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Sector Trend Analysis – Packaged food trends in South Korea

August 2019

Executive summary

South Korea has a population of 51.4 million (2017), which is expected to increase by only 1 million by 2030. 81.5% of South Korea's population is considered urban and concentrated in lowland areas, where density is high.

Seoul is South Korea's largest city with 9.9 million people. Together Seoul and its surrounding province Gyeonggi-do make up almost half of the country's consumer market, mainly due to the considerable population size and convenient location.

South Korea is a net food importer, with more than 60% of its food needs coming from foreign suppliers, which continues to grow. In 2018, South Korea's agri-food and seafood trade deficit was US$25.4 billion with imports valued at US$33.2 billion, and US$7.8 billion in exports.

Retail sales of packaged food were valued at US$27.4 billion in 2018, with a compound annual growth rate (CAGR) of 2.5% from 2014 to 2018. By 2023, retail sales are expected to reach US$31.3 billion, registering a growth rate increase of 2.7%. Convenience and health is driving eating habits of South Koreans and food manufacturers are developing more convenient and healthier food products.

Manufacturers are investing in better tasting and more nutritious prepared meal products to replace real home dining. As a result, in addition to single household consumers, married couples and senior consumers are also showing more interest in products in this area.

Consumer profile

South Korea has a population of 51.4 million (2017), which is expected to increase by only 1 million by 2030. In a country that is approximately 70% mountainous, 81.5% of South Korea's population is considered urban and concentrated in lowland areas, where density is high; Gyeonggi Province in the northwest, which surrounds the capital of Seoul and contains the port of Incheon, is the most densely populated province.

South Korea's largest cities (2018)
Rank Cities Population
1 Seoul 9,963,000
2 Busan 3,467,000
3 Incheon 2,763,000
4 Daegu (Taegu) 2,221,000
5 Daejon (Taejon) 1,558,000
6 Gwangju (Kwangju) 1,518,000
Source: CIA World Fact Book

Seoul is South Korea's largest city with 9.9 million people. Together Seoul and its surrounding province Gyeonggi-do make up almost half of the country's consumer market, mainly due to the considerable population size and convenient location. Chungcheongbuk-do and Ulsan are expected to be the country's fastest-growing consumer markets, due to the growth of Sejong City and the expected strengthening of industrial capacity in Ulsan.

South Korea has the fourth largest economy in Asia at US$1.65 trillion, after China, Japan, and India. South Korean consumers are considered affluent with an average annual disposable income per rural and urban South Korean household of US$40,821 and US$42,463 (2017). In comparison, average annual disposable income for rural and urban Canadian households is US$54,606 and US$67,382.

Imports

South Korea is a net food importer, importing more than 60% of its food needs, which continues to grow. In 2018, South Korea's agri-food and seafood trade deficit was US$25.4 billion with imports valued at US$33.2 billion, and US$7.8 billion in exports. South Korea's agri-food and seafood imports increased by 10.0% from 2017, and by a CAGR of 2.9% between 2014 and 2018. South Korea has concluded 15 free trade agreements (FTAs) covering 52 countries.

Canada is South Korea's 10th largest agri-food/seafood supplier, with a 2.0% share, after US, China, Australia, Brazil, Viet-Nam, Russia, Thailand, Germany and Indonesia. However, the Canada Korea Free Trade Agreement (CKFTA) reduced import duties on many food products which led to growing food exports from Canada. In 2018, South Korea's top agri-food and seafood imports were corn, frozen pork, food preparation, wheat and meslin and frozen boneless beef.

Retail sales

Retail sales of packaged food were valued at US$27.4 billion in 2018, with a CAGR of 2.5% from 2014 to 2018. By 2023, retail sales are expected to reach US$31.3 billion, at a CAGR of 2.7%. Convenience is driving eating habits of South Koreans and food manufacturers are developing more convenient and healthier food products.

South Korea ranks third in the world in terms of per capita consumption of fresh fish and seafood, with the average household consuming 159 kilograms (kg) in 2017 - up 12% since 2012. Fresh meat consumption has also increased (to 131kg in 2017), with pork the most commonly consumed and fastest-growing meat.

Western breakfasts such as cereals and toast are becoming more common in addition to traditional Korean breakfast, which consists of seaweed soup with vegetables, fish and rice. Lunch typically consists of soup, noodles or kimbaps (rice snack) sold by food carts and café's, however, lunch boxes and salad bowls are increasingly being purchased from convenience stores and supermarkets.

Prepared meals are becoming increasingly popular, with ready meals, processed meat and seafood, and soup all showing above average growth due to busier lifestyles, making home cooked meals less common.

South Korea packaged food retail sales - historic and forecasted - in US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Packaged food 24,790.5 27,389.8 2.5 28,135.4 31,335.4 2.7
Rice, pasta and noodles 5,164.0 5,055.0 −0.5 5,107.1 5,358.7 1.2
Processed meat and seafood 2,979.4 3,499.3 4.1 3,674.4 4,418.8 4.7
Baked goods 2,269.9 3,547.2 11.8 3,715.3 4,390.4 4.3
Dairy 4,579.8 4,409.7 −0.9 4,396.5 4,371.6 −0.1
Ready meals 940.1 1,702.5 16.0 1,904.2 2,647.0 8.6
Savoury snacks 1,787.0 1,942.1 2.1 1,972.0 2,077.3 1.3
Sauces, dressings and condiments 1,354.0 1,516.2 2.9 1,574.2 1,768.7 3.0
Confectionery 1,334.7 1,494.9 2.9 1,525.9 1,668.8 2.3
Ice cream and frozen desserts 1,801.4 1,467.4 −5.0 1,427.3 1,326.5 −1.8
Sweet biscuits, snack bars and fruit snacks 1,025.9 1,016.3 −0.2 1,017.5 1,041.4 0.6
Soup 99.9 238.8 24.3 300.0 648.7 21.3
Sweet spreads 303.3 348.9 3.6 365.6 431.8 4.2
Edible oils 428.8 426.0 −0.2 423.6 418.8 −0.3
Baby food 448.4 432.6 −0.9 425.5 410.9 −0.9
Breakfast cereals 200.7 225.1 2.9 237.4 282.1 4.4
Processed fruit and vegetables 73.3 67.8 −1.9 68.6 73.9 1.9

Source: Euromonitor International, 2018

*CAGR: compound annual growth rate

Companies, brands, and distribution

Soup

The South Korean soups sector is expected to grow from US$99.9 million in 2014 to US$238.8 million by 2022, growing at a CAGR of 24.3%.

Shelf stable soup is the largest category with value sales of US$112.4 million in 2018 and forecast to grow the fastest during 2018-2023 at a CAGR of 28.7%, followed by chilled soup (12.3%) and instant soup (12.2%).

Hypermarkets (Costco, Emart) and supermarkets (Lotte Super, Hanaro Mart) are the largest distribution channels in the South Korean soups sector with a value share of 82.6% in 2017. Convenience stores (7 Eleven, CU) (8.7%), food and drinks specialists (0.9%) and e-retailers (0.6%) are the other leading distribution channels in the same year. Hypermarkets and supermarkets is also the leading distribution channel across all the categories.

Soup retail sales- historic and forecasted - in US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Soup 99.9 238.8 24.3 300.0 648.7 21.3
Shelf Stable Soup 21.6 112.4 51.0 154.7 425.0 28.7
Chilled Soup 41.7 77.1 16.6 90.2 143.7 12.3
Instant Soup 14.1 38.3 28.4 46.0 73.0 12.2
Dehydrated Soup 22.5 11.1 −16.2 9.2 7.0 −6.6

Source: Euromonitor International 2018

*CAGR: compound annual growth rate

Spicy beef soup

Company E-Land Retailer
Brand O'price x Oegatjip
Category Soup
Sub-category Wet soup
Country South Korea
Price in local currency (South Korean won) KRW2990.00
Price in US dollars 2.63

This economy product is made with rich beef leg bone broth, fresh beef, taro stems, bean sprouts and white radish with various seasonings to provide a rich and spicy flavour. It  can be microwaved when emptied in a microwavable container and retails in a 500 gram (g) pack bearing the Hazard analysis and critical control points (HACCP) logo and cooking instructions.

Prepared meals

The South Korean prepared meals sector was valued at US$159.8 million in 2016 and is expected to grow at a CAGR of 7.0% during 2016-2021. The prepared meals sector consists of three markets: meal kits, pizza, and ready meals. Ready meals is the largest market, with a value share of 53.7% in 2016, followed by pizza and meal kits with a value share of 27.2% and 19.1%, respectively.

Ready meals had retail sales of US$85.8 million in 2016 and is expected to grow at a CAGR of 9.3% to reach US$133.7 million by 2021, compared to meal kits (6.1%) and pizza (2.5%) during 2016-2021. The ready meals market consists of ambient ready meals, chilled ready meals, dried ready meals, and frozen ready meals. Of these, ambient ready meals is largest in terms of value and is expected to grow at the fastest rate during 2016-2021. Driven by convenience and time scarcity, ready meals is expected to remain the largest market segment of prepared meals by 2021 in value.

The meal kits market had retail sales of US$30.6 million in 2016, growing at a CAGR of 3.1%. It is expected to reach US$41.1 million by 2021, at a CAGR of 6.1% during 2016-2021. The meal kits market consists of ambient meal kits, chilled meal kits, and frozen meal kits. Of these, chilled meal kits is the largest category in value terms and is expected to grow the fastest during 2016-2021 at a CAGR of 6.2% to reach US$16.6 million by 2021, followed by frozen (6.0%), and ambient (5.9%).

The pizza market grew to US$43.4million in 2016 at a CAGR of 0.6%. It is expected to reach US$49.1million by 2021, at a CAGR of 2.5% during 2016-2021. The Pizza market is categorized into chilled pizza and frozen pizza. Of these, the chilled pizza category is the largest in value terms and both the categories are expected to grow at a CAGR of 2.9% and 1.7% during 2016-2021.

The South Korean prepared meals sector is highly fragmented with the top five players accounting for only 23.5% of the market share in 2016. CjCheilJedang is the leading brand with a value and volume share of 16.9% and 21.9%, respectively, in 2016. Dongwon, Pulmuwon, and Shin Ramyun are also leading brands in the sector.

Hypermarkets and Supermarkets is the leading distribution channel for the South Korean prepared meals sector, accounting for a total value share of 65.5% in 2016. The share of the majority of the channels increased marginally from 2011 levels while that of convenience stores increased significantly from 21.4% in 2011 to 22.3% in 2016.

Prepared meals market sizes - historic and forecasted - modelled retail sales in US$ millions
Market Category 2011 2016 CAGR* % 2011-2016 2016 2021 CAGR* % 2016-2021
Meal kits Ambient meal kits 10.1 11.8 3.0 11.8 15.7 5.9
Chilled meal kits 10.5 12.3 3.2 12.3 16.6 6.2
Frozen meal kits 5.6 6.6 3.1 6.6 8.8 6.0
Overall 26.3 30.6 3.1 30.6 41.1 6.1
Pizza Chilled pizza 27.7 29.1 1.0 29.1 33.6 2.9
Frozen pizza 14.4 14.3 −0.1 14.3 15.5 1.7
Overall 42.1 43.4 0.6 43.4 49.1 2.5
Ready meals Ambient ready meals 24.6 33.2 6.2 33.2 55.5 10.8
Chilled ready meals 12.4 16.5 5.9 16.5 26.9 10.3
Dried ready meals 16.0 21.2 5.8 21.2 34.3 10.1
Frozen ready meals 14.4 14.9 0.8 14.9 17.0 2.6
Overall 67.3 85.8 5.0 85.8 133.7 9.3
Overall Overall 135.7 159.8 3.3 159.8 223.9 7.0

Source: GlobalData 2019

*CAGR: compound annual growth rate

Refreshing lemon cream chicken salad

Company GS Retail
Brand Simply Cook
Category Meals and meat centers
Sub-category Salads
Country South Korea
Price in local currency (South Korean won) KRW4300.00
Price in US dollars 3.79

This product is designed to be consumed with hot chicken and fresh vegetables. It is microwaveable and retails in a 243g pack.

Processed meat, fish, and seafood

Meat – processed

The chilled raw packaged meat - processed category grew to US$984.8 million in 2018, at a CAGR of 2.5%. The category is expected to reach US$1,109.6 million by 2023, growing at a CAGR of 2.4% during 2018-2023.

Harim, CJ, Lotto and Ottogi are the top four brands in the South Korean meat sector. Harim accounted for a value share of 0.7% in 2018 and CJ held value share of 0.2% in the same year. While Lotto and Ottogi accounted for a value shares of 0.1% each. Furthermore, private labels accounted for value and volume shares of 19.9% and 21.4%, respectively, in the same year.

Hypermarkets and supermarkets is the leading distribution channel in the South Korean meat sector. It accounted for a value share of 67.8% in 2018, followed by food and drinks specialists and convenience stores with shares of 27.6% and 3.6% respectively.

Chilled raw packaged meat - processed - value analysis by segment (US$ million), 2013-2023
Category 2013 2018 CAGR* % 2013-2018 2019 2023 CAGR* % 2019-2023
Bacon 307.3 353.7 2.9 366.1 400.8 2.5
Burgers and grills 145.0 162.0 2.2 166.3 181.9 2.3
Coated portions 55.2 63.1 2.7 65.3 72.3 2.8
Meatballs 189.4 211.4 2.2 216.9 235.4 2.2
Sausages 172.4 194.6 2.4 199.9 219.1 2.4
Overall 869.3 984.8 2.5 1,014.6 1,109.6 2.4

Source: GlobalData, 2019

*CAGR: compound annual growth rate

Sweet potato flavoured frank sausage

Company Jinju Ham
Brand Jinju Double Ring
Category Processed fish, meat and egg products
Sub-category Meat products
Country South Korea
Price in local currency (South Korean won) KRW6980.00
Price in US dollars 6.16

Jinju Double Ring Sweet Potato Flavour Frank Sausage is said to be generously filled with sweet potato mousse, offering a sweet and salty flavour. The product is made with frozen steamed sweet potato and Korean pork. It retails in a 2 × 240g pack, bearing the HACCP logo.

Frozen fish and seafood – processed

The frozen fish and seafood category grew to US$300 million in 2017 at a CAGR of 5.7%. The category is forecast to reach US$400 million by 2022, growing at a CAGR of 5.5% during 2017-2022. The Chilled raw packaged fish and seafood - processed category grew to US$1.1 billion in 2017 at a CAGR of 5.5%. The category is forecast to reach US$1.5 billion by 2022, growing at a CAGR of 5.4% during 2017-2022.

Dongwon, Ottogi, Pulmuone and Sajo Chamchi are the top four brands in the South Korean fish and seafood sector. While Dongwon accounted for a value share of 1.9% in 2017, Ottogi and Pulmuone held value shares of 1.5% and 0.4% respectively. Sajo Chamchi accounted for 0.1% share in the same year.

Hypermarkets and supermarkets is the largest distribution channel in the South Korean fish and seafood sector. It accounted for a value share of 85.2% in 2017, followed by convenience stores and food and drinks specialists with shares of 9% and 3.8% respectively.

Frozen fish and seafood – value analysis by segment (US$ billion), 2012-2022
Category 2012 2017 CAGR* % 2012-2017 2022 CAGR* % 2017-2022
Frozen processed fish 0.2 0.3 5.7 0.4 5.5
Chilled raw packaged fish and seafood - processed 0.9 1.1 5.5 1.5 5.4

Source: GlobalData, 2019

*CAGR: compound annual growth rate

Lobster Porridge

Company Damiwon Seafood
Brand Damiwon Olbareun Susan
Category Meals and meal centers
Sub-category Prepared meat
Country South Korea
Price in local currency (South Korean won) KRW3800.00
Price in US dollars 3.34

This microwavable product retails in a 260g pack.

Opportunities

Consumers are opting for convenient options when it comes to eating in order to save time and increasingly placing orders for well cooked meals and quick delivery, or purchasing prepared meals which can be heated in a few minutes. This is especially true for ready meals, soups, processed meat and seafood, with new options being rapidly developed and targeting a diverse range of consumer groups.

Manufacturers are investing in better tasting and more nutritious prepared meal products to replace real home dining. As a result, in addition to single household consumers, married couples and senior consumers are also showing more interest in products in this area. In line with this simple and convenient trend, retailers are also increasingly distributing small portions and ready-to-cook ingredients, targeting consumers who enjoy cooking at home.

The Canada-Korea Free Trade Agreement

According to the Canadian Trade Commissioner Service, the Canada-Korea Free Trade Agreement (CCFTA), once fully implemented, in 2032, will increase Canada's gross domestic product by $1.7 billion and increase Canadian exports to Korea by 30%.

Under the CCFTA, Korea will eliminate tariffs on nearly 70% of agricultural products by 2019, and 99% of Canadian exports will be duty-free by 2029. Since the entry into force of the CCFTA on January 1, 2015, Canada's agri-food and seafood trade with South Korea has increased by more than 20% as of May 2018.

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, please contact:

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

Resources

Sector Trend Analysis – Packaged food trends in South Korea
Global Analysis Report

Prepared by: Kris Clipsham, International Market Analyst, Global Analysis

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2019).

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