Insight – Korea shows strong appetite for premium Australian produce

Korea is a mature, growing market for Australian agricultural producers and exporters of premium food products. Korean consumers are increasingly willing to pay premium prices for high-quality food and agricultural produce. 

Australian exporters should engage with the preferences of Korean consumers to meet their growing demand for premium produce.

Korean market trends

Korea is showing increasing interest in high-quality Australian produce including:

  • meat (incl. fresh or chilled beef, veal, lamb)
  • seafood (incl. salmon, rock lobster)
  • seasonal horticulture (incl. table grapes, citrus, mangoes, cherries)
  • wine
  • dairy
  • processed food and beverage products (incl. juices, muesli, confectionary, healthy snacks and premium carbonated beverages).

The value of Australian premium food exports to Korea has grown steadily over the last 5 years. This is due to tariff reductions under the Korea-Australia Free Trade Agreement and strong demand for high-quality and safe premium food products.

Figure 1. Australian premium exports to Korea, 2016–17 to 2020–21

Korean_Premium_Foods_graph

Source: ABS 2021

Market insights and drivers

Korean consumers are looking for premium agricultural produce, especially food with health and environmental credentials. Despite the COVID-19 pandemic, Korea’s GDP fell by only 1% in 2020. The country’s GDP is projected to grow by 4.3% in 2021 (IMF 2021). Korea is one of the best economic performers in the OECD. A strong economic performance will allow consumers greater discretionary spending, including on premium food products.

COVID-19 has changed food consumption patterns in Korea

COVID-19 has shaped consumer food trends in Korea. The Korean restaurant and bar industry declined by 7.5% during 2020 due to social-distancing restrictions (USDA 2021). However, these restrictions have been partially offset by a shift to retail spending, particularly online.

Increasing wine consumption

Reduced activity in the Korean hospitality sector has accelerated a shift away from beer and spirit consumption. There is also an increasing interest in wine. This trend is particularly pronounced in young consumers entertaining more frequently at home, indicating the potential for sustained future demand.

Changes to online alcohol purchasing laws, which began in mid-2020, have also increased wine consumption (particularly through convenience store sales). These changes allow consumers to order online and collect purchases at licensed venues (including convenience stores).

  • In 2020, the value of Korean wine imports increased by 27% relative to 2019, with 72% growth observed since 2016. In 2020, Australia had an 8.2% share of Korea’s $478 million wine import market (ITC Trade map 2021).
  • Australian wine exports to Korea have been increasing year-on-year since 2015. Exports are projected to continue to grow. The value of Australian wine exports to Korea in January–June 2021 was 189% higher than the January–June 2018–2020 average (ABS 2021).

Increases in home replacement meals, restaurant meal replacements and meal kits

With restaurants closed or operating in a reduced capacity, restaurant meal replacements and meal kits have become popular. This includes high-end restaurants working with online delivery services to develop meal kits for customers. Meal kits and online delivery services have amplified changes to Korean lifestyles. This includes diversifying food preferences and interests and increasing single households seeking convenience.

High-end meal kits offer opportunities for premium red meat cuts and premium seafood even with decreased restaurant patronage.   

Strong uptake of online shopping and TV home shopping

Shifts away from in-store shopping towards online shopping and delivery services, and TV home shopping are likely to continue post COVID-19. The over 50’s demographic has showed a major shift in online purchasing behaviours.

Australian fresh produce and branded products have sold well on online platforms and home shopping TV channels. The strong sales offer opportunities for fresh and branded packaged food products from Australia.

Preference for premium food

Korean consumers are aware of the benefits of food safety, quality and nutrition on health and wellbeing. They show increasing preference for premium produce that provides high levels of nutrition, taste and other health benefits in a way that is convenient to prepare/consume.

Australian beef and lamb

Australian red meat is highly valued by Korean consumers who prefer premium cuts. Australian red meat is used in restaurants, home restaurant meals and meal kits. Australia is the second largest beef exporter to Korea, behind the US. It is the leading lamb exporter to Korea.

There has been significant growth of Australian lamb exports to Korea. Exports are up 255% in the past 5 years, with May and June 2021 reaching record trade figures.

The most popular cuts of meat in Korea include:

  • short ribs (strongest demand)
  • chuck roll
  • blade
  • brisket
  • cube roll
  • tenderloin
  • lamb cutlets
  • manufacturing product.

Australian table grapes

Korean consumers prefer premium, fresh, large and high brix table grapes. A range of new Australian grape varieties are viewed more favourably than other importers. Australian table grapes can be imported with a 0% tariff under the Korea-Australia Free Trade Agreement during December to April.

In March 2021, Korea removed the requirement for pre-clearance inspections and moved to onsite verification. This change should reduce costs, allow extended trade and provide greater flexibility for table grape exporters in the 2022 season.

Australian citrus

Korean consumers prefer larger, sweeter fruit (mostly navel oranges). Australian citrus has a reputation for being ‘green and clean’. 

A 0% seasonal tariff applies during April to September. A 50% tariff applies during October to March. 

Australian wine

Korean consumers are open to exploring new wine-growing regions, new varietals and fun labels.

Korean consumers are interested in Australia’s Shiraz and Cabernet Sauvignon varietals. There is also an increasing demand for Portuguese and Italian varietals grown in Australia.

Australian seafood

Australian Western rock lobster is increasingly popular in Korea. Australia is the leading rock lobster export in Korea in 2021. The popularity of Australian salmon is also growing, with salmon a popular choice in Korean home replacement meals. There are opportunities to expand exports of additional crustaceans/seafood to Korea.

Preference for organic and eco-friendly produce

Korean consumers, particularly younger Koreans, are willing to spend higher prices for certified organic and eco-friendly produce. These characteristics are associated with health benefits and environmental sustainability. Popular choices for organic products include UHT milk and milk powders, healthy snacks, and functional beverages.

The Korean Ministry of Food, Agriculture and Rural Affairs requires every value chain component to be certified organic to make an ‘organic’ claim.

Consumption of organic and eco-friendly produce has been increasing over the past decade and is forecast to steadily grow. The Korean Rural Economic Institute forecasts the environment-friendly (organic and low-chemical) produce market to expand to about KRW 2 trillion ($136 billion) by 2025. It is projected to grow on average by 5.8% per annum (KREI 2018).

Australian premium food exports to Korea

The table below shows recent increases in the value of Australian premium food exports to Korea.

Commodity

Percentage increase over 3 years

January–June 2021 total export value

Fresh or chilled sheep meat

30%1

$91.7 million

Fresh or chilled beef

8%1

$712.7 million

Salmon

538%2

$4.6 million

Rock lobster

30,384%2

$1.9 million

Wine

189%1

$29.1 million

Table grapes

17%2

$23.9 million

Citrus

131%2

NA3

Mushrooms

No trade in 2018–2020

$1.0 million

Frozen vegetables

No trade in 2018–2020

$0.9 million

Source: ABS 2021

1 Jan–June 2021 relative to Jan–June 2018–2020 average

2 2020–21 relative to 2017–18 to 2019–20 average

3 Citrus is predominately exported between July and October.

Resources

Austrade has more information about the Korea market, including information on food and beverage opportunities and trends in Korea.

Import requirements for Korea are available through the MICOR website.

Exporters should also familiarise themselves with the relevant tariffs, quotas and documents required to export under the Korea-Australia Free Trade Agreement

Organic exporters should contact ACO to discuss steps for organic accreditation in Korea.

The Australian Government’s network of Agriculture Counsellors provided information for this article. More information about the Agriculture Counsellor network, including contact details, are available on the Department of Agriculture, Water and the Environment website.

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