"Eat, Drink, and Invest"... Food and Beverage Stocks Stand Out as Defensive Plays in Slumping Market [Weekend Money]

KOSPI Down 33% in the Past Month, Food & Beverage Up 4%

"Key Investment Points Like Overseas Performance Regain Attention"

In the stock market, which has cooled off after a steep decline, food and beverage stocks that were previously overlooked are now drawing attention as defensive options. There is also growing consensus regarding their investment appeal due to health-oriented consumption trends and strong overseas exports.

According to the Korea Exchange, as of July 29, the KOSPI’s return over the past month recorded -33%. In contrast, the KOSPI Food, Beverages & Tobacco Index posted a positive 4%, highlighting its defensive characteristics.

Yonhap News

Jang Ji-hye, a researcher at DS Investment & Securities, explained, "While the food and beverage sector was pushed out of the spotlight due to worsening key market variables during the rally that began last year, several factors have recently turned favorable as the market plunged—namely, currency depreciation and increased domestic selling prices. Alongside the consistently growing overseas performance, these points of investment are once again receiving attention."

The sector’s valuation also strengthens its investment appeal. The market capitalization-weighted average price-to-earnings ratio (PER) of leading food and beverage companies stands at 12 times; KT&G and Samyang Foods are at 15 times, while the other major players range between 7 and 10 times. Jang commented, "Taking into account future earnings growth in the sector and the recent trend of enhanced shareholder returns among major companies, valuations remain attractive."

Looking ahead, the investment case for the food and beverage sector is gradually but steadily being reinforced. The sector aims to deliver stable domestic earnings while pursuing growth overseas, with inbound tourism serving as a crucial link. Rising numbers of tourists visiting Korea help boost the domestic market and local consumer spending. In the first half of this year, 10.71 million people visited Korea, up 21% from the same period last year, and cumulative credit card spending reached 10 trillion won, a 51% increase year-on-year.

Jang remarked, "Food and beverage accounts for 15% of foreign tourist spending, and of that, food product purchases (not restaurant dining) make up 20%, which will also contribute to domestic earnings growth. Major food and beverage companies, including ramen manufacturers, are actively ramping up capacity for overseas expansion." She added, "It is also worth noting the trend of rising health supplement consumption as a domestic demand driver."

The recommended stocks include Samyang Foods, Orion, Binggrae, Cosmax NBT, and Novarex. As of July 30, the one-month returns for these stocks are as follows: Samyang Foods 6.12%, Orion -2.25%, Binggrae 0.0%, Cosmax NBT 11.36%, and Novarex 3.09%.

This content was produced with the assistance of AI translation services.