"Hetbahn and Terra Sell Like Crazy"…Food Industry Smiles Despite 'COVID-19' Setbacks

CJ CheilJedang's HMR Sales Soar Amid Rising Demand for Home-Cooked Meals
Orion and Nongshim Smile as Ramen and Snack Demand Surges as Alternative Foods
HiteJinro Returns to Profit with Strong Home Sales of Jinro and Terra

[Asia Economy Reporter Choi Sunghye] Preparing breakfast has become a daily routine of worrying about lunch, and preparing lunch leads to concerns about dinner. Housewife Kim Jeong-yeon (40) recently visits online malls at the start of each week to bulk purchase instant rice, dumplings, ramen, and more. Since the outbreak of the novel coronavirus disease (COVID-19), her husband has been working from home, and their elementary school children attend online classes instead of going to school, greatly increasing the demand for home-cooked meals.

Office worker Lim Doohwan (33) finishes his remote work, prepares dinner, and enjoys a light drink with his family to end the day. Due to COVID-19, remote work has significantly reduced company dinners and various gatherings. Recently, he has been mixing 'Jinro Is Back' and 'Terra,' which have become his favorite alcoholic beverages at home, to make and drink 'Somaek' (soju + beer).

◇The Biggest Beneficiary of COVID-19: Convenience Foods= On the 4th, amid the global economic crisis triggered by the spread of COVID-19, some food companies are estimated to have enjoyed a windfall in the first quarter. This is due to a surge in sales of home meal replacements (HMR), ramen, and snacks in the first quarter, driven by social distancing trends. CJ CheilJedang, which maintains a domestic HMR market share of over 50%, is considered a prime beneficiary of COVID-19's positive effects. According to securities and distribution industry sources, CJ CheilJedang's consolidated first-quarter sales are projected to increase by 12.3% year-on-year to 5.6371 trillion KRW. Along with the surge in domestic food demand due to COVID-19, processed food sales rose by 33.9% compared to the same period last year.

Park Heejin, a researcher at Shinhan Financial Investment, explained, "As of the end of Q3 last year, CJ CheilJedang's HMR market share was 53.3%, up 3.9 percentage points from the previous year," adding, "This was thanks to the expansion of product lines under brands like Bibigo and Gourmet, as well as increased market share within existing product categories." He further noted that HMR demand is expected to continue growing, making the annual performance outlook positive.

Nongshim Chapaguri UK Promotional Material

◇Staying Home Sparks Explosive Growth in Snack and Ramen Consumption= In the case of Orion, the demand for snacks surged due to COVID-19, and improving demand in previously sluggish overseas markets is expected to result in strong performance. Orion's consolidated first-quarter sales and operating profit are forecasted to increase by 9.3% and 25.4% year-on-year to 543.7 billion KRW and 96.9 billion KRW, respectively.

Especially, the COVID-19 situation created opportunities for Orion in the Chinese market. Although sales in the Chinese segment fell by 36.0% year-on-year in January, Orion's pies, biscuits, and snack products gained prominence as food substitutes in China, leading to sales increases of 53.2% and 67.3% in February and March, respectively, compared to the previous year. Kim Jeongwook, a researcher at Meritz Securities, stated, "In countries outside China, such as South Korea, Vietnam, and Russia, strong performance is expected due to the effects of new products rather than external environmental changes."

Nongshim is another food company that benefited from the surge in ramen demand that began in earnest after February. The success of the Academy Award-winning film "Parasite" also boosted sales of 'Jjapaguri' (a mix of Jjapaghetti and Neoguri). Nongshim's consolidated first-quarter sales and operating profit are expected to increase by 16.7% and 58.4% year-on-year to 686.6 billion KRW and 50.1 billion KRW, respectively.

By business segment, ramen sales reached 353.2 billion KRW, up 16.7% year-on-year, while snack and beverage sales are expected to increase by 10.2% and 17.5% to 87.2 billion KRW and 40.5 billion KRW, respectively. Overseas sales are estimated to rise by 24.2% to 165.4 billion KRW compared to the same period last year. In the U.S. market, which greatly benefited from "Parasite," first-quarter sales are projected to increase by 30.9% year-on-year to 92.9 billion KRW.

Terra product photo

◇Terra + Jinro Popular Even at Home= In the alcoholic beverage industry, while most companies are expected to see their first-quarter results plummet due to reduced social gatherings and remote work caused by social distancing, HiteJinro is thriving alone thanks to the continued popularity of Terra and Jinro Is Back. Its first-quarter sales and operating profit are expected to increase by 17.7% year-on-year to 497.9 billion KRW and turn profitable with 35.1 billion KRW, respectively. As of the end of the first quarter, HiteJinro's market share for beer and soju was tentatively estimated at 36.0% and 67.2%, up 5.2 and 4.0 percentage points from the previous year. Sales volumes of Terra and Jinro Is Back, which led the sales increase, are expected to exceed 7 million and 3 million boxes, respectively. First-quarter sales in the beer and soju segments are projected to rise by 28.7% and 11.9% year-on-year to 179 billion KRW and 281.8 billion KRW, respectively.

This content was produced with the assistance of AI translation services.