5 Minute Briefs From Seoul

Industry: Food and Beverage

South Korea is facing major food contamination problems. Recently, imported European sausages were found to be contaminated with the hepatitis E virus and eggs from several South Korean farms were found to contain fipronil, a pesticide designed to control ants, cockroaches, other insects. In addition, a few more farms were polluted with bifenthrin. Therefore, foreign farms and sausage companies should consider approaching the Korean market

Soon after the outbreak of bird flu, South Korea is facing another embarrassment: eggs contaminated with pesticide. In 2016, during an outbreak of bird flu, South Korea imported eggs from other countries including Australia, New Zealand, Denmark, Spain, among others. South Korea also imported eggs from the US until bird flu was found in the US state of Tennessee and Korea ceased imports from the US. However, after the contaminated eggs crisis continued to spread in South Korea South Korea lifted ban on imports of US poultry and eggs, according to the U.S. Department of Agriculture. The current pesticide problem is considered worse than bird flu. The anxiety of the Korean people grew as news of the egg pesticide spread, and the consumption of eggs has declined in proportion to public concern. The dip in egg consumption is a concern to many, including restaurants and companies whose products include eggs and egg products.

According to the updated trade data from the Korea International Trade Association (KITA, http://global.kita.net/), bird’s eggs, in shell, fresh, preserved or cooked (HS# 0407) were increasingly imported to the Korean market and its import volumes reached US$3,253 million in 2017 in July. After the USA, China, Australia, Thailand, and Netherlands were the top 5 supplying countries for bird’s eggs, including the categories of in shell, fresh, preserved or cooked; however, their export amounts were relatively smaller than those of the US and China. (Table 1)

Table 1. Korea’s Imports of bird’s eggs, in shell, fresh, preserved or cooked (HSK code# 0407)

(Unit: US$ 1,000/%)

Source: Korea International Trade Association

Besides eggs contaminated with pesticide in South Korea, South Korea’s three major hypermarket chain stores; E-Mart, Lotte Mart, and Homeplus announced that they have suspended the sale of sausages imported from Germany and the Netherlands. Since Hepatitis E can cause fever, appetite and nausea, these hypermarkets and retailers have suspended the sale of these sausage imports until the government releases the results of their inspection.

In 2016 the United State exported a total of $33,455 of sausages and similar meat products, meat offal or blood to South Korea for both direct consumption and food preparation. Nevertheless, the 2017 export values decreased by $ 19,059. Although, the US still dominated the market for imported sausages and similar products, the increase in these imports from Australian and New Zealand as well as desire to buy sausages from these countries as well as Europe pose a threat to US market dominance.

Table 2. Korea’s Imports of sausages and similar products, of meat, meat offal or blood; food preparations based on these products (HSK code# 1601.00)

(Unit: US$ 1,000/%)

Source: Korea International Trade Association

Both brand name recognition and brand royalty play an important role in selling products in Korea. Due to the issues of contaminated eggs and sausages in South Korea, many brands of European sausage and Korean eggs have lost consumers’ trust, but these items remain popular in the Korean diet. The timing is right for foreign egg farms and sausages companies to enter the Korean market and win the hearts of Korean consumers.