Korea Ag-News
December 2006
NEWS CLIPPING
Canada seeks wider agricutlural access in FTA talks
Canada has pushed for wider access to Korea's agriculture market during
the eighth round of talks for a bilateral free trade agreement last week,
the government said yesterday.
Canadian negotiators asked Seoul to revise its proposals for beef and
pork, saying that an FTA would have to benefit the Canadian livestock
industry, the Seoul's Agriculture Ministry said.
But it stressed that Korean negotiators explained their difficulty in
changing the country's position on agricultural goods, citing the politically
sensitive nature of the farming industry and the difficulty faced by local
farmers.
The eighth round of FTA negotiations took place from Nov. 20 to 23 in
Seoul. The ninth will be held in Canada during the fourth week of January
next year. (Nov. 27, 2006, Korea Herald)
Bone chip found in US beef
A bone chip has been discovered in the first shipment of US beef to
land in Korea. The Ministry of Agriculture and Forestry (MAF) announced
that a small piece of bone was discovered in a box of chuck flap tail
- the bone was detected through the x-ray process by which every carton
is being inspected. While Korea has accepted that bone chips are not specified
risk material, any product with bone chip is being regarded as bone in,
which violates agreed import protocols.
The beef was shipped by the Kansas based processor Creekstone Farms,
and it is anticipated that the Creekstone plant's approval to export
to Korea will be suspended. Due to the failure of the quarantine process,
the product will be shipped back to the US or destroyed.
The nine tonnes of airfreighted US beef was the first to be sent to South
Korea since the US was banned in 2003 due to BSE. The market was officially
reopened in early September this year. (Nov. 26, 2006, Meat and Livestock
Australia)
MARKET INTELLIGENCE – OILS AND FATS
(extract from a study by Euromonitor)
Organic oils and fats set for the fast growth
Organic products showed the highest growth among HW oils and fats. Organic
oils and fats are only available in olive oil and vegetable & seed
oil. Within these areas, organic products have recently grown robustly.
This healthy performance stems from the country's burgeoning wellbeing
boom. Industry efforts to feature additional health benefits for inherently
healthy product groups have also contributed to the pattern. For example,
the latest organic launches in olive oil have attracted highly health-conscious
consumers through online or offline organic shopping stores, or the food
corners of prestigious department stores. While small-scale players largely
shape the demand, sales are showing an impressive pace of growth.
Imported and domestic brands both explore organic oils and fats
As explained, organic oils and fats are only present in olive oil and
vegetable & seed oil. The major reason for the lack of product availability
in other areas such as margarine, butter, and spreadable oils & fats
is fact that these product groups are more or less unhealthy due to their
levels of fat. This implies that inherently unhealthy food items are unfavorably
poised to secure any significant HW demand.
The key organic olive oil brand is Organic Lio Extra Virgin Olive Oil
produced by Lio in Turkey. This single brand dominates sales, and its
availability is wide, through online health food stores, offline organic
food shops, and the food corners of various department stores. As a promotional
tool, distributors mainly emphasize the name power of the brand and the
company as one of the world's best organic olive oil producers.
In contrast to the domination of organic olive oil by an imported label,
organic vegetable & seed oil is dominated by small-scale domestic
players. Distinct brands include Goesan Traditional Perilla Oil and Goesan
Traditional Sesame Oil by Goesan Traditional Food Co Ltd, Hannong Evening
Primrose Oil by Hannong Village Food Co Ltd, and Serim Brown Rice Oil
by Serim Hyeonmi Co Ltd. Domestic players adopt indigenous ingredients,
such as perilla, sesame, and brown rice. When it comes to distribution,
the channels available for such products are currently limited, as only
online organic stores and limited offline food stores offer them.
Naturally healthy oils and fats dominate in HW oils and fats
Sales of ‘naturally healthy' olive oil account for over 13%
of total oils and fats sales. Olive oil sales grew strongly from 2000
onwards. Increasing health concerns held by South Korean consumers, coupled
with the wellbeing boom, underpinned the growth. In the meantime, the
growth seen in 2003 was unprecedented, with total retail consumption volume
of olive oil jumping a marked 110%, from 2,650 tonnes in 2002 to 5,610
tonnes in 2003. This phenomenon was driven by an influx of domestic oils
and fats players into olive oil with their own local labels, using imported
materials. Until 2002, imported brands dominated domestic olive oil, particularly
Borges Olive Oil by Aceites Borges Pont SA, Bertolli by Unilever Group,
and Carapelli by Carapelli Firenze SpA. Baeksul Extra Virgin Olive Oil
by CJ Corp was the only domestic brand. In 2003, however, domestic oils
and fats players aggressively entered the field, attempting to benefit
from this increasingly lucrative area. New domestic brands included Haepyo
Compressed Olive Oil by Shindongbang Co Ltd, Ottogi Fresco Extra Virgin
Olive Oil and Ottogi Fresco Pure Olive Oil by Ottogi Co Ltd, and Chungjungwon
Chambitgoun Olive Oil by Daesang Group.
Olive oil and vegetable & seed oil present additional benefits.
Organic sales present the highest growth potential among HW categories
in oils and fats. The core growth engines look set to be organic olive
oil and organic vegetable & seed oil. Industry players may move into
featuring additional health benefits to existing formats in order to push
up sales. Consumers are also increasingly exposed to organic oils and
fats. Despite their high price levels, products are still attractive due
to their prestigious images and high quality ingredients. Compounded by
the country's emerging organic boom, there is ample growth potential
in the near future based on the currently small demand base. Nevertheless,
a narrow base of high-end consumers will continue to form the majority
of demand.
In olive oil, foreign organic labels imported from overseas are likely
to lead the sales for the time being, as domestic production of olive
is not possible in the local climate. However, organic vegetable &
seed oil is expected to see more local players over the forecast period,
with the possible entry of mass producers.
Future outlook
Organic oils and fats to show healthiest growth
The future of HW oils and fats looks bright at the moment. The key growth
factor is likely to be increasing health concerns held by South Koreans,
compounded by the country's burgeoning wellbeing boom. The highest
growth looks set to stem from organic olive oil and organic vegetable
& seed oil. This is partly from their rather embryonic sales bases
at the moment, coupled with the country's emerging organic boom.
As consumers and industry players are both increasingly moving towards
the additional health benefits of the already healthy oils and fats products,
substantial growth is likely in the near future. Over the forecast period,
organic oils and fats products are predicted to double their presence
overall in constant value terms, taking a share of 1.2% in 2009.
Margarine heads the growth of BFY reduced-fat oils and fats
BFY reduced fat products are also poised for strong growth in the future,
with over 14% growth in retail value terms to reach over Won2.6 billion
constant value sales in 2009. Margarine will spearhead this movement given
that local customers are increasingly replacing traditional full fat margarine
with reduced fat margarine
Overall landscape
Overall, the increasing ageing population, and the growing desire for
a healthy lifestyle among consumers, is predicted to facilitate the growth
of HW oils and fats. Oils and fats are an essential cooking item. As the
consumption of the products is more or less necessary, consumers are likely
to seek health benefits from the given products rather than seeking out
alternatives in other product areas. Because of this, manufacturers will
increasingly add health benefits to existing products, as well as creating
new product ranges with a health orientation.
Olive oil ready for HW diversification
With greater product availability, coupled with enlarged distribution
channels, organic olive oil looks set to continue its robust growth momentum.
Most local consumers are well aware of the health benefits of olive oil.
In the past, higher pricing over vegetable & seed oil discouraged
its consumption. While recently introduced domestic brands by leading
local producers still carry high pricing, similar to imported brands,
increasing product availability suggests the possibility that future pricing
will be reduced to a certain extent over the forecast period. If this
happens, the consumer base is expected to widen, leading to increasing
local demand for organic olive oil, which will contribute to the overall
growth of olive oil sales.
To introduce your company and products to the Korean market, why not
join the Seoul Food & Hotel 2007 on 24-27 April 2007
South Korea has the tenth largest economy in the world and is a major
economic power in Asia. Home to a relatively affluent population of over
48 million, South Korea offers a large market for agri-food products.
Korea imports 60-70% of its food requirements and runs a significant food
trade deficit. In 2005, Korea imported US$10.9 billion in agri-food products
and US$2.3 billion in fish and seafood products.
In 2005, Korea was the fifth largest market for Canadian agri-food exports.
Canada has a large agricultural trade surplus with Korea, exporting significantly
larger amounts of food to South Korea than it imports from the country.
The Korean consumer market is highly developed and Western styled foods
are growing in popularity. Overall, consumers demand high-quality, convenient
and healthy products. Changes in lifestyle and diet, as well as increasing
affluence, have resulted in growing demand for convenient and processed
foods.
Recently, the "well-being" phenomenon has swept through food
industry. The image that Koreans have of Canada is that of a clean, natural,
unspoiled country. Marketing and branding that associates food products
with Canada's favourable image may be successful in South Korea.
To assist Canadian exporters interested in this market in their efforts
to identify business partners in Korea, the Canadian Embassy would like
to encourage them to participate in the Korea's New International
Food, Drink and Hospitality Trade Show, Seoul Food & Hotel that will
be taking place on 24-27 April 2007 at KINTEX(Korea International Exhibition
Center).
The Seoul Food & Hotel 2007 results from a merger of the country's
two best recognized exhibitions, Seoul Food and Food & Hotel Korea,
with a combined track record of more than 20 years.
There will be two distinct sections of the new Seoul Food & Hotel
exhibition. The first will be for domestic exhibitors and open to the
public. The second, international part will be consisted of national groups
and admission is restricted to trade only.
The Canadian exhibitors will be grouped in a block of space under a common
look, reflecting a national identity for a Canadian pavilion in the international
hall.
Companies interested are invited to contact the organizer's Canadian Representative
at :
Derek Complin
dc@unilinkfairs.com
www.unilinkfairs.com
tel : 613-549-0404
fax : 613-549-2528
Newsletter prepared by
The Canadian Embassy in the Republic of Korea
International Trade Canada (ITCan)
Seoul, Korea
The Government of Canada has prepared this report based on
primary and secondary sources of information. Readers should take note
that the Government of Canada does not guarantee the accuracy of any of
the information contained in this report, nor does it necessarily endorse
the organizations listed herein. Readers should independently verify the
accuracy and reliability of the information.
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