South Korea or the Republic of Korea, is a modern successful high income economy with an emerging financial market, and global reputation as a manufacturer and exporter. Like the rest of south east Asia, it is one of Australia’s world neighbours, and a key country in our export sector. Here are 7 things worth knowing about the food and beverage market in Korea.
Imports are important.
Whilst the Korean economy as a whole is based around exports, the country is reliant on imports for food security. Up to 70% of Korea’s food is imported, and that number is increasing as its agricultural sector declines.
Imports are currently centred around raw foods and ingredients as Korea has a strong domestic food processing industry.
Changing demographics are changing the market…
The growth of Korea’s economy, combined with globalisation in consumer expectations, means that consumer demands around quality and convenience in their food and beverages are increasingly westernised.
Korea’s population is strongly urban, and its millennial generation are often well travelled. Traditional staple foods are declining in popularity, while demand for global brands and imported meat and dairy is increasing.
… and consumer behaviour.
Korean consumers, like those in other developed nations are looking for quality and price. Brand name recognition is becoming more important, while domestic production is fading as a purchasing criteria, especially if imported products offer a competitive price.
Products offering health benefits and convenience are especially desirable. In 2012-16, sales of ready meals saw a CAGR of over 29%!
Key imports… and areas of growth.
The top five food and beverage products imported into Korea are meat (especially beef), fish, dairy and fruits and nuts. The imports that have seen the most growth include eggs, nuts, lamb, tea and beer.
An aggressive retail sector with strong logistics.
Korea’s retail sector is dominated by a small number of conglomerates which each own a range of branded outlets (e.g. supermarkets, hypermarkets, convenience stores, online outlets). These market leaders then engage importers and distributors to provide the products they need.
The majority of retail trade in the grocery sector is via supermarkets and hypermarkets. That’s good news for imported food products as these larger shops allow for competition against local goods.
Korea’s strongly urbanised population structure, along with the country’s leading role in technology development means that Korea has excellent infrastructure for logistics and distribution.
Trade relationships are established.
Korea is already Australia’s third biggest partner for two way trade in merchandise. Australia is the 6th largest importer into Korea, and the 2nd largest player in key foods such as beef, wheat, and sugar.
KAFTA changes the game.
The Korea – Australia Free Trade Agreement was signed in 2014, and will come fully into force by 2033, with phased in trade liberalisation and reductions in tariffs. It’s good news for the food and beverage sectors with a huge range of products, including beef, dairy, sugar, and various crops, fruits and vegetables, benefitting from reduced or eliminated tariffs.
Does Korea sound like a market your business should be investigating? Export Connect will be hosting a market visit to Korea and Taiwan in May 2019 to help Australian businesses find out more about the opportunities on offer, and to start building crucial networks. If that sounds like an experience your business needs, feel free to get in contact – we always love to hear what we can do to help you.