South Korea Food and Drink Report Q1 2012
Includes 3 FREE quarterly updates
BMI View: South Korea’s consumption spending in 2012 will remain constrained by high household debt burden and a deteriorating macroeconomic outlook, which is likely to result in an uptick in unemployment rate. Bearing out this view, retail sales growth is starting to slow. The long-term consumer picture for South Korea remains broadly sanguine, however. A positive macroeconomic growth outlook, healthy population growth and rising incomes are major pluses for consumer goods manufacturers and retailers. We acknowledge that the consumer-facing sectors in South Korea are fast approaching saturation, and domestic companies such as Lotte Confectionery are likely to continue to expand their presence abroad in search of more dynamic growth opportunities.
Headline Industry Data (local currency)
FTA To Imbue Alcoholic Drinks Sector With Greater Dynamism: The US Congress has approved the USSouth Korea free trade agreement (FTA), which will eliminate tariffs and import barriers between the two countries. Should South Korea ratify the FTA, the agreement will remove a 15% tariff on US wines imported into South Korea and eliminate tariffs levied on US-imported spirits in South Korea. This is likely to lead to a greater availability of lower-priced US spirits and wines to South Korean consumers, allowing US exporters to tap into the strong growth dynamics in the South Korean alcoholic drinks sector.
Local Retailers Set Sights On High-Growth Regional Assets: South Korean leading discount retailer EMart reached an agreement with U&I Investment Corporation to establish a joint venture in Vietnam with an aim of setting up retail stores in the country. Meanwhile, Shinsegae is looking to establish a greater geographic footprint internationally, with plans to open 100 stores in China by 2015 in order to diversify its geographic footprint and further improve its presence in emerging markets.
Risks To Outlook
South Korea’s economy is likely to face the same external headwinds as other trade-dependent economies within the region. US growth is expected to remain sluggish, while the end to Europe’s sovereign debt crisis is not yet in sight. More pertinently, a hard landing in China looks to be firmly on the cards. Given the exposure that South Korea’s exporters have to these economies, the growing headwinds are likely to weigh on the health of the South Korean economy. Should South Korea’s economic growth in 2012 prove to be worse than expected, this would affect consumer sentiment and domestic demand.
BMI View: South Korea’s consumption spending in 2012 will remain constrained by high household debt burden and a deteriorating macroeconomic outlook, which is likely to result in an uptick in unemployment rate. Bearing out this view, retail sales growth is starting to slow. The long-term consumer picture for South Korea remains broadly sanguine, however. A positive macroeconomic growth outlook, healthy population growth and rising incomes are major pluses for consumer goods manufacturers and retailers. We acknowledge that the consumer-facing sectors in South Korea are fast approaching saturation, and domestic companies such as Lotte Confectionery are likely to continue to expand their presence abroad in search of more dynamic growth opportunities.
Headline Industry Data (local currency)
- 2012 per capita food consumption = +3.7%; compound annual growth rate (CAGR) forecast to 2016 = +5.1%
- 2012 alcoholic drink value sales = +5.0%; CAGR forecast to 2016 = +5.0%
- 2012 soft drink value sales = +4.2%; CAGR forecast to 2016 = +5.5%
- 2012 mass grocery retail sales = +7.8%; CAGR forecast to 2016 = +8.2%
FTA To Imbue Alcoholic Drinks Sector With Greater Dynamism: The US Congress has approved the USSouth Korea free trade agreement (FTA), which will eliminate tariffs and import barriers between the two countries. Should South Korea ratify the FTA, the agreement will remove a 15% tariff on US wines imported into South Korea and eliminate tariffs levied on US-imported spirits in South Korea. This is likely to lead to a greater availability of lower-priced US spirits and wines to South Korean consumers, allowing US exporters to tap into the strong growth dynamics in the South Korean alcoholic drinks sector.
Local Retailers Set Sights On High-Growth Regional Assets: South Korean leading discount retailer EMart reached an agreement with U&I Investment Corporation to establish a joint venture in Vietnam with an aim of setting up retail stores in the country. Meanwhile, Shinsegae is looking to establish a greater geographic footprint internationally, with plans to open 100 stores in China by 2015 in order to diversify its geographic footprint and further improve its presence in emerging markets.
Risks To Outlook
South Korea’s economy is likely to face the same external headwinds as other trade-dependent economies within the region. US growth is expected to remain sluggish, while the end to Europe’s sovereign debt crisis is not yet in sight. More pertinently, a hard landing in China looks to be firmly on the cards. Given the exposure that South Korea’s exporters have to these economies, the growing headwinds are likely to weigh on the health of the South Korean economy. Should South Korea’s economic growth in 2012 prove to be worse than expected, this would affect consumer sentiment and domestic demand.
Contents
BMI Industry ViewSWOT Analysis
South Korea Food Industry SWOT
South Korea Drink Industry SWOT
South Korea Mass Grocery Retail Industry SWOT
Business Environment
BMI’s Core Global Industry Views
Table: Agricultural Commodity Prices
Table: Core Views Q112
Asia Pacific Business Environment Ratings
Table: China Food & Drink Risk/Reward Ratings – Q112
Table: Asia Pacific Food & Drink Risk/Reward Ratings – Q112
South Korea Food & Drink Business Environment Rating
Macroeconomic Outlook
Table: Economic Activity
Industry Forecast Scenario
Consumer Outlook
Food
Food Consumption
Table: Food Consumption Indicators – Historical Data & Forecasts
Canned Food
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts
Confectionery
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts
Table: Sugar Confectionery
Trade
Table: Trade Indicators – Historical Data & Forecasts
Drink
Hot Drinks
Table: Hot Drinks Value Sales – Historical Data & Forecasts
Alcoholic Drinks
Table: Alcoholic Drinks Volume/Value Sales – Historical Data & Forecasts
Table: Beer
Soft Drinks
Table: Soft Drinks Value/Volume Sales
Table: Carbonated Soft Drinks
Table: Soft Drinks
Mass Grocery Retail
Table: Mass Grocery Retail Sales Value – Historical Data & Forecasts
Table: Mass Grocery Retail Sales By Format, %
Food
Key Industry Trends And Developments
Opening Up The Agriculture Market
Witnessing Inflow And Outflow Of Investments
Market Overview
Agriculture
Organics
Food Processing
Drink
Key Industry Trends And Developments
FTA To Imbue Alcoholic Drinks Sector With Greater Dynamism
Product And Geographical Expansion To Gain Prominence
Market Overview
Alcoholic Drinks
Soft Drinks
Mass Grocery Retail
Key Industry Trends And Developments
Local Retailers Set Sights On High-Growth Regional Assets
Retailers Face Hurdles In Pursuing Domestic Growth
Market Overview
Table: Mass Grocery Retail Market By Estimated Number Of Outlets
Table: Mass Grocery Retail – Sales Value By Format (US$bn)
Table: Mass Grocery Retail – Sales Value By Format (KRWbn)
Table: Average Sales Per Outlet By Format – 2010
Competitive Landscape
Consumer Share Price Analysis
Key Players
Table: Key Players in South Korea’s Food Sector
Table: Key Players in South Korea’s Drink Sector
Table: Key Players in South Korea’s Mass Grocery Retail Sector
Company Monitor
Food
Maeil Dairy Industry
Nong Shim Co Ltd
Drink
Hite Brewery
Oriental Brewery
Mass Grocery Retail
Lotte Shopping
Samsung Tesco HomePlus
Risk/Reward Ratings Methodology
Table: Rewards
Table: Risks
Weighting
Table: Weighting
BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
BMI Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing Skip to top