We’re back and ready to shake things up…

After some time off to refuel (and maybe overindulge), we’re back in action, folks! We’ve got a few extra pounds from all the vacay taste-testing and exciting new insights to whet your appetite.

• In September, we’ll look towards South Korea for imports, meet an expert, and get all caffeinated with some interesting brews.

• In October, Indian is on the menu as we do a deep dive into the market.

• Then in November, we’ll prepare for the future with a focus on sustainability.

So, strap in and read on.

South Korea is right now having a moment. It’s become a trendsetter across categories, from K-pop and K-drama to K-beauty. Korean food culture has become a powerhouse unto itself, driving food trends globally. At the same time, South Korea relies pretty heavily on imports for food and gets around 70% of its agricultural and food products through imports. So the country is an important destination market for global food businesses looking to expand into Asia.

Imports are also on the rise, opening up opportunities for companies with interesting products to sell. Food and agricultural imports into the country have grown from US$36 billion in 2020 to over US$50 billion in 2022. In 2022, the country imported 2,330 food items from 166 countries, with the US, China, and Australia being the top trading partners. 

Value of food imported into South Korea in 2022, by top 10 countries of origin (in US$ billion)

GourmetPro expert Kathryn Read gives us a glimpse into the reasons that make South Korea an attractive import destination for food brands. Kathryn is the founder of Kathryn Elizabeth Read Consulting, which offers export consulting services for consumer goods as well as training, coaching, and mentoring for export sales professionals. In this article, she touches upon a few of the benefits and challenges of importing into this potentially rewarding market.

South Korean consumers are open to global trends

Openness to imported foods

A lot of Korean consumers have spent time abroad for education or work and have imbibed some of the habits and cultural aspects from the countries they have lived in. Such formative experiences have made them more accepting of trends from outside the country. So, this is a market that is very open to imported foods.

The South Korean market gets compared with the Japanese market a fair bit, since both are developed markets and consumers have a lot more disposable income than other Asian countries. But unlike Korea, Japan isn’t as open to imported products.

Singapore may be a closer comparison to South Korea as another developed Asian country that imports the bulk of its food. But Singapore, while easier to enter from a regulatory perspective, is a very small and extremely expensive market to operate in. Korea offers import opportunities that are more substantial than Singapore in terms of consumer base and at lower costs.

Informed and trend-conscious consumers

South Korea has a very sophisticated and well-informed consumer base. They are very involved with the purchasing decision and pay quite a bit of attention to details of the products they are buying. They like to research products and are happy to engage with products that actually require a bit of education.

For example, while both European and South Korean consumers will need to have explanations about products and ingredients and their specific uses, Korean consumers need more in-depth information and will often do their own research as well.

As one of the most connected consumers – the country has a near complete internet and smartphone penetration rate – Koreans are keen followers of global trends and enjoy trying out new products. So, there is a lot of interest in diverse food and beverage products.

High standards for food safety

Korean consumers tend to be quite concerned about food safety, which is also why they check labels thoroughly. In general, the Ministry of Food and Drug Safety (formerly the Korea Food & Drug Administration) has a good reputation for ensuring that safety regulations are met. As a result, Korean consumers trust the organization and are generally reassured that imported products have passed scrutiny. 

These stringent regulations also work in favor of the companies. It builds trust with companies as they aren’t worrying about incomplete compliance issues that may get them into trouble in the future. A few other countries in Asia have reputations of having rather ambiguous regulations that can make importing somewhat challenging.

Market entry testing with minimal investment

South Korea offers a few interesting avenues for global brands to test the waters. 

Because the population is so concentrated, just by covering online channels and Seoul, smaller brands with a relatively limited distribution footprint can learn enough about the market to decide if this is a good market for their products. This is really valuable for companies to also see if working in Asia is really the right thing for them. 

South Korea is the fifth largest e-commerce market in the world, and it punches way above its weight in terms of population simply because it’s a very convenience-driven market. The country offers the option of doing cross-border e-commerce as a way of testing the market. This can be incredibly useful for companies who are not really sure whether their product is the right one and they just want to try a little before investing a lot of time and money into the process. 

Leveraging cross-border e-commerce

Coupang is one of the leading e-commerce sites for the country. It also has a global marketplace where companies outside of Korea can list their products. There are restrictions on what you can list on this site – alcohol is not allowed for example – but for snack brands or beverage brands, Coupang might be a good way to check if consumers will accept the products. 

• It’s important to be careful that the products listed follow Korea’s safety regulations to make sure that any oversights don’t impede future market entry or scale-up through more traditional channels.

• Companies that attend trade fairs in Korea often set up a presence on Coupang in the months leading up to the fair so they can show potential distribution partners what the product looks like and that they already have Korean product pages. 

Documentation and regulatory compliance

• Documentation for this channel is fairly straightforward - you just have to prove you are who you say you are! That means showing that the company exists, that the representative is legitimate, which may be as simple as uploading a copy of the passport. 

• Another advantage of listing on Coupang is that products don’t need a Korean label. While some types of products require ingredients and instructions – as with infant formula – in general any product under a certain value (US$200) for personal use is allowed through from other countries with little to no hassle.

• More expensive packages (over US$2,000) will undergo general customs clearance procedures. Packages of value in between these limits have a simplified customs procedure.

Fast and cost-effective market testing

• This can be a very fast solution for brands since products can be delivered to customers in South Korea in just a few days. The products are delivered to a warehouse in the home market by Coupang service providers and Coupang delivers them to the buyer.

• This is sort of an attractive end-to-end solution for companies that are not used to exporting to other markets. In fact, Coupang has even been talking about investing in regional warehouses in Europe to support the process. 

• This may not be the right option for all companies, but it is a relatively cost-effective way for companies with limited resources.

Another marketplace for cross-border e-commerce is Kurly, but this company is more of a specialist for niche, premium products.

Key considerations for cross-border e-commerce

When it comes to such cross-border options, there are a few things that brands need to consider first.

• Do they simply want to sell their products online directly to consumers as a long-term solution, as some companies prefer to do?

• Is the cross-border option a market test and the first step towards finding a regular distribution or import partner?

If brands are looking to work more deeply in the market in the long term, then it is vital to do the research beforehand and ensure that they have all the information they need to structure pricing and brand activities.  

Like what you’re reading?

Navigating market challenges

Finding the right importer is the biggest challenge when it comes to entering South Korea. 

It's often difficult to gain access to medium-sized family importers, which a lot of European family companies want to work with as an equivalent partner. 

All the big conglomerates – the chaebols – import and they have a lot of different companies but they're very untransparent in their structures. Smaller companies often feel a little bit intimidated by that. They don't feel very comfortable if they can't quite see how the ownership is or they don't necessarily want to work with a branch of Samsung or Hyundai for their imports. 

And for really small brands, big companies are not likely to be interested in them, so this can be a difficult route. 

Another aspect to take care about when looking for distribution partners in Korea is if the product has slightly unusual ingredients or flavor profiles. 

A lot of the Korean import regulations are quite strict, especially around functional ingredients, and partners need to have a strong understanding of the function that ingredient plays in the formulation. Or the product may have an ingredient that makes it unique, but as that counts as a novel ingredient in Korea which could lead to complications during registration.

• Brands sometimes tend to underestimate how complex their recipes can be. They may see how well a certain brand of energy drink is doing in Korea and think that a similar product of their own would also do well if introduced into the market. This product may have a slight variation in the product formula – either an ingredient quantity is different or there’s a unique ingredient that counts as “novel” in South Korea and needs separate registration. While many are understandably reluctant to do so, it’s very important to understand that brands will need to open up their recipes to the regulatory body when registering for distribution in the country. 

Companies should make sure that the import partner knows the import regulations and is able to communicate them effectively. 

• For example, if you have an import partner whose English is good enough to talk about the commercial aspects of the contract, but who's not able to explain that different amounts of an ingredient (like sugar) in a formulation puts the products in different registration groups, this could be a problem. So it makes sense to have somebody involved in the negotiations who has really fluent language skills.

Current trends in imported products 

Popular imported product categories

A few categories of imported products that are seeing a bit of traction among consumers right now include the following.

• Functional health drinks are popular, but they should taste good as well.

• Lower alcohol drinks that can to an extent compete with soju. There’s quite a bit of interest in fruity flavors for these drinks especially among young professional women.

• Snacks with better-for-you claims, like low sugar, gluten-free, are becoming popular right now.

• Coffee - South Korea is one of the few markets in Asia where coffee is more popular than tea.

Categories facing challenges

• Anything that is very generic without too much story behind it will struggle to break into the market. Products that can be tasted in supermarkets as samples do better and so new brands could look at offering prepared tasting samples in supermarkets.

• Products with very short shelf life don’t often work because Korean consumers lead very busy lives and are on the road a lot, so they want convenient products that can last.

This is just a glimpse into how to enter the Korean market. If you’d like Kathryn’s support to take your own products into South Korea...

That’s all folks

Thanks for reading today’s newsletter.

See you next week.

About Us: GourmetPro is a global network of elite food and beverage industry talents. We provide fractional hiring solutions, allowing international managing directors to scale and transform their local resources and teams with high flexibility and expertise in more than 30 countries. Explore our services.

Made with ❤️ by GourmetPro - your network of Food & Beverage experts, on demand.

💖 And if you think someone you know might be interested in this edition of Market Shake, feel free to simply forward this email or click the button below. 💖

👉 P.S.: GourmetPro is also on LinkedIn and X!