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Click Here to View Asset Cover pictures: Seoul, South Korea. © Department of Primary Industries Published by: Department of Primary Industries Farm Services Victoria Melbourne, Victoria, Australia November 2009 Also published on www.dpi.vic.gov.au/agribusiness © The State of Victoria Department of Primary Industries, 2009 This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Authorised by: Victorian Government, GPO Box 4440 Melbourne. ISBN 978-1-74217-672-7 (print) ISBN 978-1-74217-673-4 (web) Disclaimer This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. For more information visit the website at www.dpi.vic.gov.au or contact the DPI Customer Service Centre 136 186. Produced by: Agribusiness Group Department of Primary Industries 1 Spring Street PO Box 4440 Melbourne, Victoria 3001, Australia Authors: Anita Chennell Project Officer, Strategic Market Analysis DPI Agribusiness Group Lucy Ridley Project Officer, Strategic Market Analysis DPI Agribusiness Group Editor: Nicki Marks Senior Project Officer, Strategic Market Analysis DPI Agribusiness Group Acknowledgements: Ross Clarke, Manager Market Development North Asia Jeong-Hee Bai, Agribusiness Market Representative, South Korea EXECUTIVE SUMMARY Currently, 70% of all South Korea’s food is imported (Gillman 2007). Factors such as a growing population, increasing wealth and consumer demand for greater food variety, lower prices, and convenience, have contributed to this increasing and heavy dependence on food imports. Food exports to South Korea have grown strongly since the late 1990’s, with the largest growth being seen in meat, dairy products and grains. In 2008-09, Australian food exports to South Korea were valued at AU$1.1 billion, a 1% increase from the previous year (DPI 2009). The State of Queensland, Victoria and New South Wales dominate Australia’s food exports to South Korea. Victoria is ranked second, valued at AU$258 million in 2008- 09. This positions South Korea as Victoria’s 9th largest food and agricultural export market, accounting for 4% of all Victoria’s total food exports (DPI 2009). Since 2004, South Korea’s Gross Domestic Product (GDP) has remained strong at over 4%, largely driven by exports and consumer spending (Planet Retail, 2008). In 2008, GDP was US$22,000 per capita. In comparison, Australia’s GDP in 2008 was US$46,000 per capita (Euromonitor, 2008a). Trade liberalisation is opening a large, growing trade in value-added and high-value commodities, including meats, fruits and vegetables, processed foods, and beverages (USDA 2008a). Korea's food sector increasingly reflects trends seen in developed economies, in which convenience, attractive marketing, and variety are key attributes. Animal products and processed foods and beverages become steadily more important in overall food consumption (USDA 2008b). Annual disposable income per capita has increased substantially since 2000 (see Figure 5), by approximately 54%, from US$8,000 in 2000 to US$13,000 in 2007. This is estimated to reach US$15,000 by 2010 (Euromonitor, 2008a). The number of single-person households has also increased by 5% from 2000 to 2005, accounting for 20% of the total number of households in South Korea at the end of 2005 (Euromonitor, 2008d). These extensive changes in work and lifestyle are expected to impact positively upon the growth of ready meals. In 2007, ready meals showed strong current value growth of 7% to reach US$230 million (Euromonitor, 2008d). A greater variety of products have potential in the South Korean market since Korean consumers are open to new products to improve or maintain health. For instance, cancer and cardiovascular diseases are major killers in Korea; therefore, demand for nutritional supplements that enhance the immune system is strong (Austrade undated). South Korea Food Market Overview DPI Agribusiness Group Page i of 26 TABLE OF CONTENTS Executive Summary.................................................................................................................i Table of Contents ..................................................................................................................ii List of Tables and Figures ..................................................................................................... iii INTRODUCTION .....................................................................................................................1 This report provides an overview of South Korea’s food market. It aims to assist in identifying opportunities for Victoria’s agrifood producers and exporters by examining current food trends. 1 1. South Korea situation analysis .......................................................................................2 1.1. Socioeconomic Overview......................................................................................... 2 1.2. Food Imports .......................................................................................................... 3 1.3. Food Exports from Australia and Victoria................................................................ 6 1.4. Consumer Income and Food Expenditure ............................................................... 8 1.5. Retail and Manufacturing...................................................................................... 10 2. South Korean Lifestyle .................................................................................................11 2.1. Ageing Population ................................................................................................ 11 2.2. Work hours and Household structure.................................................................... 12 2.3. Obesity ................................................................................................................. 12 3. Consumer Trends ........................................................................................................13 3.1. Environmental Consciousness............................................................................... 13 3.2. Food safety Concerns. .......................................................................................... 13 3.3. Information and Telecommunication Capability .................................................... 14 3.4. Safe and Healthy Foods ........................................................................................ 14 3.4.1. Fermented Food Products.................................................................................................15 3.4.2. Functional Drinks .............................................................................................................17 3.4.3. Alcoholic drinks ...............................................................................................................18 3.4.4. Environmentally Friendly Agricultural Products (EFAP) ......................................................19 3.4.5. Organic Foods.................................................................................................................. 19 3.4.6. New Organic Processed Food regulations for Korea..........................................................20 4. Opportunities for Victorian Producers ..........................................................................22 5. Bibliography ................................................................................................................23 South Korea Food Market Overview DPI Agribusiness Group Page ii of 26 List of Tables and Figures Figure 1: South Korea country map. Source: CIA, 2008............................................................. 2 Figure 2: South Korea’s population pyramid for the years 2000, 2020 and 2050......................... 3 Figure 3: Value of Food Imports by Import Country in 2008……………………………………………..3 Figure 4: Value of grains, meat, fruit and Vegetable imports 2000-2008……………………………..4 Figure 5: Per Capita GDP, expenditure and disposable income 2000-2010 (est.)……………………7 Figure 6: Consumer expenditure by food type 2000 – 2012 (est.)……………………………………….8 Figure 7: Shopping cart barcode reader ……………………..…………………………………………...….9 Figure 8: Korean kimchi dish…………………..………………………………………………………………15 Figure 9: Wine imports including fortified wine 2008 ($AU million)……………………………..…….17 Figure 10: ORGA whole foods South Korea……………………………………………………………....…19 Table 1: South Korea’s top 5 food import partners in 2007……………………………………………..6 Table 2: Australia’s key competitors in the South Korean market for the top 5 food imports…………………………………………….…………………………………………………...…6 Table 3. Victorian Food and Fibre Exports to Japan by Product Category ($AU million)……………7 South Korea Food Market Overview DPI Agribusiness Group Page iii of 26 INTRODUCTION South Korea has undergone rapid economic development in the past 30 years. It is now regarded as one of the leading economies in the Asia-Pacific region; being the third largest Asian economy after Japan and China. Rapid economic growth and increasing per capita income has led to substantial changes in Korean food consumption patterns and lifestyle. Consumption of the main staple foods — rice, barley and potatoes — has declined, while consumption of meat, fruit, vegetables
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