Shinsegae makes inroads into kimchi business

Shinsegae makes inroads into kimchi business. January. 20, 2017 07:18. by Do-Young Kwak now@donga.com. Shinsegae Group, one of the largest department store franchises in Korea, is making a foray into kimchi market. On Thursday, Shinsegae Food announced that the group launched its own kimchi brand “Olbaan Kimchi,” with the sales starting on the same day at the stores of its major retailer Emart and convenience store With Me.

With Shinsegae jumping on the bandwagon, exiting players such as Daesang FNF, CJ Cheil Jedang, and Dongwon F&B will likely face an even fiercer competition over the local kimchi market.

Shinsegae will present three types of products, including Mat Kimchi (2.1 kilograms·13.5 dollars), Pogi Kimchi (3.9 kilograms·21.5 dollars), and mini Mat Kimchi (80 grams·0.93 dollars).

Experts say that it was the success of its food brand Peacock that emboldened Shinsegae to branch out into the kimchi market. Peacock’s revenues have increased from 107 million dollars in 2015 to 161 million dollars in 2016 thanks to the rise of single-earner households. The group announced that Olbaan, a premium food brand launched by Shinsegae in September last year in addition to Peacock, is well on track to hit the mark of 8.49 million dollars in cumulative sales.

Shinsegae Food is aiming to reach the milestone of 4.24 billion dollars in revenues by the year of 2023, joining the ranks of global food giants. Since last year, Vice President Jung Yong-jin of Shinsegae Group has been pushing for a strategy to transform Shinsegae Food into a consolidated food giant, breaking away from its previous focus on catering and family restaurant businesses.

The start of Shinsegae Food goes back to 1995 when the company spun off from Hankook Shinpan Inc., a company that started out as a catering service provider under Shinsegae Group in 1979. Gradually weaning itself off contract-based food services and cooking supplies business, Shinsegae Food expanded the scope of business into family restaurants and pre-cooked food.

The company is also proactive in carrying out mergers and acquisitions to grow further into an integrated food company. In 2015, Shinsegae Food acquired dumpling maker Serin Food and Smoothie King Korea, and in 2016, the company signed a contract to take over a mineral water supplier Jeiwon. In December 2015, five Emart executive-level officers, including Choi Sung-jae who developed the concept of Peacock, were transferred to Shinsegae Food.

“In the future, we are planning to cultivate Olbaan as a premium brand rather than focusing on family restaurant businesses,” said an official from Shinsegae Food.