Dongwon F&B to actively expand its business through overseas M&As

Dongwon F&B’s Chief Executive Officer Kim Seong-yong. [Photo by Lee Seung-hwan]

South Korea’s Dongwon F&B Co. is aiming to expand its overseas operations through acquisitions of foreign food makers and retailers, with the goal of tripling its current 5 percent share of overseas business within the next three years.

Despite achieving its highest-ever performance last year, Dongwon F&B’s Chief Executive Officer Kim Seong-yong, who is driving overseas business expansion emphasizes the urgency of structural improvements for sustainable growth.

According to disclosure filing, Dongwon F&B achieved a 15.3 percent on-year increase in sales, reaching a record-breaking 4.02 trillion won ($3.01 billion) in revenue last year. This marked the first time the company’s annual sales surpassed the 4 trillion won mark.

“But about 70-80 percent of Dongwon F&B’s growth in the last three years can be attributed to our subsidiary Dongwon Home Food Co. The growth rate of Dongwon F&B alone is only around 4 percent, and this is led by the growth of our flagship products such as tuna and seaweed, which are mostly driven by rising prices,” he said.

Kim’s dispassionate view of the company stems from his 30 years of experience with Dongwon F&B and Dongwon Home Food, starting in 1991 when he joined the marketing team at Dongwon F&B.

During his decade-long tenure, Dongwon Home Food expanded its size fivefold, under Kim’s leadership. Referred to as the “growth specialist” within Dongwon Group, Kim confidently said, “Dongwon F&B’s standalone growth rate will again reach double digits.”

To achieve this, Kim is placing a strong emphasis on overseas investments. Recent initiatives include establishing overseas production facilities through mergers and acquisitions with local businesses. While Dongwon F&B currently operates overseas subsidiaries in the U.S., Japan, and China, its products have primarily been produced domestically and then exported. To overcome limitations in localizing products and expanding distribution networks, Dongwon F&B is implementing a dual-strategy: exporting “Made in Korea” products for the K-food category and producing localized items in overseas production facilities.

“We may partner with local companies to jointly establish new production facilities or acquire companies with existing food manufacturing facilities. We are currently exploring various options.” The company also plans to expand its collaboration with StarKist Co., the world’s largest tuna can manufacturer, acquired by Dongwon Group in 2008. Kim envisions leveraging StarKist’s distribution network, including Walmart, to sell Dongwon F&B’s products and even launch new joint-brands such as dumplings and canned ham.

In addition to investing to improve aging facilities, the company is also considering establishing a domestic smart factory in the mid- to long-term. It plans to build a smart factory near its Jincheon plant in Chungbuk Province to expand production at its current Seongnam plant in Gyeonggi Province. The investment amount for the Seongnam plant relocation alone is 90 billion won.