Nongshim Pursues Global Push After Losing Profit Lead to Samyang

[Korea Financial Times, Yang Hyunwoo] Samyang Foods, armed with Buldak Stir-Fried Noodles, is in hot pursuit of Nongshim. While Nongshim leads in sales, it has fallen behind Samyang Foods in operating profit, market capitalization, and stock price. In response to Samyang Foods' rapid growth, Nongshim has launched a counteroffensive through new product releases and expanded global presence.

According to the industry on the 29th, Nongshim's cumulative third-quarter sales and operating profit (on a consolidated basis) stood at KRW 2,631.9 billion and KRW 150.6 billion, respectively. During the same period, Samyang Foods recorded sales of KRW 1,714.1 billion and operating profit of KRW 385 billion. While Nongshim led in sales, its operating profit didn't even reach half of Samyang Foods'.

From 2019 to 2023, Nongshim surpassed Samyang Foods in both sales and operating profit. Nongshim's sales and operating profit were: ▲2019: KRW 2,343.9 billion, KRW 78.8 billion ▲2020: KRW 2,639.8 billion, KRW 160.3 billion ▲2021: KRW 2,663 billion, KRW 106.1 billion ▲2022: KRW 3,129.1 billion, KRW 112.2 billion ▲2023: KRW 3,410.6 billion, KRW 212.1 billion ▲2024: KRW 3,438.7 billion, KRW 163.1 billion.
In contrast, Samyang Foods' sales and operating profit were: ▲2019: KRW 543.6 billion, KRW 78.3 billion ▲2020: KRW 648.5 billion, KRW 95.3 billion ▲2021: KRW 642 billion, KRW 65.4 billion ▲2022: KRW 909 billion, KRW 90.4 billion ▲2023: KRW 1,192.9 billion, KRW 147.5 billion, falling far short of Nongshim. However, last year it overtook Nongshim in operating profit with KRW 1,728 billion in sales and KRW 344.6 billion in operating profit. In operating cash flow as well, it recorded KRW 357.9 billion last year, showing stronger cash generation capability than Nongshim (KRW 272.5 billion).

Stock price movements naturally diverged. Nongshim's share price gradually rose from around KRW 240,000 (based on closing price) at the end of 2019 to around KRW 430,000 currently. In comparison, Samyang Foods' stock price, which was merely around KRW 80,000 at the end of 2019, soared rapidly to reach around KRW 1,260,000. Consequently, the gap in market capitalization has widened significantly, with Nongshim at approximately KRW 2,630 billion and Samyang Foods at approximately KRW 9,500 billion.

Behind Samyang Foods' growth lies Buldak Stir-Fried Noodles. Launched in 2012, Buldak Stir-Fried Noodles gained popularity in 2014 when YouTuber 'Korean Englishman' eating the noodles became a sensation on social media. It subsequently became a global hit as famous international figures including American rapper Cardi B and BTS competed to feature it in their mukbang videos.

Buldak Stir-Fried Noodles, which sold 1.3 billion units in 2022, surpassed 1.8 billion units last year, driving Samyang Foods' performance. With overseas sales accounting for 81% of Samyang Foods' revenue, it's no exaggeration to say that Buldak Stir-Fried Noodles is leading the company.

Nongshim is expanding into overseas markets centered on Shin Ramyun. Since entering Walmart in 2017, Shin Ramyun has expanded its overseas proportion to 60% as a single product. Nevertheless, Nongshim's overall overseas sales proportion remains low at approximately 38%. Accordingly, marking its 60th anniversary this year, Nongshim announced 'Vision 2030,' undertaking business restructuring with the goal of achieving 61% overseas sales proportion.
As part of this effort, Nongshim appointed K-pop group aespa as Shin Ramyun's global ambassador last month. Aespa is a strategic move to raise Nongshim's recognition in key markets such as North America and Southeast Asia to expand exports. The Shin Ramyun aespa advertisement actually surpassed 100 million views in just one month, meeting Nongshim's expectations. In September, the company also released limited-edition ramen in collaboration with the animation 'K-pop Demon Hunters.'

Last month, it launched 'Shin Ramyun Kimchi Stir Fry,' and on the 22nd of this month, it released 'Shin Ramyun Gold' as a 40th-anniversary commemorative product, expanding its product lineup. To match this, Nongshim is also increasing production capacity, constructing an export-dedicated factory in Busan targeting completion in the second half of next year.

To strengthen the execution of Vision 2030, Nongshim promoted Shin Sang-yeol, head of the Future Business Office and eldest son of Nongshim Chairman Shin Dong-won, to vice president. This is interpreted as driving future business initiatives alongside succession planning.

Regarding Vice President Shin Sang-yeol's promotion, a Nongshim official explained, "This is to continuously pursue changes and efforts to achieve 'Vision 2030' set this year."

The official continued, "In addition to the U.S., China, and Japan, which are currently leading overseas business performance, we plan to implement customized strategies for each country targeting Mexico and Brazil, the largest markets in Central and South America, and India, the world's largest high-growth market."

Yang Hyunwoo (yhw@fntimes.com)