Weak won pushes food firms to bolster exports

Samyang Roundsquare, the holding company of Samyang Foods, holds a groundbreaking ceremony for Samyang Foods' second manufacturing plant in Miryang, South Gyeongsang Province, Mar. 6, 2024. Courtesy of Samyang Foods Rising price of imported ingredients pressure companies By Ko Dong-hwan The weakening of the Korean currency against the U.

S. dollar is prompting the country’s major food companies to focus more on exports than domestic sales, as outbound shipments are generally less impacted by a depreciating won compared to local consumption. From bakeries to frozen foods, snacks, and instant noodles, more and more food companies are establishing manufacturing plants abroad.



This international expansion not only enhances efficiency in supplying global markets but also helps companies mitigate the rising financial burden of soaring exchange rates by allowing them to source key ingredients locally. Major producers of instant noodles, which were the leading drivers of the country’s food exports in 2024, are now building new manufacturing plants to further strengthen their export capabilities. Nongshim plans to begin construction of an export-focused plant at the Noksan National Industrial Complex in the southern port city of Busan during the first half of this year.

This new facility will increase the company’s annual production by 500 million units. Meanwhile, Samyang Foods is in the process of building its second plant in Miryang, South Gyeongsang Province. The new plant will focus on supplying the company’s popular products, including the Buldak-series of instant noodles, which were key to its export success last year.

CJ Cheiljedang is expanding its overseas production in both Europe and the United States. The company plans to build its first manufacturing facility in Europe, near Budapest, Hungary, with operations slated to begin in the second half of 2026. The new plant will focus on producing the company’s flagship Bibigo frozen dumplings for European markets.

Bibigo is CJ Cheiljedang’s signature brand for frozen foods. Through its U.S.

subsidiary Schwan’s Company, CJ Cheiljedang has begun constructing an Asian food production plant in Sioux Falls, South Dakota. Upon its completion in 2027, the facility will produce Bibigo egg rolls and dumplings. CJ Cheiljedang's Bibigo frozen products are on display at a Costco store outside Los Angeles, California, Dec.

12, 2024. Korea Times file SPC, another major Korean food company, has taken steps to build a manufacturing plant in Texas for its global bakery subsidiary, Paris Baguette. The plant will serve the company’s markets across North, Central, and South America.

Meanwhile, Orion, which saw rising sales in the U.S. of its Kkobuk Chip snacks last year, said it is considering establishing a new manufacturing plant in the U.

S. The more these companies focus on exports, the more they benefit from the rising exchange rate due to the weak won and strong dollar. A weak won makes it cheaper to buy Korean products overseas.

Market experts note that Samyang Foods, for example, will experience a sales increase of tens of billions of won if the Korean currency weakens by 10 percent. By the third quarter of last year, the company had already achieved exports of over 960 billion won ($660 million), accounting for about 77 percent of its total sales during that period. However, for companies that generate a larger share of their sales from the domestic market, the weakening won can make imports of key ingredients, such as whole wheat and raw sugar, more expensive.

Experts suggest that companies may begin raising the retail prices of their products as early as March and no later than June if the won remains weak against the dollar. Since companies generally stock imported ingredients for three to six months, they are unlikely to avoid raising prices beyond the first half of the year. However, even if they decide to implement price hikes sooner, they must tread carefully, taking into account the sensitivity of local consumers to rising price tags and the government’s vigilant oversight of the market.

"I don't expect to see significant price hikes from food companies for a while," a food industry official remarked. "However, the sharp weakening of the won has undeniably added to the uncertainties within the country's food market, which has been impacted by rising ingredient and product prices. This will continue to drive companies to expand their markets overseas and seek solutions beyond domestic borders.

" The won weakened markedly against the dollar following President Yoon Suk Yeol’s declaration of martial law on Dec. 3. Although the decree was quickly nullified by the National Assembly just hours later, it triggered political turmoil, leading to the parliament revoking the vested authorities of both the president and Prime Minister Han Duck-soo.

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