Korean Ramen in Synch with Global Market Trends

The author is an analyst of NH Investment & Securities. She can be reached at mj27@nhqv.com. -- Ed.

 

Having featured prominently in the Best Picture Oscar-winning movie Parasite, Korean ramen is attracting greater market attention both at home and abroad. Targeting overseas markets, domestic ramen players have been expanding their distribution networks and differentiating their product offerings. Believing these efforts will translate into greater demand and sales volume going forward, we continue to offer Nongshim as our top pick for the F&B sector.

Korean ramen attracting greater market attention

With the film Parasite recently winning in four categories (including Best Picture) at the Academy Awards, interest in not only Korean-made movies but also Korean food culture (‘K-food’) is growing, especially in the global ramen market. Easy to prepare and boasting a long and beloved history within domestic culture, Korean ramen is not only representative of Korea, but also readily accessible to non-Koreans. Nongshim already has distribution networks set up in around 100 countries, and it offers a diverse product portfolio—positives which allow localization and differentiation at the same time. We maintain Nongshim as our sector top pick.

Long-prepared overseas market expansion efforts + movie (Parasite) success effects

Korean ramen makers have long made efforts to: 1) differentiate their products through premium and diversified flavors; and 2) expand their global networks. Spurred by the popularity of the movie Parasite, we believe that overseas interest in Korean ramen will climb going forward. Moreover, we predict that there will be further expansion in domestic demand for ramen products.

Korean ramen is in synch with global market trends

Looking at overseas markets, each major ramen-consuming country has its own distinctive characteristics: China is the biggest ramen consumer in the world, Japan is the birthplace of instant noodles, and the US is where global ramen brands are competing to win the hearts and minds of consumers. In the Chinese market, demand for premium ramen products is expanding, a direction that provides Nongshim with a competitive edge as it forms a price range around 60% higher than that for the offerings of its rivals.

The US is the world’s sixth-largest ramen market, but ramen consumption per person in the US remains low. For domestic ramen companies, the US market looks promising owing to: 1) demographic changes; 2) rising interest in other cultures in response to higher SNS penetration; 3) the premium image of Korean ramen; and 4) expanding distribution channels. We also expect Korean ramen products to enjoy continued high popularity in Southeast Asia, thanks to SNS marketing.

 

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