VIETNAM October 2019
South Korean ‘spicy’ instant noodle firms using Vietnam as a base to larger Southeast Asia
South Korean instant noodle firms like Nongshim and Ottogi are rapidly increasing their investments in Southeast Asia, with Vietnam as one of its main target market as well as a base for future expansion.
A spokesperson from Nongshim said, “Vietnam will be positioned as a base for advancing into Southeast Asia.” Nongshim established its first subsidiary in Vietnam last October and it has since reported sales of US$2.53 million and net income of US$135,000 for the first 6 months of 2019. The spokesperson added that although Vietnam sales is lower than China, US or Japan, it is growing very fast.
Another Korean player, Ottogi already has 1 production facility in Hanoi, and is considering a 2nd plant near the capital, depending on its sales of ramen products in Vietnam. The company spokesperson claimed that strained Korea-China relationship has made it decided to relocate to Vietnam to tap the Southeast Asian market.
Vietnam is also an attractive market as it has a large population, rising disposable incomes and consumers who love spicy flavors. Kantar Worldpanel recently reported that an average Vietnamese in rural areas consumed 56 packs of instant noodles, up 5% year-on-year while a Vietnamese in urban areas consumed 36 packs, up 4%. Also, 90% of Vietnamese households are believed to have bought instant noodles during the studied period.
Vietnam is the world’s 5th largest instant noodles consumer last year with 5.2 billion servings, a 2.8% increase from 2017, according to the World Instant Noodles Association.
In a related development, another hugely successful Korean instant noodle producer, Samyang Foods will also expand overseas by promoting localisation strategies and expanding sales channels. The company projects exports to grow more than 20% this year boosted by strong sales in Southeast Asia and China.
Currently, China is the biggest exporter of Buldak Ramen, accounting for about 50% followed by Southeast Asia (35%). Samyang Foods made an aggressive foray into the dominant Halal market in Southeast Asia after receiving certification by MUI in 2017.
This year's overseas sales are expected to exceed Won 500 billion (US$420 million) for the first time. The launch of Buldak Ramen has been a huge achievement, selling as much as US$200 million in the overseas market. More than 80 percent of Samyang's overseas sales came from the instant noodle brand.
The global popularity of this spicy chicken instant noodles has resulted in surging sales since its launch in 2012. Samyang Foods' sales rose more than 50% within just 3 years, from around Won 300 billion (US$253 million) in 2015 to an impressive Won 469 billion (US$396 million) in 2018. Social media is partly attributed for its success as global consumers were entertained and curious by watching people challenging themselves to eating the super spicy Buldak Ramen instant noodles.



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