Luxury hotels enter kimchi business to diversify revenue sources

A chef from Lotte Hotels & Resorts prepares kimchi in this undated photo. Courtesy of Lotte Hotels & Resorts

Kimchi from luxury hotels is selling like hotcakes here amid growing demand for packaged kimchi and ingredient price hikes driven by the climate crisis.

Koreans' daily consumption of premium kimchi, created with the recipes of hotel chefs and made with top-notch ingredients, has been on the rise every year as it has gone viral.

According to hotel officials on Tuesday, sales of SUPEX Kimchi, a high-end kimchi brand from Walkerhill Hotels & Resorts that costs 28,000 won per kilogram, increased by 42.2 percent year-on-year in October, marking the highest sales volume of the year.

Walkerhill Hotel Kimchi, which is relatively cheap, saw its sales jump 109.9 percent.

Notably, Walkerhill Hotel Kimchi was sold out within 30 minutes on the local television home shopping channel SK Stoa Broadcasting, on Nov. 21, recording a high target rate of 211 percent.

Walkerhill Hotels & Resorts' SUPEX kimchi brand / Walkerhill Hotels & Resorts

Meanwhile, the sales of kimchi made by Josun Hotels & Resorts, which costs 28,000 won per kilogram, increased by 10 percent in November compared to the same period last year.

Lotte Hotels & Resorts, which started its kimchi business last August, also saw its kimchi sales jump by 50 percent in October compared to last year.

The company sold only a limited quantity of kimchi once a week in October this year, unlike last year, to maintain quality in line with rising demand. However, sales have jumped due to an increasing number of consumers who prefer premium kimchi, the company said.

Paradise Hotels & Resorts also saw instant success when it launched its own kimchi made by fine dining chefs in October.

Paradise Hotels & Resorts' premium kimchi launched in October / Courtesy of Paradise Group

Some 1,500 units were sold on the first day of presales, with another 1,200 units sold on the following day.

Amid the ongoing trend, Seoul Dragon City, a hotel complex in Seoul's Yongsan District, plans to officially launch its kimchi brand sometime in the first half of next year.

Premium kimchi made by luxury hotels is two to three times more expensive than regular kimchi.

Nevertheless, Korean consumers who eat kimchi every day are becoming more willing and generous to open their wallets, instead of making kimchi themselves, because of a consumption trend preferring domestic and high-quality ingredients and ingredient price hikes due to climate change.

The prices of cabbage and radish, the main ingredients of kimchi, have gone up 1.5 to two times compared to last year.

According to the Korea Agro-Fisheries & Food Trade Corp., Tuesday, the average retail price of cabbage was 4,639 won per head on the previous day, which is 65 percent more expensive than 2,817 won from a year ago.

In other words, it was possible to buy three heads of cabbage with 10,000 won last year, but now people can only buy two with the same amount of money.

This is 46 percent more expensive than the annual average and 50 percent higher than just a month ago.

The rise in ingredient prices is due to reduced cultivation areas because of bad weather conditions and the decrease in production due to frequent rainfall during harvest season.

According to Korea Statistics on Tuesday, the production of cabbage in the fall was 1.164 million tons, down 78,000 tons and about a 6.3 percent decrease from the previous year's 1.242 million tons.

Cabbage, radish and vegetables, the main ingredients of kimchi, are sold at a supermarket in Seoul, Thursday. Yonhap

Meanwhile, the proportion of Koreans who buy packaged kimchi has nearly tripled over the past three years, from 10.5 percent in 2017 to 31.3 percent in 2020, according to the Food Industry Statistics' Kimchi Industry Survey Report.

From the hotels' perspective, the kimchi business has low input costs as they can utilize personnel and cooking facilities from existing food and beverage operations.

As most major hotels are affiliates that have distribution channels such as online shopping malls and TV home shopping, it is easy for them to expand or deliver to sales networks as well, industry insiders explained.

"As the number of consumers looking for packaged kimchi has increased rapidly due to the lack of supply of cabbage from climate change, the hotel has introduced premium kimchi as HMR (home meal replacement) products to make it easier to enjoy 100 percent domestic ingredients," an official from Paradise Hotel and Resort said.

Another hotel industry official said, "Although prices of kimchi ingredients are unstable every year due to abnormal climate, packaged kimchi can be conveniently purchased online," adding, "Hotel kimchi seems to have (gained the) trust (of) strict consumers."