Commodity Innovation Series - Snapshot of Opportunities in South Korea's Oilseed Sector

February 2017

  • United States dollar (US$)
  • Genetically Modified Organisms (GMO)
  • Genetically Engineered (GE)
  • Harmonized System (HS)

Market trends

Highly dependent on agri-food imports

  • Linseed and canola oil have become increasingly popular as home cooking oils.
  • Awareness of health and well-being is influencing the demand for premium oils, such as rapeseed oil and sunflower oil.
  • Over 70% of agri-food products consumed in the market are either imported or using imported ingredients.

Oilseed trade

90% of Canada's exports are duty free

  • South Korea was the 3rd largest importer of oilseeds in Asia Pacific in 2015 with a value of US$1.6 billion.
  • South Korea's imports from Canada had an annual growth of 37% from 2010 to 2015.
  • Canola oil is Canada's second largest agri-export to South Korea in 2015.
  • As the Korean tarrif rate on soybeans of 487% or US$0.89 per kilogram was eliminated, Canada's exports of soybeans went from US$7.7 million in 2014 to US$9.4 million in 2015.
  • Since the Canada-Korea free trade agreement (CKFTA) entered into force in 2015, roughly 90% of Canada's exports entering Korea are now duty free.

Historic and forecast retail sales

Historic and forecast retail sales (US$ millions)
Category 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Edible oils 380.90 396.40 406.40 388.10 392.20 407.10 418.20 434.20 450.40 466.60 482.20
Source: Euromonitor

From 2011 to 2015, oilseed product sales grew at a rate of 1%.

  • Retail sales of oilseed products increased by 4% in 2015, from US$392.2 million to US$407.1 million.
  • Rapeseed oil recorded the fastest retail sales growth since 2007. In 2015, rapeseed oil continued to grow by 11%, to account for a 34% market share of vegetable and seed oils.

Oilseed products sales are expected to increase to US$482.2 million by 2020 with a growth rate of 4%.

  • Olive oil is expected to see the fastest growth rate of 4.4% from 2016 to 2020.
  • Organic oil specialist retailers will actively distribute imported organic products to meet increasing demand.

Oilseeds as ingredients

New products using oilseeds as ingredients are on a rise

  • From 2010 to 2015, 4,065 new product launches used some type of oilseeds in their product formulation.
  • The number of products using oilseeds has increased by 479%, growing from 189 launches in 2010 to 1,094 in 2015.
South Korea's top companies to launch oilseed products with their leading brands from 2010 to 2015
Company (Brand) Number of products launched
Lotte Confectionery (Lotto) 255
Emart (Peacock Food Collection) 223
Samlip Food (Samlip) 221
Home Plus (Home Plus) 128
Haitai Confectionery & Foods (Haitai) 106
Source: Mintel

Greater price sensitivity due to the economic slowdown and high household debt

Top 5 growing claims:

  1. Economical
  2. Babies & toddlers (0-4 years old) oriented
  3. Seasonal
  4. Low/no/reduced fat
  5. No animal ingredients

Top 5 declining claims;

  1. Male oriented
  2. Portionability
  3. Low/no/reduced cholesterol
  4. Female oriented
  5. Halal

Growing demand for products in smaller and more convenient packaging

Top package type:

  1. Flexible
  2. Flexible sachet
  3. Tub
  4. Flexible stand-up pouch
  5. Tray

Top packaged materials:

  1. Plastic other (BPA, polycarbonate and lexan)
  2. Polypropylene plastic
  3. Metallised film
  4. Plastic unspecified
  5. Board plastic lined

Top innovative markets for oilseeds in Asia Pacific

Innovation markets: Description of this image follows.
Description
Product innovation rating scale
Innovation Criteria South Korea Thailand China Australia Vietnam India Malaysia Singapore Japan Taiwan
Relaunch 3 8 5 5 9 7 8 6 8 4
New product 18 14 16 16 12 14 13 16 13 17
Product line diversity 17 16 16 16 14 15 14 15 16 15
Health and wellness claims 19 19 19 19 20 19 20 18 17 18
Rating scale: Excellent (20-17), Very good (16-13), Good (12-9), Fair (8-5), Low (4-0)

South Korea is the most innovative market in Asia Pacific to launch products containing oilseeds.

Factors of consideration

  • Labelling and packaging must comply with Ministry of Food and Drug safety's regulations.
  • Awareness of negative perception of GMO/GE products, and certain products may require “contains GMO” labelling under the Korean regulations.
  • Canadian exporters are recommended to use the “HS Korea classification pre-review service” offered by the Korea customs service before exporting products into Korea.
  • Korean retailers are making efforts to expand direct imports even though they still rely on middlemen for the imported foods.
  • Large food processors prefer to directly import in large quantities from oversea suppliers.

Recommendations for entry

  • Awareness of government of Canada programs that offer competitive advantages abroad.
  • Be cognisant of regional differences in South Korea.
  • Develop a good understanding of regulations and procedures that comply with trade.
  • Follow import guidelines to avoid import shipments being detained.
  • Develop a clear market strategy prior to entry.
  • Develop relationships with local importers and relevant stakeholders.
  • Develop a business cultural adaptation strategy.
  • Participate in trade shows to investigate the market and establish contacts.

How can we help

We offer multiple programs and services to help you achieve your international business goals, such as the Agri-Food Trade Service, AgriMarketing Program, and Canada Brand.

International Trade Commissioners are also an excellent point of contact for export advice and can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions, and local business contacts.

Have we piqued your interest?

For more information on opportunities in India or to join our distribution list, make suggestions, or request a report, contact the single window at aafc.mas-sam.aac@canada.ca.

Find out about our programs, services and tools to support your exporting efforts. Exporting from Canada

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