FAS/Seoul Monitoring of Media Reporting on Agricultural Issues

Today's Date: Wednesday December 24, 2014

For Coverage: December 01 ~ 20, 2014

1. BILATERAL/MULTILATERAL ISSUES

Korea-Canada Free Trade Agreement Takes Effect on January 1, 2015 ... Canadian Lobsters will Enter Korea Duty Free Immediately [Korea, OSY]

http://news.donga.com/3/all/20141214/68538090/1

Summary: Korean government announced that Korea-Canada Free Trade Agreement will take effect on January 1, 2015.  Upon implementation, Korea's import duties on Canadian products will either phased out or eliminated immediately.  For example, the current 40 percent import duty on Canadian beef will be phased out over 15 years.  The 20 percent duty on Canadian lobsters will be eliminated immediately.

Korea-Australia Free Trade Agreement Takes Effect on December 12 [Korean, OSY]

http://news.donga.com/3/all/20141211/68497115/1

Summary: Korea-Australia Free Trade Agreement has taken effect on December 12.  As a result, Australian food and beverage products will enter Korea with reduced import tariffs.  For example, the 15 percent base import tariff on Australian wine is eliminated immediately on December 12.  Import tariff on Australian beef, which is on a 15 year phase out schedule under the FTA, is lowered by 5.4 percent point by January 1, 2015 because the FTA enters into its second year on January 1, 2015.

2. MARKETING ISSUES

Mobile Shopping Shows Rapid Growth ... Forecast to Generate W22 Trillion Sales in 2015 [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014121723231

Summary: Korea On-line Shopping Industry Association released its forecast on December 17 that sales of mobile shopping in Korea is expected to amount to W22.5 trillion won in 2015, up 71 percent from 2014.  The association pointed out that wide spread use of smart phones among the Korean consumers (80% of Koreans of all ages are smartphone users) will boost the shopping over mobile IT gears in the coming year.  On the other hand, sales of internet shopping (via PC) in Korea is forecast to decline to W29.8 trillion won in 2015 (W31.9 trillion in 2014).

Grapefruits Report Strong Sales Growth This Year, Contrasting Sluggish Sales of Oranges [Korean, OSY]

http://www.hankyung.com/news/app/newsview.php?aid=2014120955851

Summary: According to Lotte Mart, a leading hypermarket store chain in Korea, sales of grapefruits in its stores this year has increased 119 percent through November.  Lotte Mart pointed out that female consumers were the main buyers of grapefruits as grapefruits were considered a 'diet' food for low calorie content.  On the other hand, sales of oranges declined 32 percent mainly due to reduced harvest in California. 

Western Family Restaurant Industry is on a Decline in Korea ... Tony Roma's to Close Business in Korea Soon [Korean, OSY]

http://news.donga.com/3/all/20141208/68426080/1

Summary: It is reported that western style family restaurants are shrinking in Korea mainly because of Korean consumers' increased attention to healthy diet in dining out as well as reduction in the size of traditional, multi-member households.  For example, Tony Roma's that operated restaurants in Korea since 1995 will close all Korean stores before the end of 2014.  Outback Steakhouse recently announced that 34 of its 109 stores in Korea will be closed in 2015.  TGI Fridays that once was the largest family restaurant chain in Korea now has only 44 stores, which is 88 percent less than from its highest time.  Reflecting the drastic changes in the business environment, leading players in the industry have been recently adopting new strategy for marketing and products.  For example, Ashley is focusing on lunch market for housewives with low price buffet menus.  VIPS has departed from one single menu for all store strategy and has recently introduced diversified menu strategy to individual stores for better accommodation of different consumer demand in different regions.  CJ's Gye-Jul-Bop-Sang restaurant has reported an early success since the launching in 2013 by offering Korean themed menus prepared from environment-friendly, locally grown ingredients at value price.

46 Percent of Korean Consumers, "I Will Not Eat American Beef" [Korean, OSY]

http://news.donga.com/3/all/20141207/68404131/1

Summary: 46 percent of Korean consumers replied in a recent survey by Korea Rural Economic Institute that they would not eat American beef.  Another 29 percent of the consumers surveyed replied that they would eat American beef.  The rest 24 percent replied that they had no firm decision on the issue.  On the other hand, 44 percent of the consumers surveyed replied that they would eat Australian beef.

Acreage of Environment-Friendly Farms in Korea is on a Decline for Four Years in a Row ... Due to Elimination of 'Low Pesticide' Category from National Organic Standards [Korean, OSY]

http://news.donga.com/3/all/20141208/68404379/1

Summary;  Total acreage of environment-friendly farms in Korea was 141,700 hectares (ha) in 2013, which was a sharp decline from 164,300 in 2012 or 36 percent less than the record high marked in 2009.   The sharp decline of environment friendly farms is mainly due to stricter organic standards that Korean government introduced in 2010.  In the new standards, Korean government no longer recognized 'low pesticide' category in the organic agriculture definition.  'Low pesticide' farms have reportedly either gave up on organic farming or have transformed to 'no pesticide' organic farms.

CJ to Increase Its Frozen Processed Foods 6.5% at the End of December due to High Pork Meat Price [Korean, OSY]

http://news.donga.com/3/all/20141204/68364131/1

Summary: CJ, a leading processed food manufacturer in Korea, announced that it would increase the price of its frozen processed foods such as dumplings by 6.5% at the end of December.  CJ explained that the price increase was mainly due to the high pork meat price, an important ingredients in its products.  Price of pork meat in the market has gone up over 66 percent in the second half this year compared to the same period last year.  Decreased supply due to an animal disease is reportedly limiting the meat supply in Korea.

Retail Giants in Escalated War in Premium Outlet Mall Sector [Korean, OSY]

http://news.donga.com/3/all/20141204/68364104/1

Summary: It is reported that the competition among the local retail giants is heating up in the premium outlet mall market.  Lotte Department Store is opening a mall in Gwangmyung city on December 5, which will house 311 luxury brand stores under 38,700 sq. meter space.  Lotte is also currently building another mall in Yangju city.  Hyundai Department Store is opening a mall in Gimpo city in February 2015 under 39,000 meter space.  Shinsegae will start construction project for a mall in Siheung city and Eojungbu city each in early 2015.  All the new outlet malls opening soon or under development by the retail giants are located near the Seoul Metropolitan area and target those consumers who demand luxury brand products at value price.

Fast Food Chains & Family Restaurants Focus on Breakfast & Brunch Products to Target Busy Consumers [Korean, OSY]

http://news.donga.com/3/all/20141202/68292161/1

Summary: Fast food chains as well as family restaurant chains are reportedly focusing on breakfast and brunch products to target busy consumers.  According to a recent government survey, 21.2 percent of Korean consumers said that they were too busy to eat breakfast in the morning.  As a result, consumer demand for breakfast and brunch products is showing a strong growth.  The industry estimates that the sales of breakfast/brunch products in the food service industry amounts to 1 trillion won (about $1 billion).  Leading restaurant companies have recently introduced numerous products for breakfast and brunch.  As an example, Lotteria, a leading fast food chain, launched a new line of breakfast products in October 2014 that were based on rice instead of bread.  Lotteria commented that its product strategy was to attract those consumers who wanted a quick breakfast but at the same time something more nutritional and something similar to breakfast at home.