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(Last updated: 26 Nov 2009)
Trends and opportunities
The market
The locally produced dairy products dominate the dairy market especially for products such as drinking milk, fermented milk and eating yoghurt. However in view of Korea’s uncompetitive raw milk price at levels three times higher than that of Australia, Korea is mostly dependent on imported cheese, butter and milk powder preparation for servicing its industrial dairy ingredient market, food service and retail market.
Australia is the second largest exporter of dairy products to South Korea after New Zealand taking about 14 per cent of market share. Cheese and butter blend are major dairy products exported to Korea. In 2008, Australia exported 6,867 tonnes of cheese and 1,244 tonnes of butter and butter blend to Korea. It is noteworthy of increased export of cheese from USA in 2008 overtaking market share of Australia based on competitive US dollar as well as decreased supply from Australia.
Traditionally, the European Union (EU) has been price competitive in milk powder preparations while Australia is seen as a competitive cheese supplier. The majority of cheese imported into Korea is fresh cheese (60 per cent) as ingredient to make processed cheese in Korea.
Mozzarella and gouda cheese used for pizza toppings in food service is the next largest market. The consumption of cheese in Korea has shown rapid growth recently and provides export opportunity in natural cheese for both the retail and food service sectors for cheese types including camembert, brie, mozzarella, cheddar and cream cheese.
The local dairy companies have been trying hard to expand the cheese market as an effort to compensate the saturated dairy market especially with city milk and infant formula product. The consumption of city milk and infant milk has decreased or been stagnant annually, but the cheese market has increased each year (27 per cent increase in 2008 compared to 2003); establishing itself as the last battlefield among dairy companies.
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 food service and retail
- Butter preparations and butter
- Frozen cream
- Cream cheese for bakery and retail
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Tariffs, regulations and customs
Tariffs vary considerably depending on the product. Tariffs are typically much higher for products that are produced domestically. Tariffs for specific items can be obtained from the Korean Customs Service's Tariff Database.
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.
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.
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Links and industry contacts
Dairy–related resources
Korea Dairy Industries Association – www.koreadia.or.kr
Government, business and trade resources for Korea
Ministry for Food, Agriculture, Forestry and Fisheries – www.mifaff.go.kr |
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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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