Samyang Sweeps Overseas Markets, Breaking Record Highs Daily
Nongshim and Ottogi Sales Increase but Profitability Slows
Cumulative Exports Surpass $1 Billion for the First Time in October This Year
This year, South Korea's ramen export value has surpassed 1 billion dollars for the first time, marking its heyday, while the performance of the three domestic ramen companies in the third quarter is expected to vary somewhat.
According to financial information firm FnGuide on the 4th, Samyang Foods' sales in the third quarter of this year are estimated to be 429.3 billion won, a 28.1% increase compared to the same period last year (335.2 billion won). Operating profit for the same period is expected to grow 97.1% to 85.7 billion won from 43.4 billion won in the previous year.
Following last year, Samyang Foods continues to accelerate its overseas market growth centered on its core brand, 'Buldak Bokkeummyeon' (Hot Chicken Flavor Ramen). As of the first half of this year, Samyang Foods' overseas sales reached 621 billion won, accounting for about 80% of total sales. The upward trend is expected to continue in the third quarter, mainly in the U.S. and Europe. In the U.S., sales are steadily increasing as the company accelerates entry into major retail channels such as Walmart and Costco, while in Europe, new customers are being gained through the establishment of a local sales corporation in the Netherlands and continuous social media marketing activities.
The only obstacle to Samyang Foods' growth is considered to be its production capacity, which has reached its limit. Samyang Foods is currently constructing its second plant in Miryang, scheduled to start operations around May to June next year, focusing on producing export-oriented bagged noodles. With expanded production capacity, the growth momentum, which had temporarily slowed, is expected to regain strength. Eunji Kang, a researcher at Korea Investment & Securities, predicted, "Once the new plant is operational, total production volume will increase by more than 40%, and based on the experience of operating the first plant, production stabilization will be achieved faster than before."
Continuing its high growth throughout the year following last year, Samyang Foods is expected to once again achieve its best-ever annual performance this year. Annual sales this year are projected to increase by 38.9% to 1.6574 trillion won, surpassing last year's 1 trillion won for the first time since its founding, and operating profit is expected to reach 332.8 billion won, a 125.6% increase.
On the other hand, Nongshim and Ottogi, which have traditionally led the market, are showing somewhat sluggish performances. While their sales volume still overwhelmingly surpasses Samyang Foods, their profitability is significantly lagging behind. Nongshim's sales in the third quarter of this year are expected to increase by 2.8% to 880 billion won compared to the same period last year, but operating profit is forecasted to decrease by 2.6% to 54.2 billion won. Ottogi's sales are also expected to rise by 3.4% to 939.7 billion won, but operating profit is projected to decline slightly by 0.1% to 82.9 billion won.
Despite strong export growth to Europe and Southeast Asia, Nongshim is facing disappointing domestic demand due to consumer slowdown. Nongshim continues to increase export volumes, and notably, the relocation of its products from the Asian food corner to the main food sales aisle in Walmart in the U.S. is seen as encouraging. Eunju Shim, a researcher at Hana Securities, evaluated, "Simply expanding shelf space within Walmart could result in a 10% increase in Nongshim's sales in the Americas compared to before."
Ottogi's relatively low overseas market share compared to competitors has acted as a growth obstacle. Last year, its overseas sales ratio was about 9.6%, significantly lower than Nongshim's 39% and Samyang Foods' 68%. However, in its ESG report released last July, Ottogi presented a blueprint to achieve 1 trillion won in global sales by 2028 to leap into a 'Global Ottogi,' and it plans to accelerate efforts to expand its overseas market share, including changing its English brand name from 'OTTOGI' to 'OTOKI' to make pronunciation easier for foreigners.
On the 15th, ramen was displayed at a large supermarket in downtown Seoul. With rising recognition through Korean dramas and movies, ramen is gaining global popularity. According to the industry, Nongshim's cumulative overseas sales of Shin Ramyun in the third quarter have surpassed domestic sales. Samyang Foods' overseas sales accounted for 57% of its total sales last year. Photo by Moon Honam munonam@
Meanwhile, the Ministry of Agriculture, Food and Rural Affairs reported that ramen export value reached a cumulative 1.02 billion dollars (about 1.4 trillion won) by October this year, a 30.0% increase compared to the same period last year, marking an all-time high. Last year's total ramen export value was 952 million dollars, but this year, the annual performance was surpassed in just 10 months. The ministry forecasts that export value will reach 1.2 billion dollars by the end of the year.
Ramen export value was about 210 million dollars ten years ago in 2014 but has sharply increased in recent years. Since April, when monthly exports exceeded 100 million dollars for the first time, exports have consistently surpassed 100 million dollars each month. By country, ramen exports to China from January to October this year increased by 18.6% to 210 million dollars, and exports to the U.S. rose by 65.0% to 180 million dollars.
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