‘Complex’ trade unravelled: South Korean F&B firms strike it big as EU accepts local bakery, confectionery and processed dairy goods

By Pearly Neo

- Last updated on GMT

South Korean food and beverage firms have just had a massive new market open up to them in the EU. ©Getty Images
South Korean food and beverage firms have just had a massive new market open up to them in the EU. ©Getty Images

Related tags South korea Eu Trade

South Korean food and beverage firms have just had a massive new market open up to them after trade discussions between the government and the European Union (EU) led to all 27 EU countries accepting ‘complex food’ imports from South Korea such as bread, sweets and beverages.

According to South Korean Ministry of Food and Drug Safety (MFDS) Director Kim Kang-rip, ‘complex foods’ containing processed milk, eggs and honey can now be exported to all 27 countries in the EU from Greece to Spain to Sweden.

“Complex foods are food products made by mixing vegetable ingredients with animal products (milk, eggs, honey, meat) from EU-approved countries - these include [many South Korean specialty products such as] bread, sweets, dumplings, beverages, kimchi, ramen, noodles, and sauces,”​ Kim said in a formal statement.

“So far, it has been difficult to export these complex foods containing processed milk, eggs, and honey because they do not meet the strict EU import requirements for livestock hygiene and food safety, [but after] various diplomatic efforts and continuous export negotiations with the EU, Korea has now been added to the approved list for such foods.”

The main beneficiaries of this new export market will be food and beverage firms which have thus far been restricted in export activities to the EU due to the former restrictions, particularly those manufacturing bakery, confectionary and processed dairy beverages.

Some examples of complex food and beverage products which are now permitted for EU export include bakery containing milk, eggs and/or honey, such as custards by Orion or Lotte; confectionary made with milk, eggs and/or honey such as Chocolate Chip Cookies by Lotte, Honey Butter Chips by Haitai or Honey Twist by Nongshim; and beverages containing milk and/or honey such as Milkis by Lotte and Morning Sunshine rice drink by Woongjin.

“Due to the EU’s strict import regulations, Korea’s food exports to the EU were [only valued at] about US$525mn in 2020, which is really not large compared to the total food exports of about US$7.979bn,”​ said Kim.

“[With this development], South Korea’s domestic processed foods entry into the EU market is expected to greatly expand in the future, and [this bodes well] for the growth potential of K-food exports such as kimchi and ramen (both previously limited due to the presence of plant-based oxalic acid) as well.”

This new development builds on the EU-South Korea Free Trade Agreement (FTA) established back in 2011.

South Korea-EU trade and other exports

According to data from the European Comission (EC), South Korea is the EU's eighth largest export destination for goods, whereas the EU is South Korea's third largest export market overall.

However, in terms of agri-food trade, EU exports to South Korea were valued at EUR3.03bn (US$3.67bn) in 2019-2020, some 6.7% of total trade value; whereas total South Korea agri-food exports to the EU were valued at just EUR218mn (US$264mn), only 0.2% of total trade value, indicating a lot more room for growth especially on South Korea’s end.

The EU is also South Korea's biggest foreign direct investor.

Buoyed by the recent success, MFDS has committed to expand trade negotiations with other major trading partners such as Singapore, the United States and Canada.

“[Targeting more new export markets is important] to expand our export items and diversify target markets [to build] more export growth,”​ said the ministry.

Earlier this year, South Korea also experienced another export success with its first premium strawberry-only flights​ to Singapore seeing encouraging results, also prompting the government to look to expand this in more export markets.

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