Food Ingredient Company Swiftly Adapts to Change, Turning COVID Crisis into Opportunity

Reducing School Meal Share and Increasing Convenience Foods
CJ Freshway, Shinsegae Food, etc.
Most Pre-COVID Performance Recovered

Hyundai Green Food One Table Boneless Master Myeongchon Gochujang Dakgalbi

[Asia Economy Reporter Seungjin Lee] Food ingredient companies, which were hit hard by COVID-19, are turning the crisis into an opportunity through rapid external expansion. The entire industry is experiencing a wave of change, reducing the proportion of meal services and expanding home meal replacement (HMR) and dining-out businesses.

According to the food industry on the 26th, CJ Freshway's operating profit in the third quarter recorded 16.4 billion KRW, a 39% increase compared to the previous year. Shinsegae Food also showed a 42% increase in third-quarter operating profit compared to the same period last year, reaching 6.4 billion KRW. Both companies have mostly recovered their pre-COVID-19 performance. As meal service demand decreased due to COVID-19, causing significant damage to their core businesses, rapidly expanding into HMR and dining-out markets proved effective.

CJ Freshway aggressively operates the welfare facility-dedicated brand for the elderly, ‘Healthy Nuri’, achieving the number one market share in the metropolitan area. They have restructured by cutting low-profit businesses such as the meat distribution sector within the food ingredient distribution business and expanding the HMR business. Recently, they also entered the meal kit market by partnering with Fresh Easy.

Shinsegae Food expanded its home meal replacement business ‘Olban’ instead of meal services. Olban is expected to easily achieve its sales target of 100 billion KRW this year. The growth of No Brand Burger, which secured more than 160 stores within two years of its launch, is also remarkable.

Hyundai Green Food is rapidly expanding its healthy meal brand ‘Greeting’ by targeting both online malls and offline channels such as Hyundai Department Store simultaneously. In fact, Greeting's sales to customers in their 30s and 40s from January to October this year increased by about 60% compared to the previous year, drawing positive consumer response. Greeting aims to achieve 100 billion KRW in sales within four years. Additionally, they plan to increase healthy meals for the elderly.

The industry evaluates that COVID-19 has rather become an opportunity for food ingredient companies. Before COVID-19, the food ingredient industry was stagnant due to cutthroat competition over limited meal service venues, but the pandemic accelerated new business expansion, creating growth momentum across the industry.