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The food and beverage (F&B) industry, an integrated form of business involved in all the steps of the business cycle from the point in agricultural production that originates early on in the process, logistics, packaging to food service, which take place after the production phase through to the point of sale, is witnessing positive growth prospects thanks to the recent increase in popularity of Korean cuisine throughout the world.
Customized Food Expansion, Emphasis on Health and Convenience
Amidst the COVID-19-induced economic crisis which has triggered an unprecedented, devastating hit to the economy since the Great Depression in the 1940s, recent changes in the F&B industry such as rising demand for survival food kits or home cooking have driven up the overall sales turnover. With emerging market trends led by demographic change and consumers increasingly looking for more convenient or healthier options, food companies are now working to respond well to changes in demand and livening up the business.
The most significant change seen in the business environment of Korea’s F&B industry would be the steep rise in single-person households and aging population. The number of people aged 65 or above as of 2020 is estimated to be nearly 8.13 million, taking up 15.7 percent of the total population. The share is predicted to keep growing, standing at almost 18.2 percent in the year 2023. The same goes for the percentage of Koreans living alone, representing 30.1 percent in 2020. Demographic aging and a higher proportion of the population living alone are forecast to lead to greater demand for foods good for seniors and home meal replacements (HMR).
Even if today’s consumers are growing more health-conscious in their food choices, turning toward nutritious options like functional foods while dropping energy intake, a large group of people are increasingly enjoying processed food indulgence on the back of improvement in nutritional quality and its convenient access.
The industry buzzword for 2020 would be undoubtedly HMR, with the market share reported to reach KRW 3.7 trillion as of 2018 and a growth rate of 9.2 percent compared to last year. The size of the ready-meal (usually referred to as pre-cooked food) market has shrunk, while ready-to-cook meals and prepared meal kits have started to gain ground as of recent.
A rise in HMR sales has also fueled the market growth of sauces worth KRW 260 million, up 8.4 percent year-on-year. Sauces specified by recipes, in particular, have shown outstanding sales increase. The functional foods market size is valued at KRW 2.5 trillion as of 2018. Sales of probiotics (lactobacillus) products and foods containing certain types of ingredients approved by the Ministry of Food and Drug Safety (MFDS) have grown over 30 percent.
Food and distribution industry support with changes in consumption trends
With a comprehensive policy package announced in December 2019 to further stimulate the industry, the Korean government is planning to develop technological applications which could be the next growth driver in the food industry and a list of the best top five food innovations specified below.
The first innovation is a personalized food service based on each customer’s dining preferences and biographical details. Medical foods formulated to boost distinctive nutritional needs, senior-friendly foods, alternative foods, pet foods and several others recently in the spotlight could be part of the candidates.
Second, functional foods to promote health and longevity through diet are on the list. The third entails convenience foods that are produced to optimize the ease of consumption. The fourth choice is about “green” foods, underscoring consumers’ ethical and environmental responsibility. The last pick is Korean dishes (or K-Foods) worth considering as valuable exports as they’ve been catching on globally.
Not merely to form an underlying research base and its infrastructure to support the abovementioned five new business, but to help open up and expand market presence, the authorities unveiled a plan to build up the business ecosystem, along with a solid judicial system. Furthermore, they’ll advance research capabilities as we approach a new era of the fourth industrial revolution in which information and bio technologies are transforming the way we produce, distribute and consume food products.
With a focus on areas to increase investment in, such as smart farming, agriculture-bio technology, high-quality agro-products, disaster preparedness to cope well with climate change or a pandemic, and technologies to improve the quality of life, the Korean government announced an idea to adopt the concept of open research, which refers to a series of practices that are made accessible to everyone in any stage and sectors of the research process to develop findings.
Expect a new challenge in the overcoming the COVID-19 crisis
The basic needs for human life—food, clothing and shelter—are changing rapidly these days. The fourth industrial revolution has led us to reshape consumption patterns into a completely different way from what they used to be. The COVID-19 pandemic, in particular, which has brought socio-economic upheaval across the world, is forcing every single economic unit of society to reconsider the way it thinks and behaves.
The most notable change comes from a surge in demand for online, contact-free engagement in our lives where mitigation efforts have become the new norm, fueling the transition to a digital economy.
Shoppers are using mobile apps to order online instead of wandering around offline stores. Companies are giving employees the option to work from home or move away from the traditional thought of assigned office space or hours. It’s been an imperative to go digital to be able to keep ahead of the competition.
With the arrival of 5G wireless service, Korea has started to offer 10 gigabit-per-second cable broadband, which is fast enough to download a full UHD movie in less than 30 seconds. These super-fast internet connections are regarded as the fundamental platform to shape up the technologies of the fourth industrial revolution.
At a time when the world is rushing to turn digital, Korea’s unrivaled tech-infrastructure will be the key enabler for crisis management and national competitiveness.
By Park, Jungmin
Head, Department of Research Policy, Planning Division
KFRI, Korea Food Research Institute
< The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA. >