'Nongshim' to build factory and head to Europe to shake off Samyang food chase

[Korea Financial Times, Son Wontae] Nongshim has made aggressive investments in response to Samyang Food's onslaught. Samyang Foods has been posting its best quarterly earnings ever thanks to its buldak stir-fried noodles. Earlier this year, Samyang Food also broke ground on an additional production line in Milyang, a factory dedicated to exports. In response to this, Nongshim has been targeting Europe with its flagship product 'Shin Ramyun'. In Korea, Nongshim is also showing its determination to further solidify its position as a leading 'K-Ramyun' maker by adding an export-only production line in Busan.

According to the industry on September 5, Nongshim reported sales of KRW 1.7332 trillion in the first half of this year, up 2.1% from the previous year (KRW 1.6979 trillion). However, operating profit fell 10.6% to KRW 105.1 billion from KRW 117.5 billion in the previous year. Net profit of KRW 96 billion was also down 3.2% from the previous year (KRW 99.2 billion). Nongshim explained that this was due to lower prices of popular products such as 'Shrimp Cracker' and 'Shin Ramyun'. Increases in production costs and management expenses also weighed on the company.

Overseas, performance was remarkable. This is thanks to a significant increase in exports of its main business, instant noodles and snacks. Nongshim's overseas subsidiaries posted sales of KRW 483.1 billion in the first half of this year, down 4.6% from the previous year (KRW 506.2 billion). However, domestic sales of KRW 1.25 trillion, up 4.9% from the previous year (KRW 1.19 trillion), more than offset the decline.
Nongshim's domestic performance was driven by exports. In the first half of the year, Nongshim's exports totaled KRW 176.7 billion, up 28.6% from KRW 137.4 billion a year earlier. When combined with overseas sales, the total amounted to about KRW 659.8 billion. This is a 2.5% increase from last year's KRW 643.6 billion. As a result, overseas sales accounted for 38.1% of Nongshim's total sales, up slightly from 37.9% in 2023. This is proof that Nongshim's K-ramyun, led by Shin Ramyun, is still on the rise.

Nongshim currently has seven local subsidiaries in Korea, the United States, China, Japan, Vietnam, Canada, and Australia. Production plants are located in seven locations in Korea (Anyang, Pyeongtaek, Anseong, Asan, Chungnam, Busan, Gumi, Gyeongbuk) and five overseas (USA, China, etc.). In May 2022, Nongshim opened its second plant on its California production line in May 2022. The K-Ramyun craze in the U.S. market has increased production. This will allow Nongshim to produce 850 million instant noodles annually in the US.

Last year, Nongshim generated about KRW 1.21 trillion in sales from Shin Ramyun alone, of which about 710 billion won came from overseas. That's why Nongshim is considering expanding additional factories in the United States. The plan is to increase production facilities to meet the rush of orders and drive outward growth for the entire group, especially as rival Samyang Foods has been taking over the top quarterly spot with its buldak stir-fried noodles. In the first half of this year, Samyang Food also posted record sales of KRW 810.2 billion, up 52.6% from the previous year. Of the total, sales of buldak stir-fried noodles accounted for about KRW 560 billion, or 69% of the total. In March, Samyang Food also broke ground on its second factory in Milyang, Gyeongnam, a factory dedicated to exports.

Nongshim Chairman Shin Dong-won is also active. He mentioned the new plant expansion at the annual general meeting of shareholders in March. At the time, Shin said, “We are currently thinking about establishing a sales subsidiary in Europe because exports are doing well,” adding, “We are also considering building export-only plants at existing sites such as Pyeongtaek (Poseung Plant) and Busan (Noksan Plant).” As he said, Nongshim started to materialize the 'K-Ramyun' blueprint' in the second half of the year.

First, in June this year, Nongshim introduced Shin Ramyun and other products to French retail giants LeClaire and Carrefour. Along with Shin Ramyun, which is popular in the local market, Nongshim also displayed its competitive products such as Neoguri, Shrimp Cracker, and Onion Ring. During the Paris Olympics, the company held a Carrefour pop-up event and held a Ramyun tasting event for locals. In addition to France, Nongshim is also working hard to target southwestern Europe, including Spain and Italy. In the Nordic countries such as Sweden and Denmark, the company plans to utilize local distribution networks to introduce its products. Nongshim is also planning to establish a European sales subsidiary early next year.

The company also plans to expand its production line for exports with a total area of 51,000㎡ (15,500 pyeong) on the 17,000㎡ (5,100 pyeong) site of its Noksan factory in Busan, aiming for completion in the first half of 2026. The investment for the plant is KRW 191.8 billion. The Busan Noksan plant will have a total of three high-speed, state-of-the-art lines. This will bring the total number of production lines at the Busan Noksan plant to eight, and the annual production of instant noodles will increase from 500 million units to 1 billion units. Nongshim's global production capacity will also increase to 2.7 billion units, including 1 billion units from the U.S. and 700 million units from China. The Busan Noksan plant is also close to Busan Port, Korea's export outpost, which will significantly reduce logistics costs. The Ramyun produced here will be shipped to Europe, South America, Africa, Oceania, and other new frontiers for K-Ramyun.

"Busan Port is a representative port in Northeast Asia with export routes from about 150 countries around the world," a Nongshim official said. "Considering the accessibility of Busan Port, which has global export efficiency, the site of the new plant has been decided as Noksan National Industrial Complex."

Son Wontae (tellme@fntimes.com)