Rising Food Prices Boost Group Meal Demand... Three Food Ingredient Companies Profit

As high inflation continues, the phenomenon of 'Lunchflation (Lunch + Inflation)' is worsening. Accordingly, the three major food ingredient companies?CJ Freshway, Hyundai Green Food, and Shinsegae Food?strengthened their business centered on the catering sector and recorded strong performance in the third quarter.

According to the Financial Supervisory Service's electronic disclosure system on the 9th, CJ Freshway announced through a disclosure that its third-quarter sales this year were 809 billion KRW, a 7.6% increase compared to the same period last year. Operating profit was 30.2 billion KRW, down 14.2%.

Hyundai Green Food, a newly established company following a spin-off in March, reported provisional consolidated third-quarter sales of 574.6 billion KRW and operating profit of 28.3 billion KRW. When recalculating the company's performance by segment for the third quarter of last year before the spin-off for comparison, this year's third-quarter sales increased by 7.0% and operating profit rose by 20.1% compared to the same period last year. Shinsegae Food, which announced its results earlier on the 3rd, also saw sales increase by 5.3% to 393 billion KRW, and operating profit surged 81.6% to 7.8 billion KRW.

The group catering business led the third-quarter performance of the three listed food ingredient companies. The group catering business has seen increased demand for in-house cafeterias due to rising dining-out prices, with most major clients experiencing growth in the number of diners, resulting in strong sales. The food ingredient market is also being reorganized around top companies that have established online platforms, with new orders expanding mainly around these players.

Looking at each company, CJ Freshway's food ingredient distribution business and food service business drove stable sales growth. The largest segment, food ingredient distribution, recorded sales of 596 billion KRW, a 4.5% increase from the same period last year. Within this, the catering food ingredient business led growth with sales of 216.7 billion KRW, up 15.6% year-on-year, by expanding differentiated products based on lifecycle-specific brands such as 'Ainuri (Kids)' and 'Healthy Nuri (Senior)'.

Food service business sales rose 21.1% to 197.5 billion KRW, growing by increasing new orders based on a business strategy focused on automation and operational efficiency. Strengthening content such as the ready-meal corner 'Snack Pick,' developing specialized menus tailored to customers to build menu assets, and utilizing the ‘Fresh Meal’ application for digitalization of group catering all helped garner customer response, leading to sales growth. However, operating profit declined 14.2% due to infrastructure investments for building future growth foundations.

Hyundai Green Food also continued growth in its core catering and food ingredient distribution businesses as demand for in-house cafeterias increased amid the economic downturn, leading to more diners. A Hyundai Green Food official said, "Following the transition to the endemic phase, the group catering market has continued to perform well, and new domestic and overseas client orders contributed to increases in both sales and operating profit in the third quarter. Additionally, the food ingredient distribution business, another core segment, secured new orders worth 64 billion KRW in the third quarter alone, contributing to the strong performance."

Shinsegae Food, which announced its results first, also saw a significant improvement in performance thanks to the rising trend in the catering sector. Sales increased in the catering segment due to large-scale site orders and the effects of the premium catering business, and the strategy to expand high-profit channels in the food distribution business was also effective. A Shinsegae Food official said, "All business sectors, including bakery and dining-out, showed balanced growth, leading to increases in sales and profit margins. We plan to continue implementing differentiated strategies based on diverse business infrastructure going forward."