A market crowded with local birds that have clipped prices and profits for Korean growers is faced by global poultry producers hoping to cash in on South Korea’s craze for fried chicken and beer.
Fueled by its appearance in a hit South Korean television drama and an explosion of restaurant chains the popularity of the combination, known as “chimaek”, has boomed in recent years.
Delivery services of freshly fried chicken and beer to homes, offices and picnics are made regularly by the Chimaek stores which now dot Korea.
He and his colleagues had planned to go to a sushi restaurant for a company dinner, but decided instead on chimaek – a mashup of chicken and maekju, the Korean word for beer, said Kim Chang hoo at a Seoul outlet of the popular BBQ chain recently.
“I cannot help think of chicken, even when I’m eating sushi,” Kim, 24, said. “I don’t know if it’s just me, but chicken always comes to my mind and is always delicious.”
An over-supply and a drop in farm prices have resulted as the craze has pitted domestic chicken producers in an increasingly tough battle for market share.
Now as South Korea lifts bans on overseas suppliers who are attracted by still low per capita consumption rates, imports are set to rise.
Noting a near three-fold increase since 1990 according to OECD data, South Koreans ate 14.2 kg (31 pounds) of poultry meat each in 2015. However this figure is but only half the global average of 28.6 kg per person.
According to the U.S. Department of Agriculture (USDA), boosted by the chimaek craze, South Korea’s market for chicken is expected to grow 5 percent to 1.01 million tonnes this year and a further 3 percent in 2017.
The country’s three biggest producers – Harim, Dongwoo and Maniker, dominates the supply in the country. As they ramp up production to secure market share, all have seen their earnings hit in the first half of this year.
With holding a potentially dangerous course in the hope their rivals flinch first, producers were engaged in a “game of chicken”, according to Park Ju-No, the managing director at Harim.
“We think it’s more crucial to focus on quality differentiation to survive instead of adjusting production, even though it contributes to a glut,” said Park.
Park sees the market over-supplied again next year as imports from the United States and Thailand resume but expects the imbalance to ease in the second half as the number of slaughtered chickens drops in summer.
Imposed due to a bird flu outbreak in 2015, Asia’s fourth-largest economy lifted ban on chicken imports from the United States in July.
According to Korea’s Animal and Plant Quarantine Agency, banned since a 2004 bird flu outbreak, it is likely to resume imports in November from Thailand.
Due to the resumption of U.S. chicken imports, the USDA report showed, South Korean chicken imports are expected to rise 9 percent to 130,000 tonnes this year, and a further 8 percent in 2017 in the overall.
(Adapted from CNBC)