South Korea Food and Drink Report Q4 2012

South Korea's household debt is a perpetual concern for the economy. On the back of a sliding economy and a sputtering property market, private consumption is likely to be stymied as the debt servicing burden compels consumers to scale back their expenditure. Moreover, an expected rise in unemployment is expected to place further pressure on expenditure patterns. Businesses have thus far been able to stave off laying off workers by resorting to measures such as cutting salaries and asking workers to take unpaid leave in order to lower the cost burden. We expect consumption to grow 1.5% and 3.6% in 2012 and 2013 respectively. We highlight that the risks to consumption growth are weighted to the downside in view of the enormity of the economy's household debt.

Headline Industry Data (local currency) ?? 2012 per capita food consumption = +3.7%; forecast to 2016 = +23.2% ?? 2012 alcoholic drink value sales = +5.0%; forecast to 2016 = +27.0% ?? 2012 soft drink value sales = +3.4%; forecast to 2016 = +28.3% ?? 2012 mass grocery retail sales = +3.7%; forecast to 2016 = +44.9%

Key Industry Trends And Developments Alcohol Imports Soaring: Recently signed free trade agreements with Europe and the US have led to a surge in alcohol imports to South Korea, according to the latest data from the Korea Wines & Spirits Importers Association, as reported by the Korea Herald. Between January and July 2012, imports of US wine from Spain and Germany increased by 19.7% and 19.9% respectively, while imports of US wine increased by 19.4%. Chilean wine proved to be a loser, with imports down by 3.5%, while imports of French wine fell in volume terms but increased in value terms.

No Pickup In Food CPI Despite Grains Rally: After a year of food price disinflation in Asia, the significant rally in grain prices over the last quarter has stoked fears of a return of food consumer price (CPI) pressure. Despite the recent grain prices hike, we do not see food CPI picking up again in Asia at least until 2013.

Risks To Outlook If there is a sharper than expected downturn in the global economy or even an implosion in South Korea’s household debt market, we would expect a substantial weakening in its exports sector, which in turn may push the economy into a pronounced recession.

Table of contents

Chapter 1 - BMI Industry View

SWOT Analysis

South Korea Food Industry SWOT

South Korea Drink Industry SWOT

South Korea Mass Grocery Retail Industry SWOT

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Asia Pacific Food & Drink Risk/Reward Ratings

Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q (score out of )

Table: Asia Pacific Food & Drink Risk/Reward Ratings, Q

South Korea’s Food & Drink Risk/Rewards Rating

Macroeconomic Outlook

Table: Economic Activity

Chapter 3 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Table: Sugar Confectionery

Processed Meat

Table: Processed Meat

Preserved Fish

Table: Preserved Fish

Oils & Fats

Table: Oils & Fats

Dairy

Table: Dairy

Trade

Table: Trade Indicators – Historical Data & Forecasts

Drink

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts

Alcoholic Drinks

Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts

Table: Beer

Soft Drinks

Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts, -

Table: Carbonates

Table: Bottled Water

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Mass Grocery Retail

Table: Mass Grocery Retail Sales Value by Format – Historical Data & Forecasts, -

Table: Retail Sales By Format

Chapter 4 - Food

Key Industry Trends And Developments

FTA Could Lead to Problems For Agricultural Sector

Noodle Manufacturers Fined For Price Fixing

Opening Up The Agriculture Market

Inflow And Outflow Of Investments

Market Overview

Agriculture

Organics

Food Processing

Chapter 5 - Drink

Key Industry Trends And Developments

Growing Diversity In South Korean Beer Market

FTA To Imbue Alcoholic Drinks Sector With Greater Dynamism

Product And Geographical Expansion To Gain Prominence

Market Overview

Alcoholic Drinks

Soft Drinks

Chapter 6 - Mass Grocery Retail

Key Industry Trends And Developments

FamilyMart Indicates Further Expansion In South Korea

Frustration Over Increasingly Regulated Retail Landscape

Tesco Has Ample Motivation To Acquire Hi-Mart

Local Retailers Set Sights On High-Growth Regional Assets

Retailers Face Hurdles In Pursuing Domestic Growth

Market Overview

Table: Estimated Number Of MGR Outlets

Table: MGR Sales Value (US$bn)

Table: MGR Sales Value (KRWbn)

Table: Average Sales Per Outlet By Format,

Chapter 7 - Competitive Landscape

Key Players

Table: Key Players In South Korea’s Food Sector

Table: Key Players In South Korea’s Drink Sector

Table: Key Players In South Korea’s MGR Sector

Chapter 8 - Company Monitor

Food

Maeil Dairy Industry

Nong Shim Co Ltd

Drink

Hite Brewery

Oriental Brewery

Mass Grocery Retail

Lotte Shopping

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Samsung Tesco HomePlus

Table: South Korea's Population By Age Group, - (')

Table: South Korea's Population By Age Group, - (% of total)

Table: South Korea's Key Population Ratios, -

Table: South Korea's Rural And Urban Population, -

Chapter 9 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 10 - BMI Methodology

Demographic Outlook

Table: South Korea's Population By Age Group, - (')

Table: South Korea's Population By Age Group, - (% of total)

Table: South Korea's Key Population Ratios, -

Table: South Korea's Rural And Urban Population, -

Chapter 11 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 12 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: South Korea (in Asia)