Selling Red Ginseng for 1.4 Trillion Won... CEO Kim Jae-su's Vision for H&B Toward 2 Trillion Won

Create a Second Brand... CEO Kim Jaesu's 'Special Mission'
Focusing on Donginbi's Turn to Profitability... Also Diligently Developing Overseas Sales Channels

[Asia Economy Reporter Lee Seon-ae] "We need to activate new businesses such as health functional foods and cosmetics beyond red ginseng. We plan to strategically target overseas markets by continuously nurturing global hit products and strategic products." The only thing on the mind of CEO Kim Jae-su, who leads KGC Ginseng Corporation, is to leap forward as a global comprehensive health company (H&B, Health & Beauty). Since his appointment as CEO in March 2018, he has been focusing on diversifying the brand portfolio to grow into a comprehensive health company.

In particular, he has set this year as a foundation for long-term success and has actively called for the activation of new businesses. Although the red ginseng health functional food (hereinafter referred to as health functional food) brand "CheongKwanJang" still records stable performance, he believes that if the business area is not diversified to leap into a comprehensive health company, a crisis may arise.

According to the Financial Supervisory Service and related industries on the 17th, KGC Ginseng Corporation's cumulative sales for the third quarter of 2019 were recorded at 1.1316 trillion KRW. This represents an 11.8% growth from 1.0122 trillion KRW in the same period last year. Although the fourth quarter results have not yet been compiled, the industry expects that adding the fourth quarter sales will bring the total sales for 2019 to about 1.4 trillion KRW. Compared to 1.3283 trillion KRW in 2018, this is expected to be about a 5% growth. This is considered a solid performance compared to major domestic food companies that have been stagnant.

More than 90% of total sales are accounted for by CheongKwanJang. It boasts an overwhelming brand power with a market share of over 65% in the domestic red ginseng market. Thanks to red ginseng sales, KGC Ginseng Corporation's sales surged from 784.8 billion KRW in 2013 to over 1.3 trillion KRW in five years, nearly doubling in five years. However, as major food companies are releasing various health functional foods that threaten red ginseng, business diversification is urgently needed.

CEO Kim is putting all his efforts into expanding the health functional food portfolio, which is centered on red ginseng, to include probiotics, vitamins, and more. While using red ginseng as the basic recipe, they have developed foods with various efficacies and diversified the age groups targeted. As a result, various specialized health functional food brands such as "Good Base," "Alpha Project," and "Hwa Ae Rak" have been born.

The cosmetics business is also one of the new growth engines that CEO Kim is focusing on. KT&G, the parent company of KGC Ginseng Corporation, established KGC Life & Gin as a 100% subsidiary at the end of 2010 to enter the cosmetics business and launched the red ginseng cosmetics brand Donginbi. To actively nurture Donginbi, which had been operating at a loss for seven years, KGC Ginseng Corporation incorporated KGC Life & Gin as a subsidiary at the end of 2016 and absorbed the cosmetics business into the headquarters. Since then, they have carried out a full renewal of Donginbi and are actively promoting entry into department stores and duty-free shops. Although it is not yet profitable, sales are expected to more than double last year.

They are also putting effort into pioneering overseas markets. They are accelerating overseas business expansion by exporting to more than 40 countries including the United States, China, Taiwan, and Japan.

Business diversification is directly led by CEO Kim. Having joined KT&G in 1991 and held key positions such as Head of Sales Planning, Head of Busan Headquarters, Head of Domestic Business Division at KGC Ginseng Corporation, and Director of KT&G Ethics Management Audit Team (Executive Director), his 27 years of field experience is regarded as ideal for leading new business activation.

A KGC Ginseng Corporation official emphasized, "Based on the stable growth of the red ginseng business this year, we plan to target the general health functional food market with second brands such as Cheon Nok, Good Base, and Alpha Project, and strengthen Donginbi's domestic and overseas business. Through this, we will lay the foundation for business diversification as a comprehensive health company."