South Korean food company Samyang Foods, which exported more than 1 trillion won ($750 million) worth of its iconic Buldak Ramen last year, posted an operating profit margin of nearly 20%, underscoring the company’s strong financial performance. The operating profit margin, which measures operating profit as a percentage of revenue, serves as a key indicator of business efficiency. Exports accounted for 77% of Samyang Foods’ total revenue. While South Korea’s domestic ramen market faces challenges due to a shrinking population and growing health-conscious consumer trends, Samyang Foods has prioritized international expansion, achieving a higher operating profit margin last year than Samsung Electronics (10.9%).
A decade ago, in 2015, Samyang Foods’ operating profit margin stood at just 2.4%. However, profitability surged after exports of Buldak Ramen surpassed domestic sales in 2017. The operating profit margin climbed to 11.8% in 2018 before reaching nearly 20% last year.
Traditionally, the food industry has been seen as a low-margin sector due to high raw material and labor costs, but that’s beginning to change. In South Korea, where economic stagnation and demographic decline have persisted, an operating profit margin of 5% has long been considered strong. However, three South Korean food companies—Samyang Foods, Orion, and Binggrae—have broken this norm, boosting profitability beyond that threshold by expanding overseas.
Binggrae, known for its banana-flavored milk and Melona ice cream bars, has also seen significant growth abroad. The company’s overseas revenue jumped from 46.9 billion won ($32 million) in 2016 to more than 100 billion won in 2022, reaching 104.2 billion won ($71.6 million). Melona, already popular in North America, the Philippines, and Vietnam, expanded its export footprint to the Netherlands, Germany, the United Kingdom, and France in 2023. Sales in the European market more than tripled last year compared to 2023. Binggrae’s operating profit margin, which stood at 2.29% in 2021, rose to 8.05% in 2023. Analysts estimate the figure climbed further to 8.71% last year.
Meanwhile, Orion, a major South Korean snack maker with a longstanding presence in China, Vietnam, Russia, and the United States, is well known in the food industry for its high profitability. Since 2018, Orion has consistently maintained operating profit margins in the mid-teens. As of the third quarter of last year, 64% of Orion’s total revenue came from overseas. The company separately tracks the performance of its international subsidiaries, with its Chinese, Vietnamese, and Russian units reporting higher profitability than its South Korean operations in both 2022 and 2023.
The contrast between domestic and international markets is stark for South Korean food companies. A representative from a food company with a primarily domestic focus stated, “With government-imposed price controls and strong consumer resistance to price hikes, raising prices is nearly impossible. Additionally, with the consumer base shrinking, companies must rely on aggressive promotions, such as ‘buy one, get one free’ deals, to maintain market share.” Food manufacturers argue that rising raw material and labor costs, coupled with pricing constraints, make it difficult to improve profitability.
However, industry experts note that companies with strong brand recognition and popular products can achieve higher margins in overseas markets. For instance, Samyang Foods’ Buldak Ramen is priced at 5,100 won ($3.50) for a five-pack at South Korea’s E-Mart malls, whereas on Amazon in the U.S., prices range from $7.29 to $9 (11,000 to 13,000 won). “In international markets, pricing is largely determined by consumer demand, allowing companies to secure higher margins on popular products,” said an industry source. Another executive from a successful export-driven food company added, “While logistics costs and the establishment of overseas subsidiaries require significant investment, the profitability of international markets outweighs these expenses.”
