The Food Industry of Korea

CONTENTS

1. Food industry market size

2. Trends in production and demand of the food industry

3. Status of exports and imports in food ingredient products

4. Outlook for the Korean food industry

5. Details for the food ingredient exhibition

The Food Industry of Korea

1. Food industry market size

Food production from Korea in the year 2010 was about 40.41trillion won(USD 35.0bln) and revenue from
sales were 44.44trillion won(USD 38.0bln). Sales revenue in 2011 is expected to be 48.80trillion won(USD 42.2bln)
which is a 4.3% increase compared to previous year.

According to the KOREA FOOD & DRUG ADMINISTRATION,

production in food industry in Korea grew by 8.1% per year between the year 2005 and 2009. This rate is
significantly higher than the growth rate for manufacturing (5.6 %) and GDP (5.3%).

As Koreans are increasingly developing a heightened awareness and interest in health, premium food markets are
emerging which in-turn is fueling growth in the food industry.

2. Trends in production and demand of the food industry

The market size for the Korean food ingredients industry in 2009 was 19trillion won(USD 14.6bln) and is
expected to rise up to 24.94trillion won(USD 21.6bln) in 2014 by an annual growth rate of 5.6%.
Within the food ingredient industry, the food additives sector had the highest growth rate of 13.3% between 2005
and 2009. Other sectors to follow were livestock products(9%), health food(8.5%) and the equipment, containers,
packaging sector (8.4%).

Looking at the 2009 manufacturing output by products of the food ingredient industry, dairy products
[5.12trillion won (USD 4.4bln)] came first followed by packaging equipment and utensils[3.97trillion won (USD
3.4bln), beverage [2.59trillion won (USD 2.2bln)], and flour & other foodstuffs[2.89trillion won (USD 2.3bln)], meat
products[2.80 trillion won (USD 2.4bln)].

To be more precise, ranking first was white sugar[1.25 trillion won (USD 1,080.6 mln)], second being white
flour[1.15trillion won (USD 993.8mln)], third, instant food[1.11trillion won (USD 963mln) and fourth was
carbonated drinks[1.11trillion won (USD 962mln)].

There were 22 thousand food manufacturing and processing companies in 2008, which showed a 5% increase
compared to 21 thousand in 2007. Within these companies the employees in the food-additive companies showed
a 3.1% increase totalling 242,400 people.

The top 20 companies by company turnover are as the table below.

● Top 20 companies in food industry

(Unit : billion won)

Ranking Company name Amount Ranking Company name Amount

KOREA YAKULT
1 CJ 3,962.7 11 1,142.5
CORPORATION

2 NONGSHIM 1,895.2 12 NONGHYUPSARYO 1,061.6

NANYANG DAIRY
3 SAMYANG 1,665.5 13 PRODUSCTS 1,028.1
CORPORATION

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 4 DONGSUH 1,421.8 14 THE HITE 1,022.3

LOTTE
5 1,416.5 15 DONGWON F&B 1,020.3
CONFECTIONERY
MAEIL DAIRIES
6 OTTOGI 1,372.8 16 909.5
CORPORATION

7 PARIS CROISSANT 1,312.7 17 KOREA GINSENG 842.8

CARGILL AGRI
8 LOTTE CHILSUNG 1,301.8 18 832.1
PURINA

9 DAESANG 1,202.4 19 JINRO 705.6

10 DAEHAN FLOUR 1,167.2 20 COCACOLA 700.6

source: Financial Supervisory Service

note: Sale data from 2010.

3. Status of exports and imports in food ingredient products.

The total import amount of foods including raw material and ingredients in the year 2010 was USD
20.7bln, the amount of export being USD 5.4bln. This has resulted in a trade deficit of USD 15.3bln.

Of the above import amount, the amount of imported foods in 2010 excluding animals, meat, fish, cereals and
animal-feeds has reached USD 10.9bln.

According to the 2009 import statistics major countries that Korea imported foods from are the United
States(24.7%), China(20.4%), Australia(8.5%), Brazil(5.0%), Japan(3.9%), Vietnam(2.9%), United Kingdom(2.7%),
Malaysia(2.7%), Philippines(2.6%) and Thailand(2.5%) .

Due to rapid industrialization, Korea has experienced a shortage of agricultural land, man-power, resulting in a
rising rate of food and food ingredient import, and this is thought to be continued into the future.

● Annual import and export for food and raw materials of Korea.
(Value : USD million)

Division 2008 Import 2009 Import 2010

Division 2008 Import 2009 Import Import (A) export (B) A-B

Total 21,290.0 17,242.3 20,749.5 5,445.3 15,304.2

Animal 45.2 38.8 50.8 1.8 49.0

Meat 2,031.3 1,677.8 2,071.2 30.5 2,040.7

Fishes 2,531.4 2,335.3 2,735.2 1,395.7 1,339.5

Dairy products 410.2 334.6 459.7 24.0 435.7

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 Other animal
139.7 105.8 147.3 56.3 91.0
products

Vegetable 535.2 394.8 568.4 131.1 435.7

Fruits 662.4 600.3 825.2 144.5 680.7

Coffee, tea 339.3 320.8 438.2 31.9 406.3

Cereals 4,330.4 2,870.6 3,338.2 7.10 3,331.2

Mill 230.9 308.1 199.1 66.6 132.5

Medicinal
1,432.6 1,181.9 1,276.3 204.6 1,071.1
herbs and Soybean

Vegetable juice 106.8 108.8 123.0 57.6 65.4

Oil paper 1,149.8 898.0 1,062.6 62.7 999.9

Animal Products 429.4 356.2 425.5 185.1 240.4

Sugar 813.2 882.3 1,172.2 389.9 782.3

Cocoa 192.6 195.5 260.6 40.54 220.1

Cereal preparations 370.2 299.6 366.9 516.8 -149.9

Plant Preparations 634.1 534.1 640.7 183.8 456.9

Other preparations 704.2 688.3 844.4 683.6 160.8

Beverages, alcoholic
707.9 540.1 641.7 474.7 167.0
beverages

Prepared food 1,887.2 1,511.0 1,656.7 119.0 1,537.7

Salt, and debris 1,103.1 709.8 927.7 350.1 577.6

Protein 502.9 449.2 517.9 287.5 230.4

Source: Korea Customs Service

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4. Outlook for the Korean food industry

1) Attempts to diversify food ingredients

- Overcome the limit of fresh agricultural produce and simple processed foods
· Interests in movement from basic food (eg. grains) to simple, high quality, and diversified products.
- Showing interest to shifting from basic food(grains etc.) to high value food products.
- Diet food and unique customized food products to aid in obesity problems.
- Well-being, health food: organic food, etc.

2) Health food market expands

- Steady growth from dietary supplement in the mid-1990s
- In 2008, 11% increase compared to 2007 (720bln won → 800bln won)
- Shipments, export and import amounts in total are about 1 trillion won, functional foods are expected to be
larger.
- Health food manufacturers
- 1st ; Korea Ginseng Corp. (313.7bln won, 39.1% of total production value), 2nd ; Maiim (58.3bln won), Namyang
(34.2bln won), Rexgenebio (20.3bln won)
- Nutritional Supplement Products (44%) and EPA/ DHA containing foods(16.6%) are mostly imported
- Large food companies have entered the health market - there is a growing food market

3) Food ingredient development using Microorganisms

- Microbial metabolic engineering technologies and food products containing microorganisms have been actively
developed.
- Currently amino acids, organic acids, carotenoides including lycopene and other materials are in development.
- Potential for market development in this area : The Health food market is expected to grow continuously in
the future. In particular, disease prevention materials, anti-aging silver materials, cosmetic materials, auxiliary
materials and supplements to help sports activities are expected to increase in the demand. Customers
strongly prefer food ingredients that have been manufactured naturally and thus using microbial fermentation
technology has become an economically viable option.
- The competitive microbial metabolic engineering technology of Korea :
For a longtime Korea has been developing the infrastructure (capital, manpower, facilities) for fermentation
technology in the amino acid and nucleic acid fermentation industry and this is being judged as an area where
Korea has global competitiveness.

4) Positive support from the government for the food ingredients industry.
- In 2011, 1,339bln won is being invested in R&D for the agri-fisheries industry to further develop the bio-industry
technology, higher value adding food technology etc.
- In regards to investment being made for the development of high value-adding food technology, a 35.6% rise
will be made this year amounting to 24.8bln won.
- The government has also been supportive in the development of the food ingredient industry, setting up the
National Food Cluster in Iksan.
- Promoting the globalization of Korean food.

5. Details for the food ingredient exhibition

- Program structure for business revitalization
- Exhibitions according to subject classification
- One-to-One business matching
- Conference for publicity, exchange of technology and cooperation
- To be used as a marketing opportunity for exhibiting companies.

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