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The Deep Dive

Korea redefines dining experience with meal kits and delivery food

Food giants and startups are looking to win over Korean consumers who value convenience above all

By Jul 29, 2021 (Gmt+09:00)

Korean food startup Fresheasy’s Mille-Feuille Nabe meal kit with numbered packets indicating cooking order
Korean food startup Fresheasy’s Mille-Feuille Nabe meal kit with numbered packets indicating cooking order

A good old-fashioned, home-cooked meal is becoming a thing of the past in Korean households, with a wide range of home meal replacements (HMRs) and convenient food delivery services quickly penetrating Korea’s kitchens and dining tables in recent years.

As of July, the size of the HMR market in Korea has reached 5 trillion won ($4.3 billion) and the food delivery industry has so far recorded 20 trillion won ($17.4 billion) in sales. Data shows that the combined growth of the HMR and food delivery markets has more than doubled in just about three years, from 12 trillion won ($10.4 billion) in 2018 to 25 trillion won ($21.7 billion) in 2021.

Due to the ongoing coronavirus pandemic and the prevalence of work-from-home practices, more Koreans have started eating all three meals at home, further driving the demand for convenient HMR and food delivery options. As a result, in contrast to the steady decline of rice consumption at home by more than 8% over the last five years, the amount of rice consumed from HMR products last year increased a sharp 4.6%.

Moreover, some consumer reports show that even the concept of a home-cooked meal is beginning to change. Korean food giant CJ Cheiljedang Corp.’s survey of millennials and Gen Zers recently revealed that the keyword they most associated with the idea of a home-cooked meal is no longer “mom” or “mother,” but is either the name of Korea’s food delivery app market leader Baemin, or another e-commerce platform, Coupang.

The fast expansion of Korea’s food delivery market was spearheaded by Baemin.
The fast expansion of Korea’s food delivery market was spearheaded by Baemin.

Food industry insiders say that the Swiss bank UBS’s 2018 report -- “Is the kitchen dead? --heralding a new era in which people will no longer cook at home due to the rapid expansion of food delivery services and evolution of pre-prepared food, has now become a reality in South Korea.

Food culture experts highlight that even those do cook at home rely on YouTube rather than homemade recipes when preparing food. They highlight that such practices are accelerating the unnecessary standardization, or monotony, of what we eat on a daily basis. They say that Korea has entered a period in which young people cannot cook as well as their elders, while the older generation has also reduced cooking in preference of convenient HMR products.

Even those who do cook at home rely primarily on simple recipes on YouTube.
Even those who do cook at home rely primarily on simple recipes on YouTube.

The food industry analyzes that the size of the HMR industry will grow from 5.6 trillion won ($4.9 billion) this year to 8.2 trillion won ($7.2 billion) by 2023. The industry officials highlight that Korea’s HMR market is still in its nascent stage compared to other developed countries such as the UK, the US and Japan.

NEW OPPORTUNITIES & POTENTIAL THREATS IN THE FOOD SECTOR

The paradigm shift in Korea’s food consumption habits is also driving some major game-changing moves among the country’s food companies.

Previously, the typical industry practice had been that the food manufacturers would produce food items to be sold at different distribution channels such as restaurants and supermarkets. But now, industry insiders say it’s an all-out war where food companies, retail companies, famous local restaurants, big-name restaurant chains, food-tech startups and even non-food companies are all offering meal options to consumers across the country.

“The traditional industry boundaries between food manufacturing, retail and restaurant franchise sectors are blurring faster than ever. We now have a whole new environment where product planning and marketing capabilities have become more important than food manufacturing and processing know-how,” said Moon Jung-hoon, an agriculture and food business professor at Seoul National University.

Even the country’s top hotels like Shinsegae Josun are launching HMR products to compete.
Even the country’s top hotels like Shinsegae Josun are launching HMR products to compete.

The professor added that millennials and Gen Zers no longer buy food products based on the name of the food makers, unlike the older population to whom the food maker’s name was often equivalent to the food category itself. For instance, for the older generation, Nongshim Co. stood for ramen, Ottogi meant sauces like ketchup and mayonnaise, and Dongwon F&B Co. immediately brought up the image of tuna cans.

In sharp contrast. Chef Lee Yeon Bok’s Mokran Noodles, an HMR product extremely popular among the younger generation, is manufactured by small noodle maker Noodle Lovers, which has little consumer brand recognition. But as the product’s name contains Chef Lee Yeon Bok, arguably one of the most renowned chefs in Korea, consumers are snatching up the product. 


Almost everything is pre-prepared in Chef Lee Yeon Bok’s Mokran Noodles. 
Almost everything is pre-prepared in Chef Lee Yeon Bok’s Mokran Noodles. 

“Consumers no longer look at the name of the company that manufactured the food items. They are more attracted to the content and the marketing aspects of the products,” said Professor Moon.

Industry experts highlight that there is now a plethora of original equipment manufacturers (OEMs), like Noodle Lovers, in the food sector just like in other manufacturing segments. An OEM is a business-to-business (B2B) company that makes products to be marketed by another company, usually one with higher awareness among consumers.   

According to the food industry, there are about 300,000 food OEMs in Korea today. Some dominant players include Wooyang Co., which takes up about a 50% share of Korea’s frozen corn dog market, as well as Hanmi Healthcare Inc. in the soy milk market.

Wooyang, listed on Kosdaq in 2019, supplies corn dogs, one of the most widely eaten frozen snacks in Korea, to major food companies including CJ Cheiljedang and Pulmuone. The company also supplies beverage concentrates and fruit purees to Starbucks Korea and SPC Group.

CJ’s Gourmet Crispy Hot Dog is made by the food OEM Wooyang Co. 
CJ’s Gourmet Crispy Hot Dog is made by the food OEM Wooyang Co. 

Fast growth in the number of food OEMs in Korea is in turn driving the creation of food startups offering a variety of products and services. Industry insiders say that the food startups are able to launch products with quality on par with those of big-name firms like CJ, Nongshim and Pulmuone, because a large portion of their products are produced by the same OEMs.

“Korea’s food sector, which had long been dominated by only a handful of key players such as CJ, Nongshim and Ottogi, is now undergoing a major shift with a multitude of new entrants,” said a CEO of a food-tech startup.

The CEO added that like in Korea’s e-commerce sector where new firms such as Coupang and Market Kurly have positioned themselves successfully against traditional players like Naver and eBay Korea, the food sector within the next three to five years will also see a number of startups rising as key competitors.

Some leading food startups that are posing threats to Korea’s traditional food players include Cookat Inc., Mychef Inc. and Fresheasy Co. Cookat is a company that operates Cookat Market, an online marketplace that specializes in selling HMR products. It also operates two offline Cookat Market branches in Seoul.

Cookat is also a media company that operates food curation channels on social media, including Instagram on which it has about 900,000 followers. Cookat’s 2020 revenue was 39 billion won ($34 million), up by 111% from that of 2019. It also raised 32 billion won ($28 million) in June in Series D funding.

Cookat specializes in ultra-convenient HMR products such as rice bowls.
Cookat specializes in ultra-convenient HMR products such as rice bowls.

Mychef, the first meal kit company in South Korea, sells more than 200,000 meal kits every month through more than 60 distribution channels including Coupang and Market Kurly. Mychef’s revenue last year reached 27.6 billion won ($24.1 million), growing by 151% from 2019. Mychef said that it has raised a total of 19.1 billion won ($16.7 million) in investment from external sources so far, and is planning to go public by the end of 2022.  

Mychef’s main competitor Fresheasy is the country’s leader in the meal kit market. Fresheasy specializes in food publishing, which is a business practice that collaborates with famous restaurants to commercialize their meals into convenient meal kits to be consumed at home.

The meal kit market leader Fresheasy boasts a wide range of offerings.
The meal kit market leader Fresheasy boasts a wide range of offerings.

In step with the entrepreneurial trend in the food sector, traditional players such as CJ and Lotte have launched initiatives to discover and fund food startups in Korea. CJ Cheiljedang in June kicked off the Frontier Labs project to fund up to 100 million won ($87,500) in selected food startups.

Likewise, Lotte Chilsung Beverage Co. recently started an internal venture program that funds all operating costs, including salaries to selected teams. The teams can spin off from Lotte Chilsung as separate entities and the members can also apply for reemployment within five years of the spin-off.  

SAMSUNG JOINS THE MEGATREND IN THE FOOD SECTOR

The unprecedented growth in the HMR sector in South Korea has even pushed the country’s largest conglomerate Samsung Electronics Co. to join the market. In collaboration with eight Korean food companies, Samsung on July 28 launched the Bespoke Qooker, a home appliance that specializes in cooking HMRs such as meal kits and other types of pre-prepared food.

Samsung’s Bespoke Qooker is specially designed to cook HMRs such as meal kits.
Samsung’s Bespoke Qooker is specially designed to cook HMRs such as meal kits.

The Bespoke Qooker was launched only in Korea at the price of 590,000 won ($515), with no overseas launch plans yet. The eight partners that worked with Samsung to develop the Qooker were Mychef, Fresheasy, Daesang Corp., Pulmuone, Dongwon F&B, Ottogi, Foodsupply Co. and Hy Co. Foodsupply Co. is another food startup that specializes in meal kit delivery, or what it calls the “cooking box” service, under the brand name of entrée.

A total of eight leading companies in Korea’s food industry have participated in creating the Bespoke Qooker.
A total of eight leading companies in Korea’s food industry have participated in creating the Bespoke Qooker.

The eight partners will not only introduce a total of 117 recipes to go with the Bespoke Qooker but also launch meal kits and other HMR products exclusively to be cooked on the Qooker.

“We partnered with Korea’s leading food companies in designing the Bespoke Qooker to fully understand the needs of both consumers and food makers,” said Samsung.

Samsung added that another Samsung Group affiliate, Hotel Shilla, will also launch an exclusive meal kit for the Qooker in the second half of this year.

Write to Sul-li Jun and Jong-kwan Park at sljun@hankyung.com

Daniel Cho edited this article.

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