Food and beverage to Korea

Trends and opportunities

The market

In 2018, Australian food and agricultural exports to Korea reached AUD$2.6 billion and accounted for 6.25 per cent of market share, the fourth largest after China, Japan and the United States (Source: Australian Bureau of Statistics on Global Trade Atlas

South Korea's agricultural imports play a vital role in supplementing its domestic supplies of food, animal feed and raw materials for food processing purposes. Demand for imported food and agricultural products is expected to remain strong.

On 12 December 2014, the Korea Australia Free Trade Agreement (KAFTA) entered into force. The food and beverage industry will gain significantly with its implementation.

Opportunities

South Korean consumers regard Australia as a clean and green environment, which produces quality food products and ingredients. Major Australian exports include beef, sugar, wheat, malting barley, oil seed, cheese, corn, potato, wine and dairy products such as butter and cheese.

The 'Food and Beverage Market Entry Guide: Export Opportunities for Australian businesses under the Korea-Australia Free Trade Agreement' is a comprehensive guide that acts as a starting point for Australian food manufacturers and brand owners who are creating or refining an export strategy for the South Korean market.

This guide focuses on the opportunities in the South Korean market for Australian businesses exporting packaged, manufactured and premium fresh food and beverages. It presents key facts and trends, key channels to market,  the competitive environment, getting ready, crossing the border, opportunities for Australian exporters, and how to access KAFTA benefits.

Historically, Australian food exporters have not been highly active in the South Korean market. As a result, local consumers are not familiar with Australian products.

KAFTA has significantly improved access for Australian exporters in these categories, and there is now potential for strong growth as more South Korean consumers are exposed to the wide range of Australian food and beverages.

More detailed sub-category snapshots are below:

• Beer and wine
• Edible oils
• Breakfast cereals, grains and pulses
• Fruit, nuts and vegetables
• Ready to eat meals and desserts
• Premium drinks (non-alcoholic)
• Juice
• Sauces, dressings and condiments
• Snackfoods, potato chips, nuts, dried fruit, snack bars
• Sugar confectionery
• Chocolate
• Cheese and butter
• Biscuits
• Meat, smallgoods, and seafood.

Austrade and Hort Market Insight Report

Opportunities also exist for exporters to supply Australian fresh fruit produce during unique cultural festivals, particularly those that feature fruits as gifts or offerings. Further insight into the specific opportunity in Indonesia can be found in the following report

Tariffs, regulations and customs

Tariffs vary considerably depending on the product. They are typically much higher for products that are produced domestically. Foreign suppliers entering the market for the first time are required to submit the following documentation through their importer to the South Korean Customs Service:

• an invoice
• bill of lading or airway bill
• packing list
• ingredient list (including the name of all ingredients and percentages)
• processing method
• if required, animal health certificate (for meat, fresh produce, dairy and others) or phytosanitary certificate (for fruit, nuts, vegetables, plants, grains, etc.)
• health certificate (for meat, fresh produce, dairy and others) fruit, nuts, vegetables, plants, grains, etc.
• other relevant certification such as organic or non-GMO certificates.

Customs clearance and food inspection for new products entering the local market usually takes two weeks.

With KAFTA implementation, major food and beverage products are set to benefit. These include:

• Beef: The 40 per cent tariff on beef and 18 per cent tariff on bovine offal will be eliminated progressively over 15 years.
• Wine: The 15 per cent tariff on wine will be eliminated on entry-into-force.
• Lamb/goat: The existing 22.5 per cent tariff on all sheep and goat meat will be eliminated over 10 years.
• Pork: Tariffs on key pork exports of 22.5 to 25 per cent will be eliminated in five to 15 years.
• Dairy: High tariffs of 36 per cent on cheese and 89 per cent on butter will be eliminated between 13 and 20 years. Australian dairy exporters will also benefit from growing duty free quotas for cheese, butter and infant formula.
• Seafood: Key products, such as southern bluefin tuna with its 10 per cent tariff and rock lobsters 20 per cent tariff will become duty free after three years.

For more information on KAFTA and tariff rates refer to the guide or visit the Department of Foreign Affairs and Trade (DFAT) website.

Food safety regulations

South Korea’s Special Act on Imported Food Safety Management (Special Act) came into effect on 4 February 2016 and into force from 4 August 2016. The Special Act is administered by the South Korean Government Ministry of Food and Drug Safety (MFDS). The Act puts in place new registration, certification and inspection requirements for imported food products and foreign businesses that produce and export these food products to South Korea (Source: MFDS Imported Foods).

Foreign livestock establishments need to register as ‘foreign establishments’. Please contact the Australian Government Department of Agriculture and Water Resources to register.

Foreign food establishments (includes food, grains and fresh fruit and vegetables) need to register as ‘foreign food facilities’ by completing the application form on MFDS’s website.

For more information please refer to the Manual of Importing Country Requirements or the Department of Agriculture and Water Resources’ website, which includes a range of market access and industry advice notices (listed by commodity).

Maximum residue limits (MRLs)

South Korea has started a complete overhaul of its pesticide and veterinary drugs maximum residue level (MRL) system to create a positive MRL list.

In tranches, current MRLs for chemicals that have not had a scientific risk assessment completed will be deleted. South Korea will no longer defer to a CODEX MRLs or the ‘decision tree’ for ‘tentative residue limits.’ Instead, a default MRL of 0.01 parts per million (ppm) will apply to unregistered chemicals.

The first tranche took effect on January 1, 2017 and covers tropical fruits, nuts and seeds. The second tranche covering the remaining pesticides in food products will take effect from January 1, 2019. The third tranche covers veterinary drugs is planned for 2020.

More information is available on Ministry of Food and Drug Safety’s pesticides and veterinary drugs website. For further updates, please check Department of Agriculture and Water Resources website and discuss with your local partner.

Labelling

Labelling standards, food codes and import requirements can change frequently in South Korea and are controlled by the Ministry of Food and Drug Safety (MFDS). Frequent contact with your local importer is essential as they will be the best resource for the latest information on requirements and regulations.

Organic labelling regulations

South Korean organic labelling regulations have been strengthened by the Ministry of Agriculture, Food and Rural Affairs (MAFRA) and the Ministry of Food and Drug Safety (MFDS) who enforce the South Korean Organic Certification Program.

The reinforced regulations mean more stringent rules for Australian exporters. Australian exporters can only claim a product as organic in South Korea if they receive the organic certification in accordance with the South Korean regulations. As of December 2014, Australian Certified Organic (ACO) was the first Australian organic certification body to gain accreditation to the South Korean organic standard, holding accreditation for both raw and processed food certification.

The Australian and South Korean governments are working together on a mutual equivalence recognition agreement to put in place a certification system for Australian organic products in the local market.

For more information regarding labelling refer to the KAFTA food and beverage gudide.

Links and industry contacts

Animal and Plant Quarantine Agency (QIA) under MAFRA

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

• develop international markets
• win productive foreign direct investment
• promote international education
• strengthen Australia's tourism industry
• seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.