[Exclusive] Paldo Builds a 'Dosirak Kingdom' in Russia... Establishes Another New Corporation

Paldo's "Dosirak (Доширак)," which leads the Russian ramen market, has established a new corporation to expand its territory. With a market share exceeding 50% in Russia, Dosirak is seen as laying the groundwork to further solidify its position as the leading brand amid the K-ramen boom. Riding on explosive demand, Paldo has established and operates local production plants, distribution companies, and even a flour milling company in Russia, effectively building what could be called a "Dosirak Kingdom."

Dosirak lunchbox product sold by Dosirakrus, Paldo's Russian subsidiary. Dosirak website

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According to the food industry on April 23, Dosirakrus, Paldo's Russian subsidiary, invested 539 million rubles (approximately KRW 10.6 billion) this past February to establish a new corporation called "Dosirak CG (ДОШИРАК СИ ДЖИ)." This is the first new corporation in three years since Paldo established the factory-based Dosirak Nizhny and the flour-milling company Dosirak Tambov in 2023. Until now, Paldo has operated five corporations in Russia: Dosirakrus, Dosirak Koya, Dosirak Ryazan, Dosirak Nizhny, and Dosirak Tambov.

Paldo’s Russian subsidiaries, including Dosirakrus, are continuously expanding their production lines. Dosirak Ryazan invested 160 million rubles in equipment installation and construction projects. Last month, Boris Yashinski, the governor of Ryazan Province, visited the plant and had working-level discussions with the management regarding the possibility of future production expansion, promising that "(at the local government level) every possible support will be provided." Dosirak Koya is currently constructing a new warehouse, with the value of assets under construction reaching 622.2 million rubles as of the end of last year. Dosirak Koya is also planning to expand its business this year by launching a new product line.

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Dosirak Nizhny is currently undergoing production efficiency improvements, including ceasing operations of its macaroni production line last year and selling and relocating some of its equipment.

Paldo's Dosirak is a leading brand with a market share exceeding 50% in the Russian instant noodle market. Dosirak achieved dominance in the Russian market through localization, introducing a variety of flavors such as chicken, mushroom, and shrimp for consumers unaccustomed to spicy tastes. In addition, "Dosirak Plus," which includes a mayonnaise sauce reflecting the local preference for mayonnaise, gained significant popularity. At one point, the market share exceeded 60%, but it has recently begun to decline, requiring active measures. According to a report by the daily Kommersant, citing analysis by local payment company Evotor, Dosirak's instant noodle market share dropped by 2 percentage points in one year to 51% last year.

Paldo’s entry into the Russian market began in the 1990s, when merchants from Vladivostok brought Dosirak to Russia in bundles. This led to the opening of the Moscow representative office in 1997, followed by the construction of Dosirak Koya’s first factory in 2004. In 2009, Paldo built a second factory in Ryazan, and since 2010, Dosirakrus has been solely responsible for distributing products manufactured at these two factories throughout Russia. Last year, with Dosirakrus selling finished products produced in Ryazan, the trading volume between the two companies exceeded KRW 200 billion. In response to surging demand in 2023, Paldo built a third factory in Nizhny Novgorod and established a flour mill in the Tambov region in the same year.

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Sales are on the rise. According to Paldo’s audit report, combined sales of Dosirakrus and Dosirak Koya reached KRW 632.8 billion last year, a 29% increase from the previous year. In 2021, the two corporations’ sales were around KRW 300 billion, but last year, for the first time, they surpassed KRW 600 billion, doubling within two years. Dosirakrus alone recorded sales of KRW 500.9 billion last year, surpassing Paldo headquarters' own sales of KRW 473.7 billion. As a result, the net assets of the Russian subsidiaries have surged. Dosirakrus’s net assets increased by 59%, from KRW 379.8 billion in 2023 to KRW 602.7 billion last year. Dosirak Koya’s net assets also expanded by 42% during the same period.

Despite the vibrant Russian business, these subsidiaries did not distribute any dividends to the Korean headquarters last year. Previously, Dosirakrus had remitted part of its profits in Russia to Paldo as dividends. Initially, profits were reinvested locally, but in recent years, dividends began to be paid, with nearly KRW 30 billion remitted in 2023-about 32% of the KRW 90.1 billion in net profit earned in 2022.

However, for two years starting in 2024, no dividends have been paid. This is believed to be due to Russia’s strict foreign exchange controls following the outbreak of the Russia-Ukraine war in February 2022, which have prevented the remittance of dividends to the headquarters in Korea.

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Paldo plans to reinvest profits earned locally in Russia into further business expansion there. Dosirakrus, which is responsible for exclusive distribution in Russia, is supporting local business expansion by investing funds to establish new corporations and providing long-term loans of over KRW 10 billion to manufacturing bases Dosirak Koya and Dosirak Ryazan. A Paldo official stated, "We plan to continue expanding investments to further strengthen our position in the Russian market."

Russia has become a new battleground for K-ramen. According to global market research firm Euromonitor, the Russian ramen market is expected to grow at a high annual average rate of over 10% from 2021 to 2030, reaching USD 1.05 billion by 2030. In particular, the growing popularity of Korean pop culture is boosting the preference for K-ramen. Last year, ramen exports to Russia reached USD 45.86 million, a 75% increase from the previous year. Samyang Foods' Buldak Bokkeum Myeon is also increasing its market share in Russia, and Nongshim, with its flagship product Shin Ramyun, plans to establish a Russian subsidiary in June.

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