South Korean F&B companies expanded business overseas

South Korean food and beverage (F&B) companies are aggressively seeking for new opportunities in overseas markets as the local F&B industry is saturated.

Recently, there was a large number of Korean food services companies expanded overseas. As of the end of 2018, 166 Korean food service companies were operating under 184 brands in overseas markets, including 92 in China, 61 in the United States and 34 in Vietnam. BL&F operated the largest number of restaurants in China, managing 430 Chicken Couple outlets, followed by 380 Tous Les Jours bakery stores managed by CJ Foodville Corp. in seven countries including China, Vietnam, and the U.S.

These companies expanded not only in size but also in revenue. The average annual revenue of their overseas stores reached 1.6 billion won ($1.4 million) last year, almost tripling from 590 million won a year earlier.

According to a report released by Korea Agro-Fisheries & Food Trade Corporation, 92 companies are hoping to enter overseas markets, of which 30.4 percent plan to do so this year and 59.5 percent next year. Vietnam was the most popular destination chosen by 43 percent of the companies.

So why is Vietnam attractive for Korean food and beverage investments?

Vietnam has many competitive advantages including the young, well-educated population and continued economic growth. In addition, considering the rise of wages in China, Vietnam has become an alternative for global brands to relocate their factories.

Regarding the F&B industry, it is one of the main industrial sectors in Vietnam. It currently account for the highest proportion in the monthly spending structure of consumers (accounting for about 35% of spending). Moreover, according to estimates, in the first 8 months of 2018, food and beverage consumption increased by 8.1% and 10.2% respectively over the same period last year. Vietnam is expected to enter the top three Asian countries posting the highest growth rate of the F&B industry by 2020.

For foreign investors, the abundance of agricultural products and foodstuffs in Vietnam is an advantage. The country is considered one of the top five food baskets in the world and one of the top 15 largest countries by agriculture exports. Vietnam’s export turnovers of processed foodstuffs and agricultural products totaled more than US$40 billion in 2018. Vietnamese products are available in 200 countries, including demanding markets like Japan, the EU, the UK, and the US.

As a result, foreign businesses, especially big brand names in FMCG industry from Korea with financial advantages, experience and technology have not missed the opportunity when continuously investing in Vietnam. In particular, CJ CheilJedang - a member unit of CJ Group (South Korea) bought Minh Dat and Cau Tre, Daesang Corp Group acquired Viet Duc Food JSC, etc.

By Kizuna Marketing Department

(Source: http://www.investkorea.org/en/news/ivest.do?mode=view&articleNo=481134)