Major K-food companies enjoy strong sales overseas

A local consumer is looking into Orion’s potato snack Poka Chip at a mart in Vietnam. [Courtesy of Orion]

As South Korean foods such as ramyeon, snacks, and dumplings become increasingly popular, companies began making profits in overseas markets in recent years, with Orion Corp. the first in the industry to bring nearly $100 million in profits from overseas subsidiaries back to Korea as dividends. As global sales of major food companies including CJ CheilJedang Corp., Nongshim Co., and Samyang Foods Co. grow rapidly, an increasing number of K-food companies are expected to bring the money they earned overseas back home. While Korea’s flagship exports, such as semiconductors, remain sluggish, it remains to be seen if food will help improve the nation’s current account.

According to the food industry on Thursday, Orion received 50 billion won ($37.44 million) in dividends from its Vietnamese subsidiary at the end of August 2023, with a further 60 billion won in dividends expected in October. Orion Vietnam has accumulated retained earnings of 400 billion won, which it is using for local reinvestment.

Orion’s Vietnamese dividends have been made possible as its average annual net profit has topped 50 billion won over the past five years. “We plan to use the 110 billion won brought into the country to purchase land in Jincheon, North Chungcheong Province, expand factories, build logistics centers, and repay borrowings,” an Orion official said.

The Korean confectionery company first entered the Vietnamese market in 1995 by exporting its signature Choco Pie product and established a local entity in 2005. The company’s Vietnamese sales was 200 billion won in 2016 and more than 400 billion won last year, doubling in six years. Vietnam has particularly high growth potential as the spending power of the 20-40 age group, accounting for 46 percent of the country’s total population, is growing.

The flagship products in the Vietnamese market are potato snacks including Poka Chip and Swing Chips as well as Choco Pie. Potato snacks are available in a variety of flavors, such as kimchi and steak, to appeal to local tastes, with sales exceeding 70 billion won in 2022. The company targeted the jelly market in 2021 and released Turtle Chips to accelerate its growth in April this year.

The rapid growth in overseas performance of Korean food companies, not just Orion, over the past five years has been remarkable. CJ CheilJedang posted sales of 2.11 trillion won and an operating profit of 193.5 billion won in North America in the first half of this year. CJ Foodville USA, Inc., which turned to the black in 2018, has posted a cumulative operating profit of more than 20 billion won over the past five years on the back of strong sales from CJ CheilJedang’s bakery chain TOUS les JOURS.