Sector Trend Analysis – Vegetable oils in South Korea

Positioning vegetable oil products in the world

South Korea was the 34^th largest vegetable oil market worldwide in 2018, with US$426 million worth of retail value sales. Between 2014 and 2018, South Korea imported 65.6% of their vegetable oils and has decreased by a compound annual growth rate (CAGR) of −0.2%. The top five vegetable oil companies had very little influence in the South Korean vegetable oil market indicating a market that isn't dominated by the mainstream world influencers.

Canada's performance

In 2018, Canada exported over US$2.6 billion worth of vegetable oil products to the world, with 59.6% going to the United States. South Korea imported US$105 million of Canada's vegetable oil products in 2018. More specifically, canola products accounted for 92.1% of Canada's main vegetable oil exports to South Korea at a value of US$96.7 million. Canada was the second main exporter of vegetable oil to South Korea behind the United States.

Canada mainly exported its vegetable oil products to the United States and China due to a larger market share of the imports compared to the rest of the top 10 importers of vegetable oil products in the world.

Retail environment

Retail value sales of vegetable oil products have been steadily decreasing from 2014 to 2018, by a CAGR of −0.2%. Through 2021, the market is expected to keep falling at a CAGR of −0.3% in South Korea.

The retail market for edible oils has been declining over the 2016-2018 period due to consumer preference for HMRs such as ready meals, processed meat and prepared sauces since consumers have less time to prepare home cooked meals with their much busier lifestyles.

Traditional Korean oils such as sesame oils have been seeing a decline over the past five years because more households prefer HMRs. The other edible oils category has experienced a decline despite the fact that premium oils such as coconut oil were prefered and are highly used for weight management, as well as, for beauty purposes.^{Footnote 1}

Description of above image

2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
$424.3 million	$428.8 million	$478.6 million	$456.1 million	$437.5 million	$426.0 million	$423.6 million	$422.0 million	$420.8 million	$419.7 million	$418.8 million

Source: Euromonitor International, 2019.

The blue coulmns (2019-2023) are the five year forecast.

Canola Products

Canola oil is Canada's largest oil product produced and exported to the rest of the world, as indicated by the large sales values to the United states and China and although these are the two markets with the highest imports of Canadian Canola oil, the South Korean market has room to grow with a CAGR of 3.4% from 2014-2018. Canola oil is also the largest of the canola products imported by South Korea from Canada.

Also, important to note is that canola oil is the largest imported vegetable oil by South Korea as it is the only one greater than a hundred million dollars (133.6 million to be exact) accounting for 31% of vegetable oils being imported by South Korea and will continue to be the highest imported value all through 2023 (130.1 million). Canada accounts for about 72.5% South Korean canola oil imports.

In 2018, the five largest vegetable oil product companies in South Korea controlled 86.8% of the market compared to a small decrease from the 89.5% of sales share recorded in 2016. The 'others' category made up 12.7% of the market share. CJ Cheiljedang Corp, maintained its prominent position with a value share of 36.9% in 2018 up from 35.7% in 2016. CJ Cheiljedang Corp. gained in the olive oil market due to premium packaging and products claiming special origins, although they lost market share in the other edible oils market.

In South Korea, the performance of cooking oils is largely determined by sales of oil gift sets during the periods surrounding the Lunar new year and Korean thanksgiving day. Ottogi foods and Sajohaepyo have capitalised on the gift sets initiative crediting it with the gain in market share in 2018.^{Footnote 1}

Health and wellness products

The majority of health and wellness edible oil products sold since 2014 were naturally healthy and organic oil, whereby the total category experienced steady decline through the period from 2014 to 2018 at a CAGR of −1.4%. Organic edible oils fell at an incredible CAGR of −15.9% from 2014 to 2018.

However, the forecast indicates a growth in the health and wellness edible oils category due to the growth in the naturally healthy edible oils category at a rate of 2.4% through to 2023.

There is no forecasted growth in the organic edible oil category over the 2019 to 2023 period.

Product launch analysis

There has been a large increase of product launches for vegetable oil products in South Korea in the last two years, double the amount of launches in 2016. New products account for the majority of the launch types for the increase in product launches. The top package type that has had an interesting increase is bottled products, depicting an almost three times increase in for the increase in new product launch in the last two years in comparison to 2016.

New vegetable oil product examples

Sesame oil

Source: Canada Tariff finder, 2019

Company	Ottogi foods co Ltd, South Korea
Brand	Ottogi
Category	Sauces and seasonings
Date published	October 2018
Price in US dollars	8.05
Pack size	900 milliliters

Ottogi sesame oil has been repackaged. The Hazard analysis and critical control points (HACCP) certified product is made with traditionally roasted sesame and has been processed using the traditional mill pressing method to provide an aromatic flavour. It is claimed to be the number one sesame oil brand in Korea, and retails in a 900 millilitre (ml) pack featuring one-touch lid for convenience.

Premium grape seed oil gift set

Source: Canada Tariff finder, 2019

Company	Dongwon group
Brand	Dongwon
Category	Sauces and seasonings
Date published	June 2018
Price in US dollars	14.26
Pack size	500 milliliters

Dongwon premium grape seed oil gift set has been repacked featuring an artwork designed by Kwak Myeongju. The product is described as 100% grape seed oil made with selected fine grapes from Spanish Mediterranean. It is said to be ideal for cooking natural cuisines without adding an artificial taste or odour, and retails in a 3 × 500ml pack bearing the HACCP logo.

Canola oil

Source: Canada Tariff finder, 2019

Company	CJ CheilJedang
Brand	Beksul
Category	Sauces and seasonings
Date published	April 2018
Price in US dollars	2.62
Pack size	500 milliliters

Beksul canola oil has been repackaged. The product is from Canada, contains more than 60% oleic acid, and is said to be suitable for all kinds of cooking including pan-frying, deep-frying and roasting. It retails in a recyclable 500ml pack. It is also available in a 900ml pack.

Tariff elimination schedule

On January 1, 2019, 95% of Canada's exports will benefit from duty-free access into South Korea. Korea will eliminate most tariffs on vegetable oils by 2024, apart from a few shown below that will keep the most favoured nation (MFN)^{Footnote 2} tariffs. Consult the Canada tariff finder to explore tariff information from the Korean market under the Canada-Korea Free Trade Agreement (CKFTA), and other foreign markets with which Canada has a free trade agreement.

Conclusion

The South Korean vegetable oil market is expected to keep falling over the next five years. Yet, some markets such as the olive oil, and other edible oils subsectors are expected to grow over the next five years. Canola oil is expected to lose some market share, but at a slower rate than soy or corn oil.

Despite limited growth for canola oil due to consumer habits and market trends, there may be scope to substitute canola oil for other cooking oils (ie, to increase canola oil market share compared to other vegetable oils). This would require marketing efforts by the CCC to introduce new uses of canola oil or develop recipes especially incorporated into Korean dishes or that highlight health benefits.

There has been a large increase in new product launches and this indicates an opportunity for Canadian producers as canola products have been a high percentage of the new products being launched, especially if the products are offered as a gift set.

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.

• Overview of the Trade Commissioner Service in South Korea
• Find a Trade Commissioner

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 the Seoul Food & Hotel 2019, please contact:

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

Sector Trend Analysis – Vegetable oils in South Korea
Global Analysis Report

Prepared by: Bliss Morgan, Global Analysis (Co-op student)

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