted supplements and tonics containing the same.

Latitude director JongKyu

Jang said the move comes at a critical juncture for the sector as New Origin awaits a ruling from the country’s food and drug administration that will grant velvet the right to be claimed a “functional” ingredient in food.

“It is not so much a huge shift in the market away from the important traditional market, but is definitely marks more of an opportunity that could provide a very good platform to in turn influence other markets like Taiwan and China to do the same,” he said.

New Origin Café’s offerings include a ginseng and deer velvet tonic. A full screen video promoting the product includes sweeping vistas of New Zealand high country and deer farms.

Jang said the deal between NZ and Yuhan is a first in that the big corporation agreed to source from only one supplier, rather than opting to bargain across multiple suppliers to drive price down.

The original memorandum of understanding extends back to 2017 and included AgResearch as a partner, committing to more research into velvet’s efficacy, treatment uses and dose rates.

Yuhan also committed to $1.5 million for the R&D bill, and to wear the costs involved in the lengthy process of having velvet registered as a functional food, and taking it to market.

At the time Yuhan’s head of marketing, Ashley Kyung-in Chung, said Yuhan’s objective was to successfully develop, register and market a health food product containing scientifically validated components of NZ deer velvet.

She said Yuhan had chosen NZ as the source of velvet because of the country’s transparency on three fronts – the farming environment, animal welfare and the traceable, hygienic supply chain.

“People will often give deer velvet as a gift and see its origins as something that also makes them a better person. This is especially so for the generation who use Instagram for telling their story,” said Jang.

“It has been a long journey to get this far, and NZ can claim to have been there from the start.”

He was optimistic the “functional” label’s approval will be granted this year.

Latitude has bought significant experience and local knowledge to bear in helping NZ companies access the South Korean market.

The company was founded by Kiwi Lewis Paterson, who spent much time trying to formalise the trade in velvet with Korea, at a time when it was dominated by a grey trade through China.

The company has represented several NZ companies in Korea, including Avanza avocados, Leader Brand for squash and NZ blackcurrant growers.

As valuable as the tonic/wellness market may come to be, the traditional market continues to claim 70% of velvet sales, and Jang said it needs to continue to play a healthy role in sales.

Traditional markets like Yangnyeongsi, South Korea’s largest medicinal herb market, have strong patronage from an aging demographic accustomed to traditional practices.

“In administering traditional prescriptions, you tend to get a higher volume prescribed so we want to keep the traditional sector supplied, given any addition to foods and products tends to be in very low levels.”

However, expectations are that volumes going into the high value tonic/wellness market may also get a boost, thanks to new regulations requiring a certain minimum amount.

South Korea is the first country that DINZ chose to localise and launch Nature’s Superpower. Nature’s Superpower is a single proposition to unite NZ’s global stories on venison and velvet in a clear, ownable position for the industry.

Rhys Griffiths, marketing manager for DINZ, said Yuhan’s science approach and its ambition to develop health functional food velvet extracts fits well with the Nature’s Superpower supplement proposition.

“We will continue to work, where appropriate, to provide assistance that will help Yuhan achieve its success with its New Zealand velvet products,” Griffiths said. Richard Rennie travelled to Seoul thanks to funding from the Asian New Zealand Foundation.