Korean food companies put effort for home-made coffee

Namyang has opened a giant coffee mix company
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Korean food companies are stepping up efforts to export home-made coffee mix.

In the latest move, the country’s leading dairy company Namyang has opened a giant coffee mix factory in Naju, South Jeolla Province, posing a big challenge to domestic market leader Dongsuh Food and potential rivals in China, Russia and Japan.

The opening ceremony for the factory was held on Sunday with CEO Kim Woong and other executives in attendance.

The factory is capable of producing coffee mix weighting 7,200 tons a year, the third biggest in the country after the two owned by Dongsuh.

Dongsuh generated a revenue of $55 million in 27 overseas markets last year from coffee mix sales and intends to increase it to $100 million by 2015.

In a statement, Namyang CEO said his company will become aggressive in marketing and sales in order to secure 50 percent of the domestic coffee mix market by 2016 and build a strong presence in China, Russia and Japan. Currently Dongsuh leads the market with an 80 percent market share.

“We’ve just made a big bet on coffee business,” the CEO said. “We spent nearly 450 billion won ($425 million) building the factory and buying core facilities, which is equal to our operating profits for the past five years combined and 15 percent of our annual sales.” He said the company will continue to invest into the new business to make itself Asia’s “No.1” coffee mix maker. He added the firm aims at selling coffee mix worth 100 billion won in the three overseas markets by 2016.

Namyang sees an enormous potential in China. Officials said the demand for coffee mix in the neighboring country is rising quickly as people’s taste is getting westernized.

“Currently Nestle and Kraft Foods are leading the market. We will become the first Asian coffee maker challenging their duopoly,” an official said. “We will appeal to Chinese consumers with high-end products that are available at retailers across the country.” The official said the company is fine-tuning its strategies for Russia and Japan.



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