Nongshim Co. will set up a joint venture with global food firm Ajinomoto Co. to manufacture Vono Soup in South Korea.
The company announced on December 21 that it has signed an agreement to set up a joint venture to produce instant powder soup at the Ajinomoto headquarters in Tokyo, Japan. The signing ceremony was attended by 10 officials, including Nongshim CEO Park Jun and Ajinomoto CEO Takaaki Nishii.
Under the agreement, the joint venture will start construction of a powder soup production plant in the site of the Nongshim distribution center in Pyeongtaek, Gyeonggi Province, in the first half of 2018 and complete it by the end of 2019. The joint venture will be capitalized at 13 billion won (US$ 12.04 million), and Nongshim and Ajinomoto will own a 49 percent stake and a 51 percent stake in it, respectively.
With the latest agreement, Nongshim will strengthen its portfolio for powder soup brands to brace for a growing instant soup market and continuously develop products that suit to the South Korean market in the future.
The partnership between the two companies has begun from 2006 when Nongshim started selling Vono Soup in South Korea. Vono Soup is an instant soup that can be easily cooked by pouring boiling water and stirring. It has shown a remarkable growth of 30 percent in the last five years, expanding the brand awareness in South Korea. Vono Soup has 17 billion won (US$15.75 million) of annual sales and a 32 percent market share. The domestic powder soup market was worth 58 billion won (US$53.72 million) as of 2016 and it shows a 7 percent growth a year as the number of single-person households is on the rise and online sales channels have been diversified.
Established in 1909, Ajinomoto is a Japanese leading food producer in the global market that has expanded its business areas from seasoning to biotechnology and drugs. The company is headquartered in Kyobashi of Tokyo, Japan, and has 30 branches in the world. It posts 10 trillion won (US$9.26 billion) in annual sales and its soup products have a 60 percent share of the Japanese market, winning recognition for its power of products and brand.