Strategy behind Harim, Paldo's business diversification

Harim's new facility in Iksan, North Jeolla Province / Korea Times file

By Kim Jae-heun

Big food companies like Harim, Paldo and Dongwon are striving to expand their product portfolios to balance out risks as competition intensifies.

Harim, the country's top poultry firm, has diversified its business portfolio and grown into a general food company. It has built three factories in Iksan, North Jeolla Province, to manufacture instant noodles and home meal replacement (HMR) kits. The factories opened in January and started producing new items such as ready-made soup and stews as well as precooked rice.

Last month, the poultry firm introduced its first-ever premium instant noodle, “The Misik,” which means delicacy, challenging top noodle makers such as Nongshim and Ottogi.

The main reason why Harim entered such a competitive market was increasing demand. Consumers will keep purchasing food regardless of economic trends. The stable market attracts small and medium-sized companies and the steady demand minimizes risks.

“Population growth has stagnated here due to a decreasing number of people giving birth, but competition between food firms has become more intense. Companies like Harim have no option but to introduce new food items that can give fresh impetus to consumers,” an industry source said.

Harim's premium instant noodle product “The Misik” / Courtesy of Harim

“We will bet on our product's quality and taste. We only used top-class ingredients to make The Misik instant noodles. That's why it is two to three times more expensive than the average instant noodles sold in supermarkets,” a Harim official said. “Instant noodles are just the beginning. We are planning to launch a variety of HMR products in the next few months.”

Consumers' rapidly changing food preferences is another reason why local manufacturers are coveting segments that have not been their mainstay businesses.

People are no longer loyal to their favorite products and look for new choices. Harim offers premium instant noodle products in this context to meet new market trends.

The same rule applies to Paldo, whose main products are instant noodles and beverages. It launched a sublabel called “Tteumsae” (niche) to offer a new lineup of spicy foods in the HMR market.

“Distinctive products are gaining popularity in the food market nowadays. Young consumers find one classic option to be boring,” a Paldo official said.

Dongwon Group's affiliate, Dongwon Home Food, expanded its business recently to the livestock industry and began selling products to consumers directly. Dongwon has been focusing on canned tuna, but it now wants to grow into a firm producing all kinds of meat products.