This is the third & final part of my mini-series looking at entering the food and beverage market in Korea. The first two parts looked at the market environment and working with partners. Today I’d like to focus more on the client facing marketing. Like with the other 2 posts, this post will include pointers as opposed to offering a really in-depth analysis as that would just be a huge undertaking. If you’re just looking to test the market right now, a solution with direct to consumer sales via Coupang could be your best option, and you can read more about that here.
How do Korean consumers “tick”?
South Korea can be described as a consumer society. Purchases not only serve the primary needs but also for image and status reasons, so imported food & beverage products can play into that. Products attracting the most consumers are successful brands where detailing is visible. (For example, consumers really like very elaborate packaging, as you can see in my earlier post on the topic). Consumption is often used to make a statement. That doesn’t mean it has to be a luxury product as such – it could be a regular product with special packaging, or for example cookies in a cute shape. Entering the food and beverage market in Korea means that you need to take this aspects into account when considering how best to reach consumers.
South Koreans also have high digital competence. More than 98% of South Korean households access the World Wide Web daily and over 85% of the Korean population owns a smartphone. Online shopping is very democratised. In 2019, 88.5% of the nation’s population used e-commerce platforms, and this is expected to rise to 94.4% by 2023.
This high level of online competence means that most consumers are highly educated & extremely engaged. You can expect them to thoroughly research your products or brand before purchase. However, the Korean consumer also expects to find a lot of information about products in the Korean language, meaning that you need to localise. Of course, you can delegate the management of the local website to your partner, if appropriate so that you have the right information available.
Increasing Awareness for “Green” topics
South Korea is one of the largest markets in Asia for organic food with a growing trend amongst consumers, partly fuelled by concerns about food safety. The Statista graphic below is compiled with pre-pandemic data, however the focus of consumers on boosting immunity and consuming healthy foods, has only supported the growth of organic during the past 18 months.
In the past there has been some confusion in Korea with consumers about the differences between pesticide free and certified organic products. So if your products are organic my recommendation would be to do at least a part of your marketing around educating the consumer about what organic means for your brand.
Besides the opportunity for listings in regular retail and online, there are also organic supermarkets. In 2020, Chorocmaeul was the leading organic grocery retailer with around 400 stores, followed by ORGA WholeFoods.
Localise your Value Proposition
Localisation is increasingly important in today’s world as consumers are no longer satisfied to receive products that LOOK like they’ve just been shipped half way across the world on the back of a camel. Koreans are certainly no exception to that and have high expectations of (expensive) foreign products. As a brand you therefore need to have clear and consistent brand positioning in order to establish your value proposition.
German brands often enjoy an advantage of origin – as in the rest of Asia, “German quality” is appreciated, and in Korea also German design. However you still need to be clear & consistent about what your brand value proposition will be.
Even so-called experts have been known to get entering the food and beverage market in Korea wrong.
Case Study: Walmart
‘Wal-Mart’, the world’s No. 1 discount store, entered Korea after acquiring Korea Macro in July 1998. However, in 2006, eight years after the start of the business, the business ended with them selling 16 stores to E-Mart. Experts cite localisation blunders as the cause of the failure. While Korean consumers prefer bright and neat department store-style stores, Wal-Mart was a warehouse-type discount mart with lots of things stacked high.
Case Study: Nestle
Nestle is probably the world’s No. 1 food company. In Korea it has acquired Blue Bottle and partnered with Starbucks to maintain its local market dominance. However, in December 2018, Nestle had to pull Café Nestle out of the Korean’s coffee market. Experts believe the failure of this unique partnership to be due to a deterioration in profitability due to rising labour costs and the failure to establish a proper consistent brand image in Korea.
Focus on convenience
Anyone who has ever visited Seoul will agree that whilst many things about the city are wonderful, the traffic is pretty awful. Koreans work really long hours with long commutes so anything that can make their lives easier is appreciated.
The vast majority of Koreans live in the urban conurbations so you can expect that (outside of pandemic times) most food consumption opportunities take place out of home.
Localise the Method of Delivering your Content
By that I don’t just mean “translate your website” as that should be a given, but take the advice of your partner about how to interact with Korean consumers. Korea isn’t like China where Western social media are blocked, but there are certainly some different approaches and preferences amongst consumers.
Naver is the most popular search engine in Korea, handling around 75% of search traffic so it makes sense that a certain amount of your advertising budget will be invested here. You need to have a clear understanding of how the various marketing options work and have a clear Naver marketing strategy.
The most interesting feature of Naver for brands isn’t the advertising power though (although that of course is a key part of any marketing strategy) but the opportunity for a Naver blog.
A Naver blog is the most fitting way for your brand to stay in constant communication with consumers. What’s more, Naver prioritises blogs in their search results which means you can more easily appear on the first page, given the right content strategy.
This is Korea’s most popular messaging app – similar to WhatsApp in usage. You can also have a company page though which is a bit like a Facebook page: You can share coupons, posts, videos and infographics via your profile. Furthermore, you can promote your page via display ads in both KakaoTalk and KakaoStory, a social media app from the same company. As with Naver, you need to have a defined KakaoTalk marketing strategy to optimise your marketing spend & impact.
Other Marketing Tools
My aim here is just to highlight the differences between Korea and other markets so I’m not going to go into general details of how to market your products.
What you should consider though, is that Korean consumers often use YouTube and Instagram as search engines for products (remember me saying at the top of this post, this is a society that likes to consume and think about consumption). That means you need to tailor your content accordingly.
One approach that can work well is to create local content in partnership with micro-influencers. Your digital marketing strategy should take this into account (not only for IG but also the Naver algorithm favours user-generated content so using micro-influencers can get more traction for your products).
5 Main Tips for Entering the Food and Beverage Market in Korea
Understanding consumers in Korea is the final key to successfully entering the market withh your food and beverage products. Just to summarise the key concepts from this post:
- Convenience is vital. Koreans lead really hectic lives so anything you can do to make that easier will endear your brand to them. Cooking at home, meal kits, subscriptions – all have become more popular since the pandemic
- Organic can be a good value proposition if this is what your brand stands for. Healthy food (that’s convenient) has become increasingly important in the last 18 months
- Think about making beautiful packaging as this will be appreciated. Even if you can’t make something special for Korea for general deliveries, you might want to consider a more elaborate and special promotion package for Seollal, the Spring Festival
- Make sure you have clear and consistent brand positioning to establish your value proposition
- Localise your approach to marketing
I hope that this Guide to Entering the Food and Beverage Market in Korea has been interesting for you. I’ve tried to cover the main aspects which are critical, but of course, certain things such as the legal framework or the retail landscape are constantly shifting and evolving. The South Korean food and beverage market is certainly an attractive one for exporters even if it’s not always simple to enter.
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If you are interested in doing business in South Korea, you might also find these posts helpful:
- A guideline to entering the food and beverage market in South Korea
- Finding the right importer
- Entering the Korean Market by Selling on Coupang Global Marketplace
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