Best Product Prospects for U.S. Exporters Targeting the Korean Food Service Market

A. Products Present in the Market Which Have Good Sales Potential

1. Pork meat (chilled and frozen belly cut): Due to the import ban on U.S. beef since December 2003, many beef restaurants have switched to pork menus, resulting in a strong demand for additional imports.  Although Korea has a large domestic supply of pork meat, highly concentrated demand for the belly cut has resulted in a strong need for imports.  It is interesting to note that much of the meat is distributed frozen, as restaurants generally want longer shelf life.  During 2004 (January-November), total pork meat imports increased 78 percent from the previous year, to $300 million.  Imports from the U.S. also showed a sharp increase of 165 percent to $33 million.  

2. Processed meat (sausages and hams): Processed meats are mainly served in bars and buffet restaurants.  Among the total $26 million of processed meat imported in 2004 (Jan.-Nov.), U.S. products had a 33 percent market share.

3. Chicken meat (frozen and fully cooked): Although overall demand for chicken meat significantly declined during 2004 due to the public food scare caused by avian influenza (AI), Korea remains an excellent market for chicken products.  Although only fully cooked U.S. poultry products are currently exportable to Korea, technical discussions are underway to reopen the market to uncooked, mainly frozen, U.S. poultry meat.  Demand for further processed poultry products is expected to grow quickly, as more restaurants understand the cost savings of value-added items.  Conversely, imported fresh chicken meat rarely enters the Korean market due to the short shelf life and the strict sanitary standard (zero tolerance on E-coli contamination) on imported fresh meat.  Pre-AI import volumes of U.S. chicken meat were $30-$50 million annually.

4. Seafood (frozen and processed): Korea is a major seafood market with good growth potential for imported products.  The domestic supply is decreasing due to the depletion of nearby fishery resources and increased international restrictions on deep-sea fishing.  Total imports of fishery products by Korea amounted to $1.97 billion in 2004 (Jan.-Nov.), up 16 percent from the previous year, with imports from the U.S. totaled $119 million.  Major species currently imported from the U.S. include: Alaska Pollack, Pollack surimi, Pollack roes, skate, mackerel, hagfish, halibut, scallop, cod, Pacific salmon, angler fish, rock fish, and prepared sea cucumber.  It is notable that demand for processed products (fillet, dried, surimi, and cooked) are rising.  Processed products accounted for about 21 percent of total seafood imported in 2004.  Several major seafood importers are even interested in establishing processing plants in the exporting countries.

5. Processed fruits and nuts: Processed fruits and nuts are gaining consumer popularity for their natural and healthy image.  Introduction of new recipes that require processed fruit and nut ingredients is resulting in demand for more diverse products.  Total imports of processed fruits and nuts increased by 8 percent to $152 million in 2004 (Jan.-Nov.), while imports from the U.S. totaled $22.6 million, up 3 percent.  Products currently imported from the U.S. include: dried, frozen, or preserved prune, cranberry, cherry, strawberry, grape, blueberry, walnut, almond, pistachio, and peanut.  Fruit juices also have a big market in Korea, as U.S. products, at $31 million imports in 2004 (Jan.-Nov.), took a 33 percent import market share.

6. Fresh fruits: Korea is an excellent market for U.S. oranges.  Demand for imported oranges is increasing in both food service and retail sectors.  Currently, U.S. and South Africa are the only two countries allowed to export oranges to Korea.  In spite of a temporary import ban on oranges from two California counties (Tulare and Fresno) due to a fungus problem, which has recently been lifted, orange imports from the U.S. in 2004 (Jan.-Nov.) increased 21 percent from the previous year, to $133.5 million.  Other major U.S. fruits currently imported into Korea include table grape, lemon, cherry, and grapefruit.

7. Vegetables (fresh and processed): Although Korea is self-sufficient in many categories of fresh produces, seasonal fluctuations in supply and unfavorable growing condition for foreign varieties are resulting in demand for imports.  Although China has emerged as the leading supplier of vegetables, both fresh and processed, there is strong demand for high-quality U.S. products.  Produce imported from the U.S. includes: potato ($4 million in 2004 (Jan.-Nov.)), onion ($6 million), lettuce ($1 million), dried vegetables ($25 million), frozen vegetables ($2 million), preserved tomato ($8.5 million), and pickled vegetables ($48 million).

8. Dairy Products (cheeses): More dishes with dairy ingredients have and are being introduced to the market, resulting in increasing demand.  Imports of cheese in 2004 (Jan.-Nov.) amounted to $108 million, up 30 percent from the previous year, while imports from the U.S. also rose by 25 percent to $18 million.  The demand is expected to expand in the near future as increasing numbers of consumers develop tastes for specialty cheeses.

9. Alcohol Beverages (wine, beer, and hard liquors): With the large number of bars and pubs, imported alcohol beverages have a good opportunity in the food service sector.  Especially as the demand for products with health benefits and lower alcohol content is rapidly growing.  Wine imports increased 35 percent in 2004 (Jan.-Nov.) to a record-high $52 million.  Imports from the U.S. also set a new high at $7.3 million, up 20 percent.  Among the $13.4 million of beers imported in 2004 (Jan.-Nov.), U.S. brands, at $3.3 million, took 24 percent of the import market share.  Imports of U.S. whiskies totaled $2.4 million in 2004, which was only 1.1 percent of total hard liquor imports.  

10. Roasted Coffee: A large number of franchise coffee shops opened in recent years, resulting in an increased demand for imported coffee.  Imports of roasted coffee beans increased 34 percent during 2004 (Jan.-Nov.) to $8.6 million, while imports from the U.S. increased by 14 percent, to $4.4 million.  

11. Sauces and Condiments: With the introduction of more foreign recipes, the demand for imported sauces and condiments is rising.  Imports from the U.S. in 2004 (Jan.-Nov.) totaled $11.4 million, while total imports increased by 10 percent, to $81.9 million.  

B. Products Not Present in Significant Quantities But Which Have Good Sales Potential

1. Beef meat and edible offal: Before the import ban, annual export of U.S. beef products to Korea amounted to around $900 million.  It is expected, once the market is reopened, that U.S. beef products will recover export volume and market share.

2. Lamb meat: More consumers are becoming familiar with lamb meat.

3. Processed turkey meat: An increasing number of sandwich shops are serving turkey sandwiches.

4. Premium seafood: Products such as lobster, crab (King, Snow, and Dungeness), black cod, and Sockeye salmon have good potential in Korea, due to increased demand from affluent consumer group who seek new healthier meal alternatives.

5. Processed eggs (fluid, frozen, and flour): More restaurants are expected to switch to processed eggs products from shelled eggs in the near future.

6. Fresh coffee beans: Imports of fresh coffee beans increased by 10 percent during 2004 (Jan.-Nov.) to a record-high $78.5 million.  Unfortunately, most beans are from South American and Asian countries, while U.S. products currently take a very small portion of the market.  With diversifying consumer tastes, U.S. products, especially from Hawaii, are expected to gain future market share.

7. Prepared processed food: Demand for prepared products, such as frozen soups and fully cooked chicken meat, is gradually picking up.  As more restaurants understand the benefit and quality of prepared products, interest in U.S. products is likely to increase.

8. Ingredients for micro-brew beer: Demand for ingredients for micro-brew beer is likely to increase with the addition of more micro-brewery restaurants, which are gaining in popularity.

9. Organic products:  The demand for organic products is increasing due to the strong interest from affluent consumer groups and young mothers.  However, imports of fresh organic produce is unlikely in any near future due to the mandatory fumigation treatment required for imported fresh vegetables and fruits infested with bugs.