South Korea, once ravaged by war and poverty, is now a significant player in the global economy. The world’s 10th largest economy in 2021, with a population of over 51 million people and a per capita GDP of over USD 34,000, South Korea is also a vibrant consumer market, particularly in the food and beverage sector. Hannes Humala, Asian Insiders partner for South Korea explores details and insights on South Korea’s food and beverage market. 

One of the marvels of the South Korea’s economic rise is that it is built on a limited arable area, with few natural resources and thus relies heavily on imports of agricultural and food products. With food security critically important, the implementation of the EU-Korea Free Trade Agreement in 2011 along with some 20 other bilateral and regional trade agreements, ensures that South Korean consumers enjoys the best the world has to offer. 

The average grocery spend per family in South Korea is approximately USD 600 per month. South Korea, with a unique food and dining culture has some 681,000 general dining establishments in 2021, with an estimated revenue in the food market of over USD 129 billion. This presents significant opportunities for both domestic and international players in South Korea’s food and beverage market. 

South Korea has witnessed significant social and demographic changes in recent years, leading to a shift in consumer preferences and market dynamics. Single-person households constitute over 30% of all households, with a further 23% of households consisting of only two persons. This modern household composition leads to changing demand for smaller portion sizes and ready-to-eat meals, emphasising the need for convenience. However, traditional Korean cuisine relies heavily on fresh meats and agricultural produce, which Korean farming is unable to fully supply. South Korea looks to its international partners to meet the shortfall.

South Korea also faces the challenge of a rapidly aging society. With 8.5 million residents over the age of 65, and a forecast increase to 13 million by 2030, there is a need to consider the specific needs of older consumers.

South Korea is experiencing a decreasing population due to a low birth rate, which hit a record low of 0.82 in 2021, making it one of the lowest in the world.  Conversely South Koreans enjoy long life expectancy, with women averaging 86 years and men averaging 80 years. This longer life expectancy allows for an increased demand for products that cater to older consumers’ dietary needs. 

The drift towards higher density urban living has led from communal dining to meal kits and on-the-go eating options. As convenience becomes a priority, meal kits with easy-to-follow recipes are increasingly popular, however South Korean consumers are also taking note of the trend for healthier food options. Increasingly consumers pay more attention to the quality, nutritional value and sourcing of the food they consume, presenting opportunities for high-quality, ethically sourced and healthier food options. Further, South Koreans having grown up with a distinctive and unique food culture are travelling more and are developing an increased taste for international food and beverage products.

Other recent trends indicate an inclination towards sustainability in food sourcing and packaging as well as an increased interest in vegetarian and vegan food choices.

The modern South Korean food and beverage market offers a wider range of retail options. There are over 48,000 convenience stores (CVS) across the country with major players including GS25 (GS Holdings Corp.), operating 35%, followed by CU (BFG Retail) with 31% and 7-Eleven (including Ministop, Lotte Group) with a 26% share, followed by Emart24 (Shinsegae group) with around 8% of the convenience stores.

There are 437 hypermarkets in South Korea including Emart (Shinsegae group) with about 160 stores, followed by Homeplus (MBK Partners) with 135 stores, and LotteMart with 106 stores. 

Department stores are fewer in number at around 60 (2022) with Lotte (Lotte Group) leading with 32 locations, followed by Hyundai (Hyundai group) with 16 locations, Shinsegae (Shinsegae group) with 13 locations, Galleria (Hanhwa group) with 5 locations, and AK Plaza (Aekyung group) with 4 locations. 

Homeshopping is also an important channel with Homeshopping (Hyundai department store) holding a 22% market share, Lotte Homeshopping (Lotte group) at 21%, CJO Shopping (CJ Corp) at 16%, GS Homeshopping (GS Homeshopping) at 15%, and NS Homeshopping (NS Shopping) at 10%. 

Consumers are increasingly turning to e-commerce online platforms with the online portals from super and hypermarkets’ online offering rapid delivery without extra cost. Key players in the e-commerce market include SSG.com, LotteON, Coupang, Market Kurly, Oasis Market, Gmarket, Naver, 11street, Tmon, and Acution. 

Entering the South Korean food and beverage market requires planning and a detailed understanding of the sector. Direct import is uncommon, normally requiring the involvement of an importer or distributor. Partnering with the right distribution partner is crucial. South Korea’s importers are predominantly small-sized, specializing in specific categories. Engaging with multiple importers can help businesses cover the most important sales channels, both online and offline. However, some of the major retail brands have their own importing divisions looking to import their strategic products.

South Korea’s food and beverage market offers tremendous potential for international suppliers and brands. As the 10th largest economy with a high per-capita GDP, South Korea presents a lucrative opportunity for exporters. But in almost all cases, these need to be explored with a carefully selected local partners that can handle licenses, logistics and local marketing.

Asian Insiders offers tremendous experience in working with South Korea’s food and beverage sector. To explore the potential in this market, you are invited to a no-obligation call with Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com or with Managing Partner for Korea, Hannes Humala: hannes.humala(at)asianinsiders.com