South Korea is one of the highly developed countries in the Asia Pacific region, boasting one of the world’s most developed and dynamic economies. Ranking as the 4th largest economy in Asia and the 12th largest globally, South Korea’s economic landscape is characterised by a robust industrial base, technological advancements, and an export-oriented nature.
With a population of 51.8 million, South Korea consumes 1.8 million tonnes of oils and fats annually. Palm oil and soybean oil are the most consumed oils, comprising 37% and 33% of total consumption, respectively. Soybean oil accounts for the majority of oil production in South Korea, meeting only 27% of the country’s total oils and fats requirements. The remaining demand is met through imports. Soybean oil is widely consumed in the hotel, restaurant, and institutional (HRI) sectors, as well as at home. Soybean oil has traditionally been favoured for salad/cooking purposes, but its usage is gradually being replaced by canola oil, rapeseed oil, corn oil, olive oil, and potentially palm olein. Palm oil has gained prominence for its versatility in making instant noodles, frying snack foods, and producing solid fats, offering superior functionality and cost-effectiveness compared to soybean oil.
Palm oil dominates South Korea’s oil imports, accounting for 51% of the total oils and fats imports, followed by soybean oil at 28%. Over the past five years, palm oil imports in South Korea have experienced sluggish growth, with an average annual growth rate of 0.47% between 2019 and 2022, primarily due to demand disruptions during the COVID-19 pandemic. However, in 2023, palm oil imports rebounded significantly, increasing by 101,000 tonnes, or 17%, to reach 688,000 tonnes. This growth is expected to continue in the coming years.
The biodiesel sector has been a key driver of rising palm oil imports since 2007/08. Over time, palm oil usage in biodiesel production has steadily increased. However, recent price dynamics between soybean oil and palm oil have led to a resurgence of soybean oil usage in South Korea’s biodiesel sector. As a result, the share of palm oil used in biodiesel is expected to decline slightly.
Shifting Consumer Patterns: Growth of Convenience Stores in South Korea
The surge in popularity and size of convenience stores in South Korea has revolutionized the retail landscape in recent years. This shift is attributed to several factors, including their extended operation hours, diverse product offerings, and strategic locations. Evolving needs and preference of consumers, as well as intense competition among major convenience store chains, further fuel the growth of convenience stores in South Korea.
In terms of revenue, the market size of convenience stores in South Korea soared by 47% to USD24.56 billion in 2023 from USD16.68 billion in 2017. This represents an average year-on-year growth rate of 9%. While the growth trajectory experienced a slowdown from 2019 to 2021 due to the impact of the COVID-19 pandemic, it regained momentum in 2022. According to industry estimates, more than half of these sales comprise food purchases. Convenience stores have emerged as the second-largest offline retail channel in South Korea, following closely behind department stores.
Figure 3: Comparison of retail sales share by channel in South Korea in 2017 vs. 2023 (MOTIE South Korea @ Statista, 2017 & 2023)
Prepared Foods or Ready-to-Eat Meals in South Korea Convenience Stores
Convenience stores in South Korea have adeptly responded to consumer demands by introducing a variety of innovative offerings, including a wide selection of ready-to-eat meals, salads, fruits, and other fresh items. This extensive range caters to the needs of busy individuals who prioritise convenience and nutritious options.
Prepared food, also known as “dosirak” or “bento” in South Korea, is widely available and highly popular among individuals seeking convenient meal solutions. Dosirak typically consists of a balanced combination of rice, protein (such as meat, fish, or tofu), and vegetables, occasionally accompanied by side dishes like kimchi. As consumer lifestyles continue to evolve, the demand for ready-to-eat meals is expected to remain robust.
According to a survey conducted in March 2023 among convenience store customers in South Korea, dosirak and kimbap emerged as the most frequently purchased items, accounting for approximately 52% of respondents. Close behind were instant noodles and snacks. In addition to dosirak, South Korean convenience stores offer a range of other ready-to-eat meals, including hot noodles, fried chicken, kimbap (rice and ingredients rolled in seaweed), dumplings, and pre-packaged salads. These options cater to individuals seeking a quick and satisfying meal on the go.
Malaysian Palm Oil Growth Opportunities in the Prepared Foods Market
The South Korean prepared foods market has demonstrated a favourable compound annual growth rate (CAGR) of 5.5% from 2018 to 2023, reaching a sales value of USD6.15 billion in 2023. This indicates a notable increase of 6% compared to the previous year, 2022. The market experienced its strongest performance in 2021, exhibiting a growth rate of 11.9% compared to the previous year, while its weakest performance was observed in 2020, with a growth rate of -0.62% over 2019. The drop in the growth rate in 2020 was due to the home quarantine measures taken by the government during the COVID-19 pandemic.
The remarkable growth in the consumption of prepared foods in South Korea is driven by changing lifestyles, increasing urbanisation, and evolving dietary preferences. The revenue of the prepared foods market in South Korea is expected to amount to USD8.08 billion in 2028 with a CAGR of 5.61% (2023-2028). Amidst this growth, palm oil has emerged as a promising ingredient, offering various opportunities for expansion and utilisation in the ready-to-eat meals market.
The growth opportunities for Malaysian palm oil in South Korea’s prepared foods sector are significant. Palm oil’s characteristic as a versatile oil that can enhance the texture and shelf life of foods, combined with its competitive pricing compared to other oils, makes it a viable ingredient choice in the prepared foods sector. The growth of Malaysian palm oil usage in the prepared foods sector can be achieved through collaborative efforts between Malaysian palm oil suppliers and convenience store players in South Korea. Responsible sourcing of palm oil can further promote its utilisation in the prepared foods sector, catering to the evolving demands of South Korean consumers.
Prepared by Ms. Rina Mariati
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Source:
1. USDA
2. Statista
3. Oil World
4. CEO Score
5. Trendmonitor
6. MOTIE (South Korea)
7. Korea JoongAng Daily
