Food industry in Korea. January 2012. osec.ch
Food Industry in Korea. Title.
Food Industry in Korea.
Language.
English
Number of pages.
34 pages
Content.
The economic development of Korea over the past 50 years has been among the most rapid and sustained. It has transformed from one of the poorest countries to becoming a leading industrial nation and the world’s 8th largest exporter. Korea’s GDP growth in 2010 reached to 6.2% which is the 2nd highest among the OECD countries, with a GDP of CHF 1,324.8 billion and per capita GNI of CHF 27,115. With a trade-dependent economy, Korea’s total trade volume has reached CHF 1,009 billion in 2011 for the first time in history, i.e. the cumulative imports and exports for 2011 stood at CHF 409.1 billion and CHF 520.1 billion, respectively. Korea relies largely on imports of agricultural goods and food product as only 30 % of its land is arable and the rest is mountainous. Much of the limited farmland has been dedicated to rice production. Over 50% of Korea’s population of 49.8 million lives in the Seoul metropolitan area and its suburban areas. With the increasing household incomes and consumer’s diversified tastes of food products, this has helped expand the import market of food and agricultural products.
Author.
Ken Yang, Korea Business Services, Inc.
2
Contents. 1.
INTRODUCTION ................................................................................................................................................... 4
2.
REGULATORY ENVIRONMENT........................................................................................................................... 6
3.
FOOD INDUSTRY ................................................................................................................................................. 8 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10
4.
RETAIL .................................................................................................................................................................. 8 SPECIALTY AND GOURMET STORES ........................................................................................................................ 9 ORGANIC AND NATURAL FOODS ........................................................................................................................... 10 FUNCTIONAL FOODS ............................................................................................................................................ 11 PROCESSED FOODS ............................................................................................................................................ 12 BEVERAGES ........................................................................................................................................................ 13 PRIVATE LABEL ................................................................................................................................................... 14 FOODSERVICE AND HRI ....................................................................................................................................... 15 CHALLENGES AND OPPORTUNITIES FOR SWISS FOOD SUPPLIERS .......................................................................... 19 INDUSTRY TRENDS ........................................................................................................................................... 20
FOOD DISTRIBUTION ........................................................................................................................................ 23 4.1 4.2 4.3
ROUTE TO MARKET ............................................................................................................................................. 23 NATIONAL DISTRIBUTORS..................................................................................................................................... 23 PRICING.............................................................................................................................................................. 25
5.
CONSUMER TRENDS ........................................................................................................................................ 26
6.
EXPORT CHECKLIST......................................................................................................................................... 28
7.
SUMMARY........................................................................................................................................................... 29
APPENDIX I: LIST OF TRADE SHOWS AND EXHIBITIONS IN 2012 ....................................................................... 30 APPENDIX II: LIST OF ASSOCIATIONS..................................................................................................................... 32 APPENDIX III: PUBLICATIONS & INDUSTRY MAGAZINE ....................................................................................... 33
3. Food Industry. 3.1
Retail
The retail business sector in Korea has been dramatically modernized in a large scale format since 1993 when the first hypermarket store, E-mart, opened. Hypermarket Chains, Grocery Supermarket Chains, On-line Retailers, Department Stores and Convenient Stores which are the typical retail formats in Korea have grown rapidly over the traditional retail outlets of street and open market.
Figure 2. Total Retail Sector Sales in Korea Unit: CHF Billion
10%
7% 6% 5%
The total sales of retails are reached to CHF 227 billion in 2010 with a 6.4% increase in CAGR from CHF 176 billion in 2006.
4%
Hypermarkets, armed with aggressive pricing, one-stop shopping convenience, convenient location, and efficient products assortment, have advanced to become the largest retail force in Korea since 2002. Hypermarket accounted for 12.4 % of overall retail sector sales with CHF 27.73billion in 2010.
176
187
199
207
227
2006
2007
2008
2009
2010
Sales
Growth Source: Statistics Korea
The most noticeable channel of retail is the on-line retail sector. With the help of advanced information communication technologies, the sales of on-line retailers which include internet shopping, TV Home-shopping and catalog shopping businesses, have grown up CHF 25.6 billion in 2010, a 11.2% increase from CHF 19.7 billion in 2008. Department stores and grocery hypermarkets maintained a solid growth between 2008 and 2010. In particular department stores were one of the most successful retail channels with up-scaled store layouts and more luxury product sales. Grocery supermarkets have found a new growth momentum during the last several years targeting neighborhood markets in residential areas. Convenient stores also showed an outstanding growth reflecting busier lifestyle of local consumers. Table 5. Retail Sector Sales and Market Share in Korea (USD Billion)
Segment Hypermarket Online Retailer Grocery Supermarket Department Stores Convenience Store Other Total
2008 Sales 24.76 19.66 17.69 16.29 4.52 116.08 199.10
2010 M/S 12.4% 9.8% 8.8% 8.1% 2.2% 58.9% 100%
Sales 27.73 25.59 19.58 19.99 6.01 127.93 226.90
M/S 12.2% 11.2% 8.6% 8.8% 2.6% 56.3% 100%
Sales Growth 22.8% 29.9% 10.7% 22.8% 33.1% 10.2% 14.0%
Source: Statistics Korea
Total sales of foods products in the retail sector amounted to CHF 50.44 billion in 2010. This is 22% of overall retail sales in Korea. Key players in Hypermarkets include E-Mart, Lotte Mart and Homeplus. E-Mart operates 124 retail stores nationwide 8