Namyang to export powdered coffee to Poland
Namyang Dairy Products announced yesterday that it has struck a $10 million deal to supply instant coffee powder to a company in Poland, a rare positive announcement from the company, which has been hit with tumbling sales and growing operating losses.
Namyang will be the first local company to export plain coffee powder, though some companies export coffee powder mixed with milk powder and other flavorings.
Under the contract, Namyang will supply 500 tons of coffee powder to Poland’s Instanta, which will account for 15 percent of the production capacity of Namyang’s factory in Naju, South Jeolla.
Founded in 2000, Instanta produces and packages instant coffee that it distributes to Japan, America and many European countries.
Namyang said that it is worth noting that Korean coffee powder has made inroads into countries known for having a refined taste for coffee.
“It’s meaningful to have Korea export coffee powder, even though it is not considered a coffee producing country,” Lee Won-ku, CEO of the company, said in a statement.
“The coffee powder market is dominated by South American and European companies,” said a representative of Namyang. “When it comes to coffee, Korean companies were only able to export a small quantity of mixed coffee products.”
The deal is a major achievement for Namyang after it shifted its focus from milk to coffee and mineral water.
The dairy and instant coffee producer spent 180 billion won ($164.3 million) to build its Naju factory to increase its share of the domestic coffee powder industry, which is dominated by Dongsuh.
But the move has been met with little success, as Namyang remains the third-biggest player after Lotte-Nestle, which has a market share of about 7 percent.
Namyang saw its biggest success two years ago when it managed to oust Nestle’s Taster’s Choice from the No. 2 position with its French Cafe mix. The company spiraled after that due to a scandal that triggered a boycott.
Last May, an audio file of a phone conversation between a young Namyang salesman and a distributor appeared on YouTube in which the salesman insults and threatens the older distributor, who refuses to buy more product than he can sell.
The public revolted over the clip, and last year was the first time that Namyang recorded losses.
Market conditions also worked against the company. Korea’s stock of powdered milk is at a record high due to shrinking demand.
To improve its performance, Namyang is seeking to diversify its products and entered the bottled water market with Chunyeonsoo this year.
BY PARK EUN-JEE [firstname.lastname@example.org]
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