PLENARY SESSION CEO & CFO Visit to Korea
February 1st, 2016
ABOUT KOREA
KOREA, LOCATED IN THE FAR EAST SINCE 2333 BC
2333 BC
37 BC – 668 AD
57 BC – 935 AD
1392 - 1897
Gojoseon kingdom Three kingdoms United Silla dynasty Joseon dynasty (King Sejong created "Korean alphabet”)
1950 - 1953 Korean War
1988 Seoul Olympic
2002 Korea-Japan World cup
2018 PyengChang winter Olympic
3
A COUNTRY TECHNICALLY UNDER WAR,
BEING ONLY SEPARATED COUNTRY IN THE WORLD
4
SOUTH KOREA HAS SMALL TERRITORY
FRANCE
643,801㎢ Ranking 43th
SOUTH KOREA
99,720 ㎢ Ranking 109th
Source : CIA The World Factbook(2014) 5
1
L U X EM B O U R G
2
SWITZER L AN D
96,268.65
BUT HAS POWERFUL ECONOMY
84,069.79
3
QATAR
81,602.85
4
N O R WAY
80,748.90
4
GERM A NY
4,210.36 3,413.48 2,853.36
FRA NC E
2,469.53
INDIA
2,308.02
BRA ZIL
1,903.93
ITA L Y
1,842.84
10
C A NA DA
1,615.47
11
KOREA
1,435.08
5
UNITED3 KINGDOM
6 7 8 9
GDP NOMINAL
D EN M AR K
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
3
JAPAN
11,211.93
SIN G AP O R E
8
2
C HINA
IC EL AN D
7
18,124.73
U N ITED @ STATES
6
1
UNITED3 STA TES
5
Korea GDP Ranking No. 11th, Capital Ranking 28th AU STR AL IA
56,421.39
54,331.40
53,604.15 52,821.79
UNITS : US dollars
52,454.38 49,582.12
SWED EN
49,139.01
SAN @ M AR IN O
47,329.05
IR EL AN D C AN AD A
45,028.93
AU STR IA
44,475.59
N ETH ER L AN D S
44,249.48
U N ITED @ K IN G D O M
43,940.00
FIN L AN D
42,732.77
H O N G @ K O N G @ SAR
42,437.29
N EW@ ZEAL AN D
42,017.26
G ER M AN Y
41,955.23 41,267.28
B EL G IU M FR AN C E
38,458.50
U N ITED @ AR AB @ EM IR ATES
37,962.11
ISR AEL
36,658.80
J AP AN
33,223.36
K U WAIT
32,719.73
ITAL Y K O R EA
30,593.80 28,338.23
B R U N EI@ D AR U SSAL AM
26,804.39
SP AIN
26,516.99
GDP CAPITAL
Source : IMF World Economic Outlook (2015) 6
WITH SLOW BUT STEADY GDP GROWTH GDP grows 2-3% point every year UNITS : US dollars
CAGR : 3%
CAGR : 4%
Source : OECD
7
WE HAVE 50M INHABITANTS DENSITY MAP FRANCE
121 people per ㎢ (81th in the world)
KOREA
517 people per ㎢ (17th in the world)
Source : The World Bank (2014), OECD(2012) 8
WE HAVE 50M INHABITANTS LARGE METROPOLITAN AREAS WORLD RANKS 1th
68.3% KOREA
65.8% JAPAN DENMARK
58.3%
50.3%
USA
MEXICO
17th
44%
39%
38%
37.7%
ITALY
SWEDEN
BELGIUM
CZECH
37.5% FRANCE
Source : The World Bank (2014), OECD(2012) 9
WE ARE FAST AGING SOCIETY PERCENTAGE OF POPULATION OVER 65
11.1% 15.8% 37.4% 2010 2020 2050
Source : National Statistics Office
LOWEST BIRTH RATE OECD RANKING
1 2 3 4 8
ISRAEL 2.68 MEXICO 2.27 FRANCE 2.08 TURKEY 2.05 ENGLAND 1.89 …
26 29 31 34
GERMANY GREECE JAPAN KOREA
LONG LIFE EXPECTATION
Age 81.7
1.44 1.43 1.4 1.25
Source : CIA The World Factbook
Source : National Statistics Office
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BUT, WE ARE PASSIONATE PEOPLE TOGETHER!
IN THE SPIRIT OF ‘PALI PALI’
1st street in Seoul
Birth of ‘KOREA’ from JP colonization
Conglomerate power
1st Olympic game in KR 1st McDonald’s in KR Joins WTO
Made in Korea phone to K-wave
KOREA WORLD
1900 -
1st metro in NY
40’s - 50’s
60‘s - 70’s
80’s - 90’s
Birth of ‘brands’ from mass production
Flower power
APPLE’s iconic 1984
2000 - NOW APPLE’s smartphone
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WE ARE VERY COMPETITIVE TO EACH OTHER
#1 or high ranking obsession
No.4th in 2002 World Cup No.5th in 2010 Winter Olympic 13
EVEN FROM WHEN WE ARE YOUNG CHILDREN
RATES OF UNIVERSITY GRADUATE
PRIVATE SPENDING ON EDUCATION (% OF GDP)
83.8% 64% 45% 40%
KOREA
USA
JAPAN EUROPE
14
These well educated, competitive people are driving consumption of today
YOUNG FORTIES: WHO SPEND FOR PLEASURE AND WELL-BEING
Anti-aging cosmetics
연령별 인구 현황(2015/Feb) 단위:천명, 자료:통계청
Luxuries
16
WHEN SHOPPING, THEY WANT THE HIGHEST EFFICIENCY
How often do your order delivery food to your home?
FOOD DELIVERY SERVICE
AUSTRALIA
CHINA
KOREA
SINGAPORE
51% 31% 11% ONCE A WEEK OR MORE
5%
2%
1-3 SEVERAL ONCE A NEVER TIMES A TIMES YEAR MONTH A YEAR OR LESS
IN KOREA Source : Asia Pacific Food Forward Trends Report II
17
Such role is Now expanded to all ASIA
SAMSUNG > APPLE SMART PHONE NO.1 SELLER = SAMSUNG ELECTRONIC
SMARTPHONE WORLDWIDE MARKET SHARE (Q2/2014)
19
KOREAN BEAUTY KOREA IS COSMETIC MARKET LEADER When L’OREAL launched BB to Asia, Korean market had CC already
YOUTUBE KOREAN BEAUTY CHANNELS
20
KOREAN CELEB = WORLD CELEB G-dragon Instagram followers hit 7.6million
THE LEADER OF BOYGROUP BIGBANG’, G-DRAGON HAS BECOME A WORLD STAR
OTHER GLOBAL STARS FROM KOREA
21
KOREAN FOOD The annual sales volume of ‘Choco-pie’ hits FIVE HUNDRED MILLION at RUSSIA in 2015.
‘Banana-milk’ : MUST-EAT-ITEM to Chinese tourist
China FMCG taking Korean letters in their front pack, to enhance premiumness
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KOREAN CONGLOMERATES LEADS ALL TOTAL VALUE OF LISTED COMPANIES
1,264 trillion won TOTAL VALUE OF LISTED 10 MAJOR CONGLOMERATES STOCK : 882 trillion won TOTAL VALUE OF LISTED 4 MAJOR CONGLOMERATES STOCK : 670 trillion won
TOTAL GDP
1,377 trillion won ASSETS OF 10 MAJOR CONGLOMERATES : 1,070 trillion won ASSETS OF 4 MAJOR CONGLOMERATES : 716 trillion won
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KOREAN TRADE CHANNEL SO FRAGMENTED TOTAL TRADE
CHEESE CATEGORY
45.0 41.9
TRADITIONAL
40.0 37.5
Ind. Small Smkt
35.0 32.1 30.0
25.0
30.7
29.8 28.3
26.5 26.0
33.0 32.6
32.7
33.0
Hyper 28.1 24.9
24.4
23.0
24.3 22.6
20.0
19.3
Department CVS TV4Homeshopping Supermarket
15.0
15.0
10.0
9.8 8.4
5.0
5.4 4.9
0.0
0.5
2011
6.6 5.4
10.7
11.3 11.0
7.5
7.8
5.7 4.9
5.8
2013
Mobile(2) Total4Online(1+2)
7.7 6.2
Union Shop Chain Large Smkt Hypermarket Online
Hyper Offline
1.5
2012
2014
3.5 3.3 3.3
CVS Ind.Large Smkt
2015
Hypermarket
MAT15 FY14 FY13
3.5 3.3 3.3
Internet4(1)
26.5 24.3
0.2 0.1 0.1
14.9 14.9 15.2 4.3 4.0 4.1 17.0 16.6 16.7 3.2 2.5 2.4 50.4 50.5 51.4 53.6 53.1 53.8
0 10 20 30 40 50
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KOREAN TRADE CHANNEL SO FRAGMENTED Starbucks Korea Annual sales & no. of stores
CVS CHANNEL SALES GROW UP
4,820억
10조
Sales(KRW)
2,422억
8조
913억 6억
6조
86억
599
680
327
Stores
144
4조
10
2조
’00 ‘05 ’10 ‘13 ‘14 Market Scale of Cafe 3조원 2조4000억
0
’01 ‘05 ’07 ‘08 ‘09 ‘10 ‘11
1조5000억 2010
2011
2012
25
TOTAL DAIRY MARKET IS 4 BILLION €, AND IT IS INCREASING 5,600,000& 3,700,000'
3,582,185'
3,600,000' 3,500,000'
5,500,000&
3,400,000'
5,450,000&
3,300,000'
5,400,000&
3,200,000' 3,100,000'
5,536,498&
5,550,000&
5,350,000&
3,036,455'
5,300,000&
5,292,942&
3,000,000'
5,250,000&
2,900,000' 2,800,000'
5,200,000&
2,700,000'
5,150,000&
2009
In volume
2013
(Tons)
2009
In value
2013
(M KRW)
26
MILK PRICE IS HIGH IN KOREA BECAUSE OF COW FEED IMPORT 70 58
26
29
France
55
48
28,680
31
EU
Japan 2006
39,772
2010
Milk Price
/100L (euro)
Korea
2006
Cow feed
2010
/100L milk (krw)
27
GROWTH DRIVERS FOR CHEESE BETWEEN 10 AND 14 Penetration
Innovation
Promotion
Source : Penetration from Nielsen Consumer Panel Innovation and promotion from news clippings
28
RETAIL VOLUME ACCOUNTS FOR 16%, BUT IT IS GROWING FAST WITH HIGH VALORIZATION Volume1Volume1 (Tons) (Tons) 20,000
20,000
18,000
18,000
16,000
16,000
12,000
12,000
10,000
10,000
Retail8,000 6,000 16%4,000
8,000
18,492 18,492
13,511 14,000 14,000 18,492
37%
(growth)
19.6
6,000 4,000
2,000
2,000
0
0
2010
FS 84%
13,511
99,575
2010
Total Cheese (Retail +FS) (2014)
2014
Retail Volume (Tons) 74% 209
Total : 118,067
2014
20 18
15.5
11.9
16 14
8.9
12
(growth)
363
9.8
10 8 6
1.2
4
2014
2
2010
0
2010
2014
Retail Value (M Euro)
Korea
Asia-Pacific
Western-Europe
Cheese Valorization (Euro/KG)
Source : Korea Dairy Committee for total cheese volume, Bel Global Cheese for retail cheese volume 29
DRIVEN BY MODERN TRADE Traditional-0.1%
Others
7.9%
93%= Modern Trade
CVS
31.5% Large Smkt
53.1% Hypermarket ’01 ‘05 ’07 ‘08 ‘09 ‘10 ‘11
Distribution Channel Total Korea Value(%) (2014)
Source : Korea Dairy Committee 30