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Foodservice Profile – South Korea

January 2020

Executive summary

South Korea, with a population of approximately 51.6 million, is the largest foodservice market in the four 'tiger' economies: South Korea, Hong Kong, Taiwan and Singapore. South Korea is an important market for Canadian agri-food and seafood exporters.

South Korea's rising middle-class population and evolving urbanized lifestyles stimulate demand for convenience, consistent quality, and added value from all around the world in its foodservice industry.

There are five consumer segments in South Korea's foodservice industry: frugal convenience-seekers, time-poor experimenters, sporadic splurgers, regimented routiners and inbetweeners. Understanding the preferences of each consumer segment will help Canadian exporters to better penetrate the South Korean foodservice market.

The restaurant subsector is South Korea's largest foodservice subsector, with sales of US$22.5 billion in 2018, for a compound annual growth rate (CAGR) of 2.2% from 2014 to 2018. This subsector is expected to reach US$25.8 billion by 2023, with a CAGR of 2.8%. Pubs, clubs & bars ranked the second biggest in terms of value sales (US$4.6 billion) in 2018, followed by retail (US$1.5 billion), accommodation venues (US$1.1 billion) and workplace (US$0.9 billion). All subsectors grew well from 2014 to 2018 and are expected to grow promisingly from 2019 to 2023.

Even if South Korea is facing slower growth, the prospect for Canadian agri-food and seafood products in the South Korean foodservice sector is promising for multiple products such as pork, food preparations, beef, wheat and soya beans.

The full implementation of the Canada-South Korea Free Trade Agreement (CKFTA) in 2032 will offer more export opportunities for wide varieties of Canadian agri-food and seafood products in the coming years.

Consumer behaviour

Consumer trends

The recent official statistics (Statistics South Korea, 2019) indicate that average monthly consumption expenditures recorded 2.5 million South Korean won (US$2,272.9Footnote 1) per household in 2018, declining by 0.8% nominally from 2017 (a 2.2% year-on-year decrease in real consumption expenditures). By category, "food and soft drinks" (14.4%) took the lion's share of the total consumption expenditures, which was followed by "restaurants and hotels" (13.8%). "Alcoholic beverages and cigarette occupied the smallest share of total expenditures (1.4%). In terms of real percent change, the household consumption expenditures on "food and soft drinks" and "restaurants and hotels" dropped 1.0% and 4.2% respectively, whereas the expenditure on "alcoholic beverages and cigarette increased 0.4%.

Year-on-year percent nominal and real changes (%) in average monthly consumption expenditures by item
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Description of above image
Nominal Real
Consumption expenditures −0.8 −2.2
Food and soft drinks 1.8 −1.0
Alcoholic beverage and cigarette 0.6 0.4
Clothing and foodwear −4.3 −5.3
Housing, water, electricity, gas and other fuels 0.9 0.2
Household equipment and houskeeping services 4.5 2.2
Health 5.1 5.2
Transportation −5.5 −7.7
Communication −2.7 1.9
Entertainment and culture 9.8 9.3
Education −7.9 −9.2
Restaurants and hotels −1.3 −4.2
Other miscellaneous goods and services −4.7 −5.2

Source: Statistics South Korea 2019

In 2018, the South Korean government introduced the 52-hour work week aiming to improve work-life balance and boost birth rates (Lam, 2018). So far, the new policy has delivered limited results. A recent poll showed South Koreans were unable to fully profit from their leisure time (Yonhap, 2019). As workers finished work earlier, the foodservice industry forecasted that corporate workers would take fewer office dinners and buy fewer business drinks. The president of the South Korea Food Service Industry Association said to the media: "due to the minimum wage hike, the 52-hour workweek, as well as increases to soju and beer prices, it has become difficult to be in the foodservice industry" (Oh & Kim, 2019) .

On the other hand, the U.S Department of Agriculture (USDA) suggested that South Korean café (other non-alcohol beverage bars) and institutional-feeding restaurant businesses have proliferated since 2014 (Larrabee & Yoo, 2018). Keen consumer interest in new tastes and busier lifestyles are likely to boost the sales in these segments in the coming years (Larrabee & Yoo, 2018).

Consumer segments

In 2017, Global Data conducted a foodservice survey interviewing a thousand South Korean consumers to explore their attitudes and preferences when eating and drinking out. The survey generated the consumer segments below, which may help Canadian agri-food and seafood exporters to better penetrate the South Korean foodservice market.

Consumer segments in South Korea's foodservice market

Frugal convenience-seekers

Time-poor experimenters

Sporadic splurgers

Regimented routiners

Inbetweeners

Source: South Korea - The Future of Foodservice to 2023, GlobalData 2019

In terms of population share, inbetweeners are the largest consumer group and correspond to their population share in quick service restaurants (QSR) and coffee and tea shop channels. However, inbetweeners under-perform in terms of their share of transactions in full-service restaurants (FSR) and the pubs, clubs and bars channels. Frugal convenience seekers account for 24% of the South Korean consumers. This segment consistently represents a bigger proportion of foodservice transactions than their population share in all the channels. Sporadic splurgers represent 23% of South Korea's population and consistently under-perform in terms of their foodservice transactions in relation to the segments share of population. Meanwhile, time-poor experimenters, although representing only 4% of South Korean people, over-perform in all channels. As with time-poor experimenters, regimented routiners also account for 4% of South Koreans, but over-perform in most of the channels except QSR.

Consumer segment shares of population and of transactions in four major channels
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South Korean population Quick service restaurants Full-service restaurants Coffee and tea shops Pubs, clubs, and bars
Frugal convenience seekers 24% 31% 36% 27% 35%
Time-poor experimenters 4% 6% 7% 5% 5%
Sporadic splurgers 23% 15% 15% 21% 16%
Regimented routiners 4% 4% 2% 3% 3%
Inbetweeners 44% 44% 40% 44% 41%

Source: South South Korea - The Future of Foodservice to 2023, GlobalData 2019

The overall foodservice market

Food services in South Korea continue to be restructured as large foodservice companies and broad-based foodservice distributors expand at the expense of small independent companies. According to the U.S. Agricultural Trade Office in Seoul (USATO), even though South Korea is facing economic difficulties, there is still a bright future for foreign agri-food and seafood exporters as South Korea is 60-70 percent directly or indirectly dependent on food imports (USATO, n.d.). Recent trends and events contributing to the expected expansion include:

  1. A general globalization and westernization of tastes.
  2. The high percentage of younger consumers with a growing taste for imported foods.
  3. An increasing number of working women and two-income families who demand more convenience foods.
  4. The decline in per capita consumption of rice and moving away from rice-based foods to wheat, corn, meat, and potato-based foods.
  5. The spread of conventional ovens, microwaves, and refrigerators.

South Korea, with a population of approximately 51.6 million, is the largest foodservice market in the four 'tiger' economies. South Korea's rising middleclass and evolving urbanized lifestyles have stimulated demand for convenience, consistent quality, added value, and diverse tastes in the foodservice industry. The country's foodservice sector grew at a CAGR of 3.5% from 2014 to 2018, reaching US$87.8 billion sales in 2018, which is US$62.5 billion higher than competing Taiwan. The South Korean foodservice sector is forecasted to reach US$104.7 billion by 2023, growing at a CAGR of 3.6% from 2019 to 2023.

Foodservice value sales by four 'tiger' economy, in US$ millions – historical and forecast
Economy 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
South Korea 76,510.4 87,783.0 3.5 90,913.8 104,739.9 3.6
Taiwan 19,723.2 25,277.0 6.4
Hong Kong 15,728.5 18,268.2 3.8 18,910.2 22,115.7 4.0
Singapore 8,303.0 9,788.7 4.2 10,150.9 11,942.3 4.1

Source: GlobalData, 2019; Department of Statistics, MOEA Taiwan, 2019

*CAGR: Compound Annual Growth

The restaurant subsector is South Korea's largest foodservice subsector, with sales of US$22.5 billion in 2018, for a CAGR of 2.2% from 2014 to 2018. This subsector is expected to reach US$25.8 billion by 2023, with a CAGR of 2.8%. Pubs, clubs & bars ranked the second biggest in terms of value sales (US$4.6 billion) in 2018, followed by retail (US$1.5 billion), accommodation venues (US$1.1 billion) and workplace (US$0.9 billion). All subsectors grew well from 2014 to 2018 and are expected to grow promisingly from 2019 to 2023.

Value sales and growth of South Korea's foodservice by subsector, in US$ millions – historical and forecast
Subsector 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation 976.3 1,071.8 2.4 1,104.0 1,249.3 3.1
Leisure 663.1 712.6 1.8 726.8 821 3.1
Mobile operator 8.6 9.3 2.0 9.6 10.7 2.7
Pub, club and bar 4,049.5 4,585.9 3.2 4,783.5 5,651.9 4.3
Restaurant 20,631.1 22,520.7 2.2 23,117.3 25,784.8 2.8
Retail 1,356.0 1,485.0 2.3 1,525.0 1,699.9 2.8
Travel 424.5 458.1 1.9 468.1 526.5 3.0
Workplace 829.8 883.3 1.6 898.7 977 2.1
Total 28,938.9 31,726.7 2.3 32,633.0 36,721.1 3.0

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Within the restaurant subsector, full-service restaurants recorded the highest sales of US$16.0 billion in 2018, followed by quick-service food restaurants (US$4.7 billion). These top two outlets accounted for 91.7% of total sales within the restaurant subsector (US$22.5 billion). Both outlets grew well at a CAGR of 2.1% and 2.6%, respectively, from 2014 to 2018 and are forecast to grow at a CAGR of 2.7% and 3.1%, respectively from 2019 to 2023. Coffee & tea shops performed well at a CAGR of 2.1% from 2014 to 2018, reaching sales of US$1.8 billion in 2018.

Within the pubs, clubs & bars subsector, pubs & bars recorded the highest sales of US$4.1 billion in 2018, followed by private clubs (US$370.4 million) and nightclubs (US$92.6 million). These three outlets grew at a CAGR of 3.2%, 2.7% and 2.7%, respectively, from 2014 to 2018 and are forecast to grow at a CAGR of 4.3%, 3.7% and 3.7%, respectively, from 2019 to 2023.

Within the retail subsector, bakeries recorded the highest sales of US$932.2 million in 2018, followed by service station forecourt (US$211.5 million). These top two outlets accounted for 77% of total sales within the retail subsector (US$1.5 billion). Both outlets grew well at a CAGR of 2.4% and 2.2%, respectively, from 2014 to 2018 and are forecast to grow at a CAGR of 2.8% and 2.7%, respectively, from 2019 to 2023.

Within the accommodation subsector, hotel & motel recorded the highest sales of US$891.3 million in 2018, followed by guest house (US$ 78.0 million). These top two outlets accounted for 90.5% of total sales within the accommodation subsector (US$1.1 billion). Both outlets grew well at the same CAGR of 2.4%, from 2014 to 2018 and are forecast to grow at a CAGR of 3.1% and 3.2%, respectively from 2019 to 2023.

South Korea's foodservice by subsector and outlet,in US$ millions – historical and forecast
Subsector Outlet 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2018-2023
Accommodation Bed and breakfast 20.6 22.4 2.1 23 25.9 3.0
Caravan park 2.9 3.2 2.5 3.3 3.8 3.6
Guest house 71 78 2.4 80.4 91.3 3.2
Holiday park 41.3 44.7 2.0 45.9 51.3 2.8
Hostel 24.4 26.9 2.5 27.8 31.6 3.3
Hotel & motel 811.3 891.3 2.4 918.3 1,039.3 3.1
Others 4.8 5.2 2.0 5.4 6.1 3.1
Leisure Entertainment 359.9 384.8 1.7 391.8 443.7 3.2
Venue 232.2 251.3 2.0 256.9 289.6 3.0
Visitor attraction 71.1 76.5 1.8 78 87.7 3.0
Mobile operator Other mobile operators 3.3 3.5 1.5 3.6 4.1 3.3
Vans 5.4 5.8 1.8 5.9 6.6 2.8
Pubs, clubs and bars Nightclub 83.3 92.6 2.7 96.1 111.3 3.7
Private member and social club 333.2 370.4 2.7 384.2 444.8 3.7
Pub and bar 3,633.0 4,123.0 3.2 4,303.2 5,095.8 4.3
Restaurant Coffee and tea shop 1,645.9 1,789.2 2.1 1,834.9 2,055.1 2.9
Full service restaurant 14,708.5 15,997.0 2.1 16,407.0 18,228.7 2.7
Ice cream parlour 65.3 71.4 2.3 73.3 82 2.8
Quick service restaurant and fast food 4,211.5 4,663.0 2.6 4,802.2 5,419.0 3.1
Retail Baker 847.2 932.2 2.4 958.5 1,071.9 2.8
Convenience store 122.5 132.7 2.0 135.8 149.7 2.5
Delicatessen 17.5 19.1 2.2 19.5 21.7 2.7
Department store 4.6 5 2.1 5.1 5.7 2.8
Garden and home improvement centres 10.4 11.4 2.3 11.7 13 2.7
Other retail 5.8 6.3 2.1 6.5 7.2 2.6
Service station forecourt 194.1 211.5 2.2 216.9 241.1 2.7
Supermarket and hypermarket 154 166.9 2.0 171 189.7 2.6
Travel Air 47.7 51.3 1.8 52.4 59 3.0
Rail 356.6 385.1 1.9 393.6 442.9 3.0
Sea 20.2 21.7 1.8 22.1 24.6 2.7
Workplace Government department and local authority 211.5 225.5 1.6 229.5 249.7 2.1
Industrial 385.6 409.5 1.5 416.5 452.1 2.1
Retail, financial and office based 232.7 248.3 1.6 252.8 275.1 2.1

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Foodservice: chain franchises versus independent operators

The South Korean foodservice market has a substantial amount of small- to medium-sized, family-owned businesses with fewer than five employees. According to the USDA, the restaurant and bar sector in South Korea was a major shelter for retirees during the Asian economic crisis in 1997-2000 and the 2008 global economic downturn (Larrabee & Yoo, 2018). From 2005 to 2015, the percentage of small- to medium-sized restaurants and bars in South Korea dropped from 90% of all restaurants and bars to 86% (Larrabee & Yoo, 2018). Despite accounting for large shares in each channel (except retail), chains are forecast to register faster CAGA growth than the independents (4.0% vs 3.4%), by 2023.

Despite the faster growth of chain franchises, within the restaurant subsector independent restaurant sales accounted for 63.9% of total sales while chain restaurants accounted for 36.1% in 2018. Within the pubs, clubs & bars subsector, independent sales accounted for 63.8% of total sales, while chain franchise sales accounted for 36.2%. Within the retail subsector, independent sales accounted for 43.1% of total sales, while chain franchise sales accounted for 56.9%.

Historical and forecast sales of South Korea's foodservice sector: chain franchises versus independent operators, in US$ millions – historical and forecast
Chain vs Independent Subsector 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Chain Accommodation 36.8 41.2 2.9 42.2 47.3 2.9
Independent 2,899.8 3,215.5 2.6 3,287.8 3,653.8 2.7
Chain Leisure 472.8 535.3 3.2 552.9 627.5 3.2
Independent 1,833.2 2,078.5 3.2 2,148.9 2,446.7 3.3
Independent Mobile operator 30.5 34.4 3.1 35.5 40.1 3.1
Chain Pubs, clubs and bars 3,508.0 4,182.5 4.5 4,378.3 5,224.4 4.5
Independent 6,259.4 7,380.5 4.2 7,704.8 9,108.0 4.3
Chain Restaurant 19,470.1 22,752.6 4.0 23,707.1 27,848.7 4.1
Independent 35,363.7 40,352.1 3.4 41,682.7 47,640.9 3.4
Chain Retail 1,711.5 1,876.2 2.3 1,918.6 2,114.8 2.5
Independent 1,302.1 1,419.1 2.2 1,449.3 1,592.9 2.4
Unspecified Travel 1,468.0 1,592.9 2.1 1,629.6 1,790.0 2.4
Unspecified Workplace 2,154.6 2,322.3 1.9 2,376.0 2,605.0 2.3
Subtotal: chain franchises 25,199.2 29,387.8 3.9 30,599.2 35,862.6 4.0
Subtotal: independent operators 47,688.7 54,480.1 3.4 56,309.0 64,482.4 3.4
Total: chain and independent 76,510.4 87,783.0 3.5 90,913.8 104,739.9 3.6

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

In the South Korean foodservice sector, the highest value per transaction in 2018 occurred in chain hotels & motels (US$24.8), followed by independent nightclubs (US$21.7), and chain full service restaurants (US$20.0). Fast food restaurants recorded the highest CAGR of 1.9% (independent and chain) from 2014 to 2018. Fast food restaurants are also expected to grow the fastest at a CAGR of 3.1% (chain and independent) from 2019 to 2023.

Value per transaction in chain foodservices by outlet, in US$ – historical and forecast
Subsector Outlet 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation Hotels and motels 25.4 24.8 −0.6 24.8 25.6 0.8
Leisure Entertainment 7.4 7.4 −0.1 7.5 7.7 0.9
Venue 12.4 12.3 −0.1 12.5 13.1 1.1
Visitor attraction 5.4 5.3 −0.4 5.4 5.5 0.7
Pub, club and bar Private member and social club 14.7 14.7 −0.1 14.9 15.5 1
Pub and bar 13.4 13.7 0.5 14.0 15.0 1.8
Restaurant Coffee and tea shop 4.2 4.1 −0.5 4.1 4.3 0.7
Full service restaurant 20.0 20.0 −0.1 20.2 21.1 1
Ice cream parlour 3.4 3.3 −0.6 3.3 3.4 0.5
Quick service restaurant and fast food 5.7 6.2 1.9 6.4 7.3 3.1
Retail Baker 4.2 4.2 −0.5 4.2 4.3 0.8
Convenience store 3.4 3.4 −0.2 3.4 3.5 0.9
Department store 4.2 4.0 −1 4.0 4.1 0.3
Other retail 3.8 3.7 −0.7 3.7 3.8 0.6
Service station forecourt 3.5 3.4 −0.7 3.4 3.5 0.6
Supermarket and hypermarket 4.0 3.8 −1.1 3.8 3.9 0.4

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Value per transaction in independent foodservices by outlet, in US$ – historical and forecast
Subsector Outlet 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Accommodation Bed and breakfast 5.2 5.1 −0.3 5.2 5.4 1.0
Caravan park 7.2 7.0 −0.7 7.1 7.2 0.4
Guest house 9.2 9.2 0.0 9.4 9.7 0.9
Holiday park 10.5 10.2 −0.6 10.3 10.5 0.5
Hostel 5.8 5.8 −0.1 5.9 6.0 0.7
Hotel and motel 16.4 16.1 −0.5 16.2 16.5 0.6
Others 6.4 6.2 −0.7 6.3 6.5 0.7
Leisure Entertainment 6.5 6.5 −0.2 6.6 6.8 0.9
Venue 8.8 8.8 −0.1 8.9 9.3 1.1
Visitor attraction 5.1 5.0 −0.4 5.1 5.2 0.7
Mobile operator Other mobile operators 4.1 3.9 −0.9 3.9 4.0 0.3
Vans 4.2 4.2 −0.4 4.2 4.4 0.8
Pub, club and bar Nightclub 22.1 21.7 −0.4 21.9 22.0 0.1
Private member and social club 16.0 15.8 −0.2 16.0 16.6 0.9
Pub and bar 11.2 11.4 0.5 11.7 12.5 1.8
Restaurant Coffee and tea shop 3.2 3.1 −0.7 3.2 3.3 0.7
Full service restaurant 13.7 13.8 0.1 13.9 14.3 0.6
Ice cream parlour 2.8 2.8 −0.8 2.8 2.8 0.4
Quick service restaurant and fast food 5.0 5.4 1.9 5.5 6.3 3.1
Retail Baker 3.5 3.5 −0.4 3.5 3.6 0.9
Convenience store 3.2 3.2 −0.2 3.2 3.3 0.8
Delicatessen 3.9 3.8 −0.3 3.8 3.9 0.6
Department store 3.6 3.4 −1.1 3.5 3.5 0.4
Garden and home improvement centers 3.5 3.3 −1.2 3.3 3.4 0.3
Other retail 3.5 3.4 −0.6 3.4 3.5 0.6
Service station forecourt 3.3 3.2 −0.8 3.2 3.3 0.6
Supermarket and hypermarket 3.6 3.5 −1.1 3.5 3.6 0.4

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Trend

Asia's four 'tiger' economies

Economists dubbed South Korea, Hong Kong, Taiwan and Singapore Asia's four 'tigers' for their rapid, trade-oriented economic growth since the 1960s. The four 'tigers' have collectively joined the ranks of the world's richest economies. Canadian agri-food and seafood exports to Asia's four 'tiger' markets combined were valued at US$1.5 billion in 2018, accounting for 2.9% of Canada's net exports to the world (US$51.1 billion). Canada's exports to the region were relatively small, with export values from Canada declining by a CAGR of 3.8% from 2014 to 2018. However, South Korea remains an important market for Canadian agri-food and seafood exporters. Canada's agri-food and seafood exports to South Korea grew at a CAGR of 1.5% from 2014 to 2018 with a value of US$600.0 million.

Canada's exports to Asia's four 'tiger' economies in agri-food and seafood (HS6), in US$ millions
Country 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Asia's four 'tiger' economies 1,710.1 1,457.5 1,445.9 1,539.6 1,463.7 −3.8
South Korea 564.7 484.7 569.1 586.5 599.4 1.5
Hong Kong 798.7 694.3 579.0 604.8 531.1 −9.7
Taiwan 227.0 201.8 198.0 247.9 261.8 3.6
Singapore 119.8 76.7 99.7 100.4 71.4 −12.1

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

The four 'tigers' are net agri-food and seafood importers from Canada with a net value of US$ 1.2 billion. Canada imported US$311.2 million in agri-food and seafood from the four 'tigers', while Canada's exports were valued at US$1.5 billion in 2018.

Canada's agri-food and seafood imports from Asia's four 'tiger' economies, in US$ millions
Economy 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Asia's four'tiger' economies 226.1 219.6 225.5 258.9 311.2 8.3
South South Korea 87.1 82.6 88.7 106.7 122.4 8.9
Taiwan 90.3 88.2 88.9 99.4 101.9 3.1
Singapore 20.1 18.5 21.4 20.9 50.7 26.0
Hong Kong 28.5 30.3 26.6 31.8 36.2 6.1

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

Global market

South Korea is a net agri-food and seafood importer from Canada with a net value of US$554.7 million. Canada's imports of agri-food and seafood products from South Korea were valued at US$122.4 million, while Canada's exports were valued at US$677.1 million in 2018. South Korea's total agri-food and seafood imports from the world were valued at US$33.3 billion in 2018, of which US$677.0 million was from Canada, representing 2.0% of South Korea's total agricultural imports. The gap between South Korea's imports from the world and Canada was US$32.6 billion in 2018.

Canada's gross export gap to South Korea in agri-food and seafood (HS6), in US$ millions
Import supplier 2014 2015 2016 2017 2018 CAGR* % 2014-2018
South Korea's imports from the world 29,649.9 28,317.1 28,111.8 30,268.1 33,295.6 2.9
South Korea's imports from Canada 592.4 557.3 593.4 666.1 677.0 3.4
Gross export gap with Canada 29,057.5 27,759.8 27,518.4 29,602.1 32,618.6 2.9

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

South Korea's top imported products from the world in 2018 were maize (US$2.1 billion), frozen swine meat (US$1.6 billion), food preparations (US$1.4 billion) and wheat (US$1.0 billion). Imports of food preparations (US$ 1.4 billion) grew the fastest at a CAGR of 11.2% from 2014 to 2018, followed by imports of frozen swine meat at a CAGR of 10.6%.

South Korea's top 10 agri-food and seafood imports from the world, in US$ millions, 2014-2018
HS 6 Code Description 2014 2015 2016 2017 2018 CAGR* % 2014-2018
World total 29,649.9 28,317.1 28,111.8 30,268.1 33,295.6 2.9
100590 Maize (excluding seed for sowing) 2,629.3 2,213.1 1,894.9 1,783.6 2,126.0 −5.2
020329 Frozen swine meat, bone in 1,074.1 1,234.7 1,165.1 1,406.9 1,609.0 10.6
210690 Food preparations, n.e.s.[1] 902.0 915.0 1,036.3 1,139.7 1,380.1 11.2
100199 Wheat and meslin (excluding seed for sowing, and durum wheat) 1,210.2 1,105.4 1,007.1 956.6 1,001.5 −4.6
020230 Frozen boneless bovine meat 751.8 872.5 976.0 915.3 1,077.9 9.4
230400 Oilcake and other solid residues 992.3 839.5 780.9 651.0 769.3 −6.2
170114 Raw cane sugar, in solid form 752.3 623.7 674.7 789.6 602.7 −5.4
120190 Soya beans (excluding seed for sowing) 801.6 642.9 596.8 592.4 581.9 −7.7
020220 Frozen bovine cuts, with bone in 519.8 491.0 568.5 628.0 748.7 9.5
030389 Frozen fish, n.e.s.[1] 513.1 538.6 582.0 493.1 515.2 0.1

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

1: not elsewhere specified

South Korea's agri-food and seafood imports from Canada grew at a CAGR of 3.4% from 2014 to 2018, and reached US$677.0 million in 2018. South Korea's top imported products from Canada in 2018 were crude canola oil (US$83.2 million), followed by frozen swine meat (US$70.6 million) and lobster (US$67.8 million). Canada's canola oil accounted for 98.2% of South Korea's total imports of that product from the world. Canadian lobster accounted for 79.2% of South Korea's total imports from the world. Frozen lobsters had the most substantial import growth with a CAGR of 83.8% from 2014 to 2018, while wheat was in decline with a CAGR of −23.2% over the same period.

South Korea's top 10 agri-food and seafood imports from Canada, in US$ millions, and Canada's share, 2014-2018
HS 6 Code Description 2014 2015 2016 2017 2018 CAGR* % 2014-2018 Canada's share % in world 2018
Canada total 592.4 557.3 593.4 666.1 677.0 3.4 2.0
151411 Low erucic acid rape or colza oil, crude 51.1 65.4 81.0 92.3 83.2 13.0 98.2
020329 Frozen meat of swine, with bone in 63.7 66.6 51.9 57.9 70.6 2.6 4.4
030632 Lobsters "homarus spp.", whether in shell or not, live, fresh or chilled 0.0 0.0 0.0 61.7 67.8 N/C 79.2
210690 Food preparations, n.e.s.[1] 28.8 37.9 41.3 50.9 60.8 20.5 4.4
100199 Wheat and meslin (excluding seed for sowing, and durum wheat) 162.0 67.5 39.6 65.8 56.5 −23.2 5.6
020319 Fresh or chilled meat of swine , with bone in 13.3 19.7 29.4 38.8 48.1 37.8 39.5
030612 Frozen lobsters "homarus spp.", even smoked, whether in shell or not, incl. lobsters in shell 3.0 10.6 16.4 20.3 34.4 83.8 92.5
430110 Raw furskins of mink, whole, with or without heads, tails or paws 23.4 24.4 20.6 15.1 22.9 −0.5 26.8
200410 Potatoes, prepared or preserved otherwise than by vinegar or acetic acid, frozen 4.9 9.9 17.1 20.4 22.7 46.5 15.0
110710 Malt (excluding roasted) 27.1 18.6 15.3 20.2 16.5 −11.7 17.8

Source: Global Trade Tracker, 2019

*CAGR: Compound Annual Growth Rate

1: not elsewhere specified

N/C: Not Calculable

Top 10 foodservice companies in South Korea

McDonald's was the top foodservice company with a value sale of US$760.4 million in 2017, representing a 1.2% share of the foodservice market in South Korea. It was followed by Starbucks (US$542.7 million), Mr. Pizza (US$492.8 million), Lotteria (US$404.5 million) and Vips (US$348.7 million). Among the top five companies, two of them are well-known worldwide franchises, and the other three are local companies
(Mr. Pizza, Lotteria and Vips).

Top 10 foodservice companies in South Korea by value sales and share, 2017, in US$ millions
Company US$ million Share %
McDonald's 760.4 1.2
Starbucks 542.7 0.9
Mr.Pizza 492.8 0.8
Lotteria 404.5 0.6
Vips 348.7 0.5
BBQ 322.7 0.5
Burger King 296.8 0.5
Domino's Pizza 289.6 0.5
Outback Steakhouse 273.5 0.4
Others 59,982.1 94.1
Total 63,713.94 100.0
Source: GlobalData, 2019

Competition and opportunities

South Korea is a growing market for convenience, quality and healthy food products. Canada is perceived as a country with a good environment and quality products and South Koreans are willing to pay for big name brands and quality Canadian products. Canada's low market share of South Korea's imported food shows room for expansion and the CKFTA should improve Canada's competitiveness within the South Korean market.

The prospect for Canadian agri-food and seafood products in the South Korean foodservice sector is promising for multiple products, such as pork, food preparations, beef, wheat and soya beans. The implementation of the Canada-Korea Free Trade Agreement (CKFTA) will continue to offer more export opportunities for wide varieties of Canadian agri-food and seafood products in the coming years.

Top 10 South Korean imports of agri-food and seafood products and competition in 2018, in US$ millions
HS 6 Code Description Gross imports in 2018 1st supplier 2nd supplier Canada ranking (market share %)
100590 Maize (excluding seed for sowing) 2,126.0 United States Russia 12th (0.0)
020329 Frozen meat of swine, with bone in 1,609.0 United States Germany 6th (4.4)
210690 Food preparations, n.e.s.[1] 1,380.1 United States New Zealand 3rd (4.4)
020230 Frozen, boneless meat of bovine animals 1,077.9 Australia United States 6th (0.4)
100199 Wheat and meslin (excluding seed for sowing, and durum wheat) 1,001.5 United States Australia 5th (5.6)
020130 Fresh or chilled bovine meat, boneless 770.9 United States Australia 3rd (0.5)
230400 Oilcake and other solid residues, resulting from the extraction of soya-bean oil 769.3 Brazil India 18th (0.0)
020220 Frozen bovine cuts, with bone in 748.7 United States Australia 4th (1.4)
170114 Raw cane sugar (excluding cane sugar of 170113) 602.7 Australia Thailand N/O
120190 Soya beans, (excluding seed for sowing) 581.9 United States Brazil 4th (1.5)

Source: Global Trade Tracker, 2019

N/O: not offered

1: not elsewhere specified

Cuttlefish (and squid) and animal organs were two of the top three fastest-growing South Korean imports, which grew 494.5% and 128.8%, respectively, from 2017 to 2018. Canada has the potential to increase the exports of these two products to South Korea as its market share for cuttlefish and animal organs were 0.8% and 12.4%, respectively, for the same period.

Top 10 fastest growing South Korean imports of agri-food and seafood products inUS$ millions
HS 6 Code Description Imports from the world in 2018 Growth from 2017 in % Canada growth from 2017 in % Canada market share in 2018 in %
030743 Cuttlefish and squid, frozen, with or without shell 11.9 494.5 1,304.1 0.8
240399 Chewing tobacco, manufactured tobacco and manufactured tobacco substitutes, and tobacco powder, tobacco extracts and essences 69.6 277.1 N/O N/O
050400 Guts, bladders and stomachs of animals (other than fish), whole and pieces thereof, fresh, chilled, frozen, salted, in brine, dried or smoked 12.7 128.8 −5.6 12.4
230649 Oilcake and other solid residues, resulting from the extraction of high erucic acid rape or colza seeds 11.9 125.0 −100.0 0.0
080122 Fresh or dried brazil nuts, shelled 159.4 124.1 6.8 0.0
240391 Tobacco, "homogenised" or "reconstituted" from finely-chopped tobacco leaves, tobacco refuse or tobacco dust 17.8 118.0 N/C 0.0
030345 Frozen atlantic and pacific bluefin tuna (thunnus thynnus, thunnus orientalis) 97.9 108.7 N/O N/O
081340 Dried peaches, pears, papaws "papayas", tamarinds and other edible fruits (excluding nuts, bananas, dates, figs, pineapples, avocados, guavas, mangoes, mangosteens, citrus fruit, grapes apricots, prunes and apples, unmixed) 87.3 106.7 1380.5 0.0
100790 Grain sorghum (excluding for sowing) 354.4 84.2 N/O N/O
030399 Frozen fish fins, heads, tails, maws and other edible fish offal (excluding livers, roes, milt and shark fins) 137.5 82.4 N/O N/O

Source: Global Trade Tracker, 2019

N/C: not calculable

N/O: not offered

As of January 1, 2019, 95% of Canada's exports benefitted from duty-free access into South Korea as a result of the CKFTA. This included new duty-free access for a variety of goods, such as lentils; chocolate and chocolate confectionary; and prepared frozen and cold-water shrimp. Upon full implementation of the CKFTA on January 1, 2032, South Korean tariffs will be eliminated on 99.75% of Canada's exports. For more information, please visit CKFTA for Agri-Food Exporters, or consult the Canada Tariff Finder to explore further tariff information for the South Korean market under the CKFTA, and other foreign markets with which Canada has a free trade agreement.

For more information

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

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Seoul Food and Hotel Show 2020, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Foodservice Profile – South Korea
Global Analysis Report

Prepared by: Zhiduo Wang

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2020).

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