A SNAPSHOT OF THE BAKERY INDUSTRY IN SOUTH KOREA FLANDERS INVESTMENT & TRADE MARKET SURVEY A SNAPSHOT OF THE BAKERY INDUSTRY IN SOUTH KOREA August 2014 FLANDERS INVESTMENT & TRADE SEOUL c/o Embassy of Belgium 23, Itaewon-ro 45-gil, Yongsan-gu, Seoul 140-893, Republic of Korea (T) 822-790 2480 (F) 822-790 2483 (E) [email protected] Contents Contents .................................................................................................................................................. 1 Before you start reading.......................................................................................................................... 2 Introduction ............................................................................................................................................. 3 1. Brief Overview of the Bakery Sector................................................................................................ 4 1.1. Characteristics and Trends .................................................................................................. 4 1.2. Players in the Bakery Sector ................................................................................................ 6 1.3. Information on Imported Bakery Goods ............................................................................. 8 2. Tips on How to Approach the Korean Bakery Market ................................................................... 10 2.1. Taking the First Steps ........................................................................................................ 10 2.2. Korean Bakery Importers .................................................................................................. 11 3. Information on Fairs and Organizations ........................................................................................ 12 3.1. Overview of Fairs Organized in South Korea ..................................................................... 12 3.2. Contact Details of Interesting Organizations..................................................................... 12 In Belgium .............................................................................................................................. 12 In Korea ................................................................................................................................. 13 Sources .................................................................................................................................................. 14 A snapshot of the bakery industry in South Korea | August 2014 1 Before you Start Reading We advise you to check the latest Korean legislation and import regulations before sending your goods to South Korea. This can be done by contacting your Koreans importer or inform yourself with the Koreans Customs Authorities. The Korean Embassy in Brussels or Flanders Investment and Trade can also assist you. Statistical material can vary depending on the source. The terms “Korea” and “South Korea” are used in this sector overview. Both terms refer to the Republic of Korea. Exchange rates (19 August 2014): 1 EUR ≈ 1362 Korean Won (KRW) 1 USD ≈ 1017 Korean Won (KRW) This report was compiled by Flanders Investment and Trade in Seoul, Republic of Korea in August 2014. The information given in this publication is intended as background information. It is with the greatest of care that we collected this information based on the available data and documentation at the time of publication. This publication does therefore not have the ambition of completeness or validity for your specific situation. They can therefore never be regarded as legal, financial or other specialist advice. Flanders Investment & Trade (FIT) cannot be held responsible in the sense for any incorrect entries, omissions or inaccuracies in this publication. FIT cannot be held responsible for the use or interpretation of information contained in this publication. References in this publication to specific entities, companies and / or individuals have no specific recommendations in which Flanders Investment & Trade could bring some responsibility. 2 Introduction According to research from Global Industry Analysts, the global baked goods industry is expected to exceed $310 billion in 2015. Because of busy lifestyles and double income households, time to cook and prepare meals is limited. People are looking for convenient, easy and fast to eat food such as baked and pastry goods. Demand for baked snack foods such as wraps or sandwiches are increasing. The global baked goods market has shown strong growth over recent years. Reasons stimulating market expansions include convenience, affordability and health benefits of baked goods products. Because of globalization, the eating pattern in Asia is changing. Asians are eager to try out new foods and wheat products are becoming very popular. Bakery products are becoming a solid food element in the Asian diet. The baked goods industry, encompassing products such as bread, cereals, cakes, biscuits, pastries and scones, has potential in Asia. These trends of busy lifestyles and interest for new foods are also seen in South Korea. In this snapshot, we will have a brief look at the bakery industry, trends in het market, identify the major players and give you some tips on how to approach the market. At the end of this overview, we will give you some interesting information on fairs and organizations. A snapshot of the bakery industry in South Korea | August 2014 3 1. Brief Overview of the Bakery Sector 1.1. Characteristics and Trends In 2013 retail value sales of baked goods grew at 5 % to reach KRW 1,927 billion, whilst retail volume sales posted 2% growth. The increase rate was largely due to increasing bread consumption, in line with changes in consumers’ meal habits. More often the traditional rice or noodle breakfast is being replaced by bread. Cakes and pastries posted retail value growth at 5 % and 1 % respectively. Cakes and pastries are consumed during special occasion, to celebrate, to give as a gift or just as a treat. The industry is expected to grow at a compounded annual growth rate (CAGR) of 4,1 % by value and 3,4 % by volume for the same time period, according to Canadean. The volume sales of baked goods will keep increasing as more and more consumers replace their rice-based breakfast with bread. However, since unpackaged/artisanal bread products have more potential to reflect premium price, their sales will register the higher constant value growth. Koreans find high-quality important in the choice of food and are willing to pay for it. For packaged/industrial bread, constant value growth will not be able to catch up with the volume growth as the majority of local consumers look for value for money products in the category. This packaged/industrial bread is comparable to soft toast bread. These breads are produced locally. Therefore we see many opportunities for Flemish companies active in bakery products. Also there is interest in the knowhow to make good bread. In the Canadean forecast, we see that energy and cereal bars are expected to show strong growth in South Korea, thanks to the country’s increasingly on-the-go lifestyle. It predicts the category will display the highest growth in volume at a CAGR of 4,8 % up to 2017. Convenience is a significant factor for the young and the middle class of South Korea. These clients have hectic lives and require products which can be consumed quickly and easily. Sandwiches are gaining popularity. More sandwich restaurants are opening that offer sandwiches, panini, wraps… Also in this segment quality is important. So to make qualitative sandwiches, they often use Western 4 products like cheese, salmon, smoked ham... The superiority of the bread is essential like a good baguette, ciabatta or whole grain sandwich. Rectangular sandwiches can be bought in convenience stores or supermarkets. They are much cheaper in price and lower in quality. Another important trend is the health aspect. Cookies will show the least growth over the next five years, with value and volume CAGR of 3 % and 2,8 % to 2017 respectively. Consumers are looking for less sugar and salt in their bakery products. Most items that can be found in Korean bakeries are salty or very sweet. Korean bakeries offer savory articles like bread or rolls with cheese, sausage, curry, spices, chicken… And these products are often covered with something sweet. Health- conscious consumers are looking for products without these elements. Back to the basics of the bakery: nice, healthy bread. A last trend is the growing popularity of desserts. The variety of desserts, cakes and pastries is rising. Because of globalization, consumers tried many desserts abroad and want this on the Korean market. Waffles, cakes, pies, Danish pastries, cookies, chocolate desserts… are popular. Koreans are eager to learn new types of desserts. A snapshot of the bakery industry in South Korea | August 2014 5 1.2. Players in the Bakery Sector In South Korea you can buy bread and rolls from 4 different types of bakeries: Franchise bakeries (44 % of market share in 2009-2010). The 2 main players are Paris Baguette and Tous Les Jours. Window bakeries (22 % of market share) are non-franchised or small franchise bakeries. Factory bakeries stand for 20 % of market share. They are producers of industrial packaged breads that you can buy in retail. Factory bakeries were leading the bakery industry till 1970’s. Other types of bakeries appeared in the market from