Nongshim's heavy dependence on Shin Ramyun raises concerns

Nongshim's Shin Ramyun products are displayed on a shelf at a large grocery store in Seoul in this 2022 file photo. Korea Times file

By Kim Jae-heun

Concerns are growing over Nongshim's growing reliance on sales of instant noodles ― especially its all-time bestselling Shin Ramyun, which accounts 40 percent of the company's overall instant noodle sales ― according to industry officials Monday.

The company has strengthened its overseas business to continue its growth, but there has not been noticeable progress in other business sectors apart from instant noodles as it struggles to find new growth engines.

According to company officials, its instant noodle sales accounted for 73.23 percent of Nongshim's total revenue in 2012. The ratio continued to grow to 78.33 percent in 2021 and 78.75 percent by the end of last September.

Instant noodles are the main export products of Nongshim too, accounting for 74.25 percent of the food firm's export in 2021, which have since grown to the 80 percent range ― thanks to the company's establishment of local production facilities in the United States and China.

“We are seeing some market expansion with instant noodles these days because food companies have raised their prices. Consumption rates of instant noodles are continuing to decline, after increasing a bit during COVID-19. Ultimately, Nongshim's business will not grow, if it relies only on instant noodle sales,” a local food firm official said.

What's even worse here is that Nongshim's instant noodle sales depend heavily on its Shin Ramyun product launched 37 years ago.

Despite much investment in research and development for new items, Nongshim has failed to introduce a new hit. Apart from Shin Ramyun, Nongshim has other steady sellers like Neoguri and Ansungtangmyun, but they were launched even before Shin Ramyun.

In 2021, Nongshim spent 29.3 billion won ($22.93 million) on R&D, equivalent to about 1.1 percent of its overall sales. It is the largest amount among local food firms. Pulmuone followed with 28.5 billion won, Ottogi with 13 billion won and Samyang Foods with 2.1 billion won. Instant noodle sales accounted for only 10 percent and 25.52 percent of Pulmuone's and Ottogi's overall revenues, respectively.