Nongshim and Samyang Foods are pushing to acquire a manufacturing company for seasonings such as soup. Soup is a key material that determines the flavor of instant noodles. Until now, Nongshim and Samyang Foods have sourced their soup from external suppliers. However, through this acquisition, it is expected that they will strengthen their product competitiveness by producing soup in-house. This strategy is to enhance their capabilities in response to the growing popularity of K-sauces such as gochujang, doenjang, and buldak sauce, particularly overseas.
According to the related industry on the 24th, Nongshim is pursuing the acquisition of the soup manufacturer 'Seou.' Seou has supplied soup for Nongshim's flagship product, Shin Ramyun. Kim Jeong-jo, a fifth cousin of Shin Dong-won, chairman of Nongshim Group, holds 18.18% of the equity, while Kim Chang-kyung, who is presumed to be the son of Kim, holds 60.24%.
Seou produces and sells products not only for ramen soup seasoning powders but also for various sauces such as soy sauce, gochujang, doenjang, and ssamjang. Nongshim Holdings stated, "We are reviewing the acquisition of Seou, a manufacturer of soy sauce and seasonings, to maximize synergy with our existing food business," adding, "Nothing has been finalized."
With the popularity of buldak-bokkeumyeon, Samyang Foods, which recently entered the 10 trillion won club, is also pursuing the acquisition of the sauce manufacturer 'G&F.' This merger and acquisition (M&A) is taking place 10 years after Samyang Foods acquired the frozen food company Sae-A-Chim (now Samyang Square Meal) in 2015.
G&F has supplied powdered sauces, including the ingredients for Samyang Foods' buldak-bokkeumyeon sauce, to major domestic food companies such as Nongshim and OTOKI. Samyang Foods plans to sign a stock purchase agreement (SPA) to acquire 100% equity in G&F. A representative of Samyang Foods noted, "G&F is well-known not only for soups and sauces but also for its coin broth," and said, "There have been no confirmed details regarding the timing of the acquisition completion; we are still reviewing various aspects."
In the food industry, the acquisition push for soup manufacturers by Nongshim and Samyang Foods is seen as a way to strengthen product competitiveness and supply chain stability through soup internalization. An industry insider remarked, "Since the flavor and quality of instant noodles are determined by the soup, this indicates the intention to secure a stable supply chain that can showcase an independent flavor while preventing technology leakage through in-house production." They added, "The uses for soup extend widely beyond instant noodles to include frozen foods and various sauces. This also considers the expansion of the seasoning market."
Seong Yong-gu, a professor at Sookmyung Women's University, said, "Noodle companies that have established a foothold in overseas markets with K-ramen are trying to gain momentum for market expansion by converting to ODM (original design manufacturing) or vertical integration structures for their soups and sauces."
There are analyses that the trend of growth in the global seasoning material market has influenced this. According to the Korea Agro-Fisheries & Food Trade Corporation (aT), the size of the global seasoning material market last year was approximately $43.3 billion (about 60 trillion won) and is projected to grow to $60 billion (about 84 trillion won) by 2030.
A food industry insider noted, "Gochujang, doenjang, and buldak sauce have started to establish a foothold in the overseas market to the extent that they are classified under the category of K-sauces," adding, "Buldak sauce is also derived from the liquid soup of buldak-bokkeumyeon. The strategy to swiftly respond to consumer preferences and demands will likely be a key factor in this acquisition."
Some view Nongshim's actions as an effort to address the controversy over preferential treatment in transactions. Seou is operated by the family of Shin Dong-won's fifth cousin. In fact, during 2021, when Seou was part of the Nongshim Group, 61% of its sales of 102.8 billion won, which is 63.2 billion won, came from transactions with Nongshim.
Subsequently, in 2022, it received recognition for 'independent family management' from the Fair Trade Commission, which led to its separation from the corporate group. The independent family management recognition system excludes a company from the corporate group and removes related parties from the same person when a family member or executive (independent manager) of the same individual (the head) is recognized to operate the company independently.
An insider in the food industry stated, "The Fair Trade Commission has pointed out that there is a high proportion of internal transactions among Nongshim Group affiliates," adding, "In a situation where the new government’s Fair Trade Commissioner has yet to be appointed, it appears they are preemptively organizing elements that could become problematic. Once the acquisition of Seou is completed, the allegations of preferential transaction treatment surrounding it will disappear."