Despite Price Hikes of the 'Ramen Big 3', Poor Performance... "Seeking Breakthrough Overseas"

Nongshim, Ottogi, and Samyang Foods Face Earnings Slump Due to Cost Burden and Base Effects
Offset by Increased Overseas Sales Share... Strengthening Product Competitiveness
Price Hike Impact Expected from First Half

[Asia Economy Reporter Song Seung-yoon] The 'Big 3' of the domestic ramen industry?Nongshim, Ottogi, and Samyang Foods?are accelerating their expansion into overseas markets to recover from last year's poor performance. With limited growth potential in the domestic market, they plan to gradually increase the proportion of overseas sales to find new growth momentum.

According to the industry on the 23rd, Nongshim's overseas sales accounted for about 37% of total sales as of 2020. By country, the breakdown is 30% in the United States, 30% in China, 10% in Japan, 5% in Europe, and 25% in other countries. Nongshim plans to gradually increase overseas sales to the 50% range. By increasing product supply centered on the second U.S. factory, which will begin operations next month, it is expected to gain an advantage in the North American market, which has been a major export destination, and significantly improve the performance of its U.S. subsidiary.

Samyang Foods also plans to expand its overseas export ratio, which currently stands at around 59%. In particular, it aims to target blue ocean markets such as Southeast Asia and the Middle East, in addition to the U.S. and China. Samyang Foods' overseas export ratio is 45% in China, 30% in Southeast Asia, and 15% in the U.S. Earlier, Samyang Foods secured a contract to simultaneously enter more than 220 nationwide stores of Panda, the number one supermarket in Saudi Arabia, marking a first in the Korean ramen industry. They plan to showcase about 20 products including the Buldak brand, Samyang Ramen, and Kimchi Ramen, aiming to achieve annual sales of 50 billion KRW by 2023?2024. Once the overseas export-dedicated factory in Miryang is completed next month, it is expected to export 500 million products annually.

Ottogi, which has a relatively low overseas export ratio, plans to gradually increase overseas sales from the current 10% range while focusing more on the domestic market through product diversification. Overseas, it is driving sales growth in Southeast Asia through its local factory in Vietnam, completed in 2018, and domestically, it plans to enhance product competitiveness through new product launches and renewals of existing products. The three ramen companies expect the impact of the ramen price increase implemented in August last year to be concentrated in the first half of this year.

According to the Financial Supervisory Service's electronic disclosure system, the operating profits of the three ramen companies last year decreased significantly by 16% to over 33% compared to the previous year. Previously, all of them cited rising costs such as raw materials and logistics as factors for poor performance in their investment briefing materials. The cost of key ingredients used in ramen, such as wheat, soybean oil, and palm oil, steadily increased, and despite price hikes on major products, it was difficult to offset these costs. Furthermore, as the COVID-19 pandemic prolonged, initial demand shifted due to factors such as dining-out demand and the popularity of meal kits, and comparing with the record-breaking figures of the previous year caused a 'reverse base effect,' making the performance appear relatively worse. An industry insider said, "Since the growth potential of overseas markets is still large, expanding overseas sales will soon become a growth driver," adding, "If each company strengthens key sales channels and focuses on overseas markets, and the effects of price increases are fully reflected, a sales rebound can be expected."

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