With Seoul Food & Hotel less than three weeks away, many Australian food and agribusinesses are gearing up to fly to Seoul and engage with buyers. As such, we’re sharing some insights to help companies prepare for–and get the most out of–the expo!
From Korean BBQ to kimchi and bubble tea, South Korean food and beverage trends have made their way around the world–including Australia! But in this article, we’ll take a look at the key trends making waves in South Korea itself.
1. A Large and Lucrative Food and Beverage Market
With a population of almost 52 million, South Korea’s population size almost doubles that of Australia. And this means double the number of consumers in the food and beverage market! Plus, the imported food and beverage industry is huge: over 55-60% of all F&B supply in South Korea is made up of imported products, and retail sales of packaged foods are valued at over US$35 billion. This represents an enormous opportunity for Australian exporters to pave their way in the market.
In terms of the most attractive F&B categories, beer, seafood and meat became the three most consumed food groups in 2020. Per capita seafood consumption is amongst the highest in the world at 55-70kg per year, and the same trend is evident for coffee, with the average Korean consumer consuming 12.3 cups of coffee per week.
2. Alcohol Consumption Amongst the Highest in Asia
Similar to seafood consumption trends, South Korea also trumps many other countries when it comes to alcohol consumption. In fact, per person consumption of alcohol in Korea is the second-highest in Asia after Laos, with the average Korean consumer drinking 10 litres of pure alcohol per year. So, why is this the case? Well, alcohol plays an important role in social and business life in Korea, where after-work drinks are a common occurrence. Beer is a popular choice and the fastest-growing alcoholic beverage segment with a 5.50% CAGR over the next five years, while local specialty soju is also a go-to. However, western products have been growing in popularity in recent years, including single malt scotch whisky and wine, particularly light sparkling wines. Mindful drinking is another growing trend, which is seeing some consumers opt for no or low alcohol formulations, or even reduced calorie options.
3. High Disposable Incomes
The opportunity for F&B exporters is further strengthened by Korea’s high disposable incomes, ranking third by disposable income in Asia. Over 15 million citizens maintain disposable incomes of over US$25,000, with the majority of these households residing in major cities like Seoul.
In the F&B industry, this translates into growing demand for premium grocery products. But in South Korea, consumers undertake their fair share of research before jumping on new products or brands. This means that exporters of premium foods and beverages need to craft and communicate a clear value proposition that’s relevant to consumers. Fortunately, Australia already maintains a high-quality image in the minds of Korean consumers, who are displaying growing interest in premium Australian exports include beef, lamb, seafood, fruits, red wine, dairy and packaged foods such as cereal and better-for-you snacks.
4. Growth of Single-Person Households
Another growing trend to watch for F&B exporters is the rise of single-person households in South Korea. Comprising roughly one third of households, this growth is attributed to the growing number of couples choosing to delay having children, or choosing not to have children at all. This growth is also being driven by South Korea’s ageing population, with the over 65 population expected to reach 20% of the total population by 2026.
But, how is this trend affecting the F&B industry? Well, the impact can be summed up in one word: convenience. This, however, manifests in many different forms. Consumers are shifting from home cooking to takeaway and out-of-home meals. They’re also buying pre-packaged, partially cooked and ready meals – and doing so at much higher levels than the average global consumer. We can see this in the numbers – according to Global Data, frozen foods, prepared meals and soups are forecast to be the three fastest-growing categories in South Korea’s F&B industry over the next five years. Plus, the home meal replacement market has exploded in recent years, prompting F&B players to develop offerings such as premium meal kits.
5. Healthy Eating and Flexitarian Diets Take Off
As we’ve seen across the world post-COVID-19, consumers have become much more focused on the health attributes of the products they add to their shopping carts. Korea is no different. Following a rise in disposable incomes and pandemic-induced health-consciousness, South Korean consumers are much more willing to invest in healthier F&B products, spending more on products with reduced sugar, fewer artificial ingredients and additional nutrients. Meanwhile, free-from foods are seeing interest, including gluten-free and lactose-free goods. Organic product sales have also seen double-digit growth in recent years, especially categories like milk powders, and functional snacks and beverages.
While plant-based diets represent just a small segment of the population, at 1.5 million people according to the Korea Vegetarian Union, flexitarianism is taking off. Over ten million South Korean consumers follow a flexitarian diet, driven by motivations including health and ethical concerns–both for animals, and the natural environment. But while sustainability concerns are prompting some consumers to switch to plant-based diets, others are simply becoming more mindful of the products they select off supermarket shelves. In particular, consumers are willing to pay higher prices for grocery products which create fewer packaging waste. The sustainability trend also prevents some consumers from buying groceries online, as online orders often come with much more packaging waste than in-store purchases.
6. Health Supplements Take Off Post-COVID-19
When exploring the shift towards healthier foods and beverages, we can see certain ingredients and properties being especially important among the South Korean population. In particular, consumers are looking for products containing polyphenols, flavonoids, omega-3s, prebiotics, probiotics, protein and vitamin D. This creates a strong opportunity for Australian manufacturers of health supplements like fish oil and vitamins, and functional foods and beverages such as kombucha, cereal bars and protein powders. The driving force behind this demand has been the impacts of the pandemic, which saw consumers re-evaluate their approach to health. Another contributing factor is South Korea’s highly urbanised population, with younger generations especially working long hours and thus having less time to exercise, prepare nutritious meals and spend time outdoors. Plus, the rapidly ageing population naturally spurs greater demand for health supplements.
7. Grocery Channels Offer Strong Opportunities
As one of Asia’s most urbanised countries, with over 90% of residents living in cities, South Korea’s modern grocery retail landscape is highly developed. In fact, more than 85% of grocery retail occurs via modern channels including supermarkets and hypermarkets. The e-commerce grocery market is also highly developed and represents 25% of all grocery sales, yet South Korean consumers continue to make their way to retail stores to buy fresh produce, access a larger range of produce and avoid delivery costs.
In line with the consumer demand for convenience foods, the convenience store channel has also taken off in recent years. The movement towards shopping close to home at one-stop shops has become common worldwide post-COVID-19, and is especially pronounced in Korea. In fact, convenience store revenue has surpassed that of supermarkets, and outlet numbers soared above 50,000 in 2021. To meet consumer demands for one-stop shopping, convenience retailers have started stocking more grocery products, including wine and fresh produce. To compete, supermarkets are stepping up the efforts, stocking more wines and beers.
Wrap-Up
That rounds off our exploration of South Korea’s food and beverage market. As we’ve seen, the market is highly lucrative thanks to the country’s large consumer base and demand for premium foods. In particular, consumers are seeking out premium beers, wines, seafoods, red meats and functional snacks and supplements, and are also willing to spend more on products which are convenient, sustainably produced and better for them. Meanwhile, the dominance of modern grocery retailers including e-commerce supermarkets and convenience stores is a positive trend for Australian exporters, mirroring Australia’s modern retail landscape.
We hope you’ve found these insights on the South Korean market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.
