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(Last updated: 30 July 2007)
Trends and opportunities
The market
Australia is one of the biggest suppliers of cheese, exporting 9,823 tonnes and 6534 tonnes of blended butter to Korea. Since 1998 UHT milk regulations have also changed, allowing manufacturer designated shelf life rather than government set periods so export of UHT milk is much more feasible, though still subject to market demand.
Traditionally, the European Union (EU) has been price competitive in milk powder preparations while Australia is seen as a competitive cheese supplier. Australian cheese is mainly imported in bulk to then be processed by local dairy manufacturers. The retail profile of Australian dairy products is limited to specialist deli shops at hotels and supermarkets catering to expatriates.
The gradual liberalisation of the Korean dairy industry from the mid-1990s underpins opportunity for market access and export growth for Australian suppliers. Since then locally produced items such as cheese and milk powder have become less price competitive than imported products so local dairy manufacturers have tended to focus on drinking milk, leaving more opportunity for the importation of manufactured dairy products.
There are a number of inherent problems within the Korean dairy industry:
- Despite the rapid development of the industry, more than 70 per cent of production is used for drinking milk, the remaining 30 per cent for other processing purposes. These proportions are reversed in countries with advanced dairy industries.
- There are also financial burdens on the local industry due to supply and demand discrepancies that result in seasonal price fluctuations. While raw milk production is high from winter to spring, market demand peaks in spring and autumn.
- There is also a very limited variety of dairy products produced in Korea, including milk, yoghurt drinks, cheese and butter.
- Local producers are not internationally price-competitive so imports of processed ingredients such as cheese, casein and milk powder preparations have experienced steady growth.
- There is little variety in locally produced cheese (only cheddar, mozzarella, camembert) and there is a lack of manufacturing facilities to produce cheese.
Opportunities
The best opportunities for Australian suppliers in the Korean dairy industry are:
- Block cheddar cheese and mozzarella for making processed cheese
- Natural cheese for high end restaurants, hotels and department stores
- Milk powder preparations
- Butter preparations and butter
- Frozen cream
- Whey powder concentrate
Competitive environment
Australia's main competitors are New Zealand, the EU and USA. |
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Tariffs, regulations and customs
Industry standards
Labelling standards, food codes and import requirements can change frequently in Korea and are controlled by the Korean Food and Drug Administration. Close contact with your Korean importer is essential as they will be the best resource for the latest information on requirements.
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Marketing your products and services
Market entry
As Korean dairy manufacturers normally depend on trading agents to source imported material, it is important to have a trading agent who has established networks with dairy manufacturers.
In presenting new material to dairy manufacturers, it’s best to approach the company’s research and development (R&D) department first as they are responsible for assessing quality and other technical standards. The purchasing departments make decisions based on the information and recommendations from R&D.
Australian companies should consider participating in or visiting Seoul Food, the biggest international food exhibition in Korea which is held during April each year.
Relationship building is the key to marketing dairy products in Korea so it is important to visit the market regularly and assess specific requirements of Korean consumers. During visits it is highly recommended that you go on a factory tour as this helps secure production level support for your ingredients. It is also advisable that for customers who use your ingredients regularly, an invitation to visit your factory is a very good way to sustain the relationship.
Distribution channels
The food and food materials distribution systems remain fairly inefficient due to three main problems:
- Manual, labour intensive handling
- Multi-layers within the system
- Shortage of cold storage facilities
While the shortage of adequate cold storage facilities has driven up distribution costs, the increasing presence of multinational distribution companies has improved the situation somewhat. |
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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