Food start-ups find ravenous appetite from customers
Food start-ups in Korea are enjoying a boom as people are forced to stay home due to the coronavirus and long rainy season, but don't want to cook.
Start-ups are coming up with new food options ranging from home meal replacements (HMRs), subscription services and livestreaming channels promoting food products.
Fresh Easy, a start-up that’s leading the HMR market, is expected to report sales of 170 billion won ($143.5 million) this year, more than double last year’s 71.1 billion won. The company, founded in 2016, supplies HMR products to large retail channels like Emart, Coupang and GS Home Shopping.
HMR refers to various substitutes for home-cooked meals, from fully prepared meals to so-called kits with ingredients, sauces and directions.
Korea’s HMR industry had 100 billion won in sales last year, and Fresh Easy has a 70 percent market share. This year, the company hired 170 additional employees, bringing its total to 300.
Venture capital companies are keen on the industry. A total of 160 billion won has been invested in Fresh Easy so far. Among the investors is SoftBank Ventures, which holds a 12.12 percent stake through a fund called Growth Acceleration.
Fresh Easy invested 70 billion won in a meal kit factory in Yongin in Gyeonggi, which is able to produce some 100,000 products a day.
The company says its cost effectiveness is its key strategy. Dishes like Spanish garlic shrimp or a Chinese hot pot called malatang — the kind of meal one associates with dining out — cost less than 20,000 won for two persons.
“Customers compare meal kit prices to how much they would pay for the same items at restaurants or phoning in for delivery,” said a spokesperson for Fresh Easy. “We try to keep the price half of what the other options would cost, such as dining out.”
Cookat is another local food start-up.
Cookat started off on social media including YouTube and Facebook, uploading authentic recipes that are easy to follow with simple ingredients. As that social media content started to get a big following, the company jumped into private brand products followed by HMR products. It has 32 million subscribers on social media in 70 countries, although its business is mostly in Korea.
Cookat reported 9.8 billion won in sales in the first quarter of this year, tripling its sales from the same period last year. Its sales target for this year is 40 billion won.
Recently, Cookat opened a bricks-and-mortar store dubbed Grocerent, a portmanteau of "grocery" and "restaurant," in Coex in Samseong-dong of southern Seoul where customers can buy HMR products and cook and eat them on the spot.
The company was founded seven years ago and is planning to expand to Vietnam, Hong Kong, Taiwan, Thailand and the Philippines.
“Cookat’s market power derives from the popularity of video content,” said Lee Mun-ju, CEO of the company. “Utilizing data on the subscribers, we make products that will suit their tastes, and those products are also made into video content.”
Other food start-ups include Jung Yook Gak, an online butcher shop that deals in fresh pork. Founder Kim Jae-yeon, a graduate of KAIST, shortened the logistics process to promise the freshest meat and now has monthly sales of 1.2 billion won.
The Bread Blue, Korea's first subscription service for vegan bread, is expected to post sales of 5 billion won this year.
Retail conglomerates in Korea are jumping on the bandwagon.
Shinsegae Department Store on Aug. 10 said it will expand a bread subscription service offered at select branches to a nationwide service.
Hyundai Department Store on Aug. 5 started a delivery service for banchan, Korea's famous side dishes, to 10 select branches.
BY BAE JUNG-WON [firstname.lastname@example.org]