South Korean food makers turn to bio-industry for growth potentials

[Source : Gettyimagesbank]

South Korea’s major food manufacturers are shifting their focus toward the bio-industry, as the market growth prospects for food products is expected to weaken due to shrinking population and thinning profits. They believe the domestic food market faces limits for growth, which has led to fierce competition and operating profit margin of 5 percent to 6 percent being undermined by higher material costs. An industry official said that some companies are turning overseas while others are finding a new growth source. Many players are searching for growth potential in the bio-industry because bio-products that require exclusive technologies to be developed enable the manufacturers to lead the market, resulting in higher operating profits.

According to several industry sources on Sunday, Samyang Foods Co. plans to dive into the bio-industry and develop new products of vegetable protein and microbiome technologies to drive growth. In 2022, Orion Holdings established OrionBiologics to develop and sell food active substances and drugs.

[Source : Daesang Corp.]

South Korea’s Daesang Corp. has invested resources in developing bio-material products. As a mid- and long-term roadmap to grab a bigger market share in the industry, the company set a strategy to strengthen its bio-sector businesses, ranging from cultured meat to amino acids. In particular, as part of its journey toward a green biodegradation business, Daesang is expected to set up a joint venture with SKC Ltd. and LX International Corp., with a goal to issue shares by Feb. 7 next year.

Some markers players have already stood out. For example, CJ CheilJedang Corp. has seen its bio-sector earnings outpace those from the food division. The company’s operating profit from the bio-sector in the first three quarters of last year reached 558.4 billion won ($442.4 million), higher than the food-driven profit of 546.7 billion won. Although sales from the bio projects during the same period stood at 3.71 trillion won, just half of food sales of 8.27 trillion won, operating profit margin or the bio sector was double that of the food business.

The government is also providing support to the sector. In a new year speech, Food and Drug Safety Minister Oh Yu-kyoung promised to support the emerging bio-market by setting management criteria and safety evaluations tailored to the novel bio-medicines and cell-cultured food.