Better Meat to Lead Future Growth
The author is an analyst of NH Investment & Securities. She can be reached at mj27@nhqv.com. -- Ed.
At Shinsegae Food, margin improvement momentum should continue on both a downstream industry recovery and expansions of the firm’s franchise and food manufacturing businesses. Its alternative meat and IP businesses are to emerge as new future growth engines.
Margin improvement to sustain on business model transition
With downstream industry recovery, business model transition, and new business ventures all being highlighted, Shinsegae Food is working on fundamental restructuring. The company plans to beef up its margins by expanding its business domain from food material distribution to encompass bakery, franchise, and food manufacturing.
With downstream demand picking up after being sluggish due to the Covid-19 pandemic, rapid earnings improvement should continue. The firm is also expected to win additional catering orders from subsidiaries of large enterprises. The number of No Brand Burger (NBB) franchise stores is to expand from 170 to 250 this year, helping to increase the franchise business’s profit contribution to around 30%. Plus, the alternative meat and IP (JRilla) businesses that the company is working to develop should rise as future growth engines.
Better Meat to lead future growth
After years of research on alternative meat since 2016, Shinsegae Food launched its own alternative meat brand Better Meat in 2021. Partnering with Starbucks, the company has developed a plant-based ham & arugula sandwich by using Better Meat sandwich ham cold cuts. Considering that more than 300,000 of the sandwich product have been sold as of Jan 2022, Better Meat’s 2022 sales are projected to reach W10~12bn. The fact that Better Meat is supplied to iconic, global brand Starbucks is to help boost demand for Better Meat. While Better Meat products are currently being supplied mainly through B2B channels, such as Starbucks and SK Telecom (Shinsegae Food’s catering business client), Shinsegae Food plans to cover B2C channels as well, going forward.