Korea’s top probiotic drink maker hy to expand global biz

South Korea’s leading probiotic drink maker hy Co. is seeking to expand its health functional food business into the global market as demand for the supplements is expected to stay strong despite an economic slowdown, given the rising interest in the prevention of diseases in the wake of COVID-19.

hy, aims to introduce its health functional foods this year to the US as the company saw the world’s largest consumer market lacking health supplements for skin care, antioxidants and diets. The firm plans to make inroads into Southeast Asia with raw materials of supplements for intestinal health while launching ingredients that reduce body fats in Germany and Sweden, which consumes lots of cheese.

The company, formerly known as Korea Yakult, has been producing and selling Yakult, a Japanese sweetened probiotic milk beverage fermented with the bacteria strain Lacticaseibacillus casei Shirota, in South Korea under a licensing deal. It changed the company’s name with the aim of developing itself as a comprehensive food maker.

STRAIN R&D

South Korea’s health functional food market surged 53.7% to 6.1 trillion won ($5 billion) last year from 2018, according to the Korea Health Supplements Association, an industry group.

To expand its presence in the market, hy established a new research and development team of strains, raw materials for health functional foods, according to local industry sources on Thursday.

The development of strains is essential for the exploration of individually-approved ingredients, a core of the health functional food business. The Ministry of Food and Drug Safety certifies their functionality and grants exclusive sales rights for a certain period of time.

The number of individually-approved ingredients more than doubled to 43 last year from 20 in 2021, according to the South Korean authority.

hy aims to increase the number of its individually-approved ingredients to 15 by 2025 from the current 7.

“The company assigned a task on Lactobacillus R&D since it is difficult to improve profitability only based on a flagship product Will,” said Lee Jung-yeol, the head of the company’s R&D unit, referring to its famous fermented milk.

The R&D center studies about 5,000 kinds of lactobacillus and 300 kinds of natural products. The company supplies strains developed at the center to health supplement companies such as Amway’s Nutrilite and CKD Healthcare Corp., a unit of the South Korean pharmaceutical group Chongkundang, through business-to-business deals. Its annual sales nearly tripled to 10.1 billion won last year from 3.5 billion won in 2020.

Write to Kyeong-je Han at hankyung@hankyung.com
Jongwoo Cheon edited this article.