South Korea’s strong economy (11th in the world in 2015), high per capita purchasing power and dependence on food imports make the country an extremely attractive prospect for global food exporters, even if the total imports were on a downward trend in 2015. We’ll try to analyze which imported products have the biggest potential and what are the best steps for entering the market and contacting food importers and distributors.
Being one of the biggest export economies of the world, Korea has strong trade connections around the globe. A Free Trade Agreement with the European Union, that became functional in July 2011, has further improved its status. The agreement will reach its full strength in July 2016, making import duties on almost all products a thing of the past. In a top of importers from the EU, South Korea occupies the 8th place and exports of goods to the Asian country amounted to 43.2 billion Euro in 2014.
Since 2012 Korea also has a Free Trade Agreement with the US, which is the leading exporter of agricultural products to the Asian country.
Other important trade partners in the food sector are China, Australia, Canada and Thailand.
Korea’s relatively limited agricultural potential, combined with a large population of more than 50 million, force the country to rely quite heavily on food imports (around 70% of its needs). The growth in this sector is fueled by the consumers’ focus on organic food, more diversification and better product quality, among others.
Top food imports and trends
The Korean food market is currently influenced by a number of trends that shape the consumer demand. The population is adopting a western style and diet which opens the door for popular US and European products. The global organic trend that focuses on high quality products with multiple health and wellness benefits also has an increasing following among young professionals and the older population who tries to stay fit. Price is less of a problem than in other Asian countries and the Koreans tend to spend more on nonessential food items.
Meat imports (both fresh and frozen) are on a growing trend, especially for pork and beef. Pork products are gaining an increased popularity among the consumers and frozen pork is the most important category among the frozen food imports. Some of the most important sources of pork are the United States, Germany and Chile. Some of the European countries who have a tradition in pork production could find the country an interesting prospect.
Beef imports have also reached record levels last year following an explosive of 300% since 2005 . Korea imported beef worth 1.81 billion USD from Australia, New Zealand, Canada and a few South American countries, especially Uruguay.
Chocolate, snacks & biscuits
Korean imports of various snack products, cookies and biscuits are on a constant increase since 2005 (more than 290% to a total of almost 122 thousands metric tons).
Recent statistics also show promising results for chocolate and an excellent opportunity for foreign chocolate producers – imports grew by 200% since 2000 when the total imports were around 15,500 tons. Koreans prefer chocolate products from the United States, Belgium, Germany, Italy, France of China.
Fresh food – nuts & fruit
The consumption of fresh food products is growing slowly but steadily, which also influences the country’s imports for these commodities. Nuts and fresh fruit imports (which are used for juices) show the most promise for growth and should be taken into consideration by exporters who are trying to decide what products should they introduce to the Asian market.
Cheese is gaining a lot of attention from Korean consumers who have become accustomed to the product thanks to the influence of western dishes like pizza, lasagna, etc. Cheese imports have increased dramatically in the last decade and are now close to the 500 million barrier. The country imports mostly fresh cheese, like mozzarella or cream cheese, but also other varieties that can be used as topping.
Other promising imports are in the oils (vegetable and seeds) and fats segment, powdered and non-dairy milk, as well as ready to eat meals.
The retail sector
South Korea has an unusually large percentage of urban population, about 80%, and a strong food retail ecosystem, which relies on specialized importers and distributors. Hypermarkets hold close to 45% of the market share and are the main channel for imported food products. The most important names are Homeplus, E-mart, Costco or Lotte Mart.
Some interesting trends can be seen in the retail scene too – for example many Korean seafood buyers tend to shift from shopping only from traditional fish markets to focusing more on the diverse offer of the supermarkets and discount stores.
As many Koreans live busy lives and focus on their careers, online shopping is also significantly more developed than in other Asian countries and many retailers have a strong online presence.
Tips for entering the market
Even if Korea is considered a country where exporters are met by a friendly system that facilitates trade, producers interested in the food market should make sure that they comply with the country’s import regulations (details available by clicking the following link).
In order to enter the Korean market producers should make sure that they are supported by a reliable food importer who will guide them and provide vital market information, as well as customs clearance and promotion is many cases. Agents (offer agents) can also be an alternative.
Marketing strategies should also be discussed with the importer, as well as short and long term plans that will allow the development of a solid relationship. Exclusivity shouldn’t be a problem as it’s not a very usual demand in Korea.
Importers can be met via various strategies, among them cold contacting via a reliable list, taking part at the major food expos, like Seoul Food and Hotel or being recommended by a government or trade agency. After the initial contact producers can send the food importer various marketing materials, like product brochures and samples, as well as detailed price lists.
Finally, after these steps, exporters should focus on personal visits which are very important for companies who want to succeed in Korea. Business meetings and dinners with the contacts help create trust and develop communication.