Samyang Corporation in a "No-Win Situation" Amid Weak Domestic Demand and Price-Fixing, Seeks Overseas Breakthrough

Established subsidiaries in the U.S. and Japan this year

Boosting U.S. sales of specialty products such as allulose and dietary fiber

Acquisition of Japanese fragrance and cosmetics company expands food and beauty businesses

Weak dome

Samyang Corporation, which operates both food and chemical businesses, is expanding its food business into overseas markets. It is seeking to offset the difficult domestic business environment in global markets: its core sugar, flour, starch and starch-sugar businesses are struggling at home, and it has been hit with fines worth hundreds of billions of won by the Fair Trade Commission for price fixing. The company has established subsidiaries in the United States and Japan in succession and is seeking a breakthrough led by high-value-added businesses such as allulose, dietary fiber and flavors.

Samyang Corporation showcases specialty food ingredients to local visitors at 2025 NPEW, the world's largest natural products expo, held in Anaheim, California, last year. Courtesy of Samyang Corporation.

According to the Financial Supervisory Service's electronic disclosure system on October 23, Samyang Corporation invested more than KRW 260 billion this year to establish two overseas subsidiaries: Samyang Corporation USA, Inc. in February and Samyang Corporation Japan, Inc. in May. It invested KRW 2.9 billion to establish the U.S. subsidiary and KRW 257.7 billion for the Japanese subsidiary. Both investments were made to participate in management, but the subsidiaries differ in their main businesses. The U.S. subsidiary is classified as a food distributor and is specified as selling products such as starch sugar, while the Japanese subsidiary is classified as a holding company.

A Samyang Corporation official said, "Samyang USA was established to expand our global business and sells specialty, or high-functionality, food ingredients such as allulose and dietary fiber. Samyang Japan is a special-purpose company (SPC) established to acquire Soda Aromatic; it was not set up to sell products or operate a business independently."

In fact, alongside the establishment of Samyang Japan, Samyang Corporation acquired a 100% stake in Soda Aromatic, one of Japan's five largest flavor companies, for approximately KRW 387.7 billion. Founded in 1915 and headquartered in Tokyo, Japan, Soda Aromatic is a global company specializing in flavors that create the aromas and tastes of food, as well as fragrance and cosmetic ingredients used in perfumes and cosmetics. It has more than 1,000 customers worldwide. It operates seven production facilities across five Asian countries: Japan, China, Taiwan, Thailand and Singapore.

Samyang Corporation is positioning specialty products such as allulose, a zero-calorie alternative sweetener that is about 70% as sweet as sugar, and dietary fiber as growth drivers. It is targeting global markets including North America, Japan and Southeast Asia, while accelerating its transformation into a solutions company that designs the taste and aroma of food. In 2024, it built South Korea's largest allulose plant in Ulsan, increasing annual production capacity to about four times its previous level. As of the end of last year, more than 300 products contained allulose, and allulose-related sales volume rose about 40% year over year last year. The acquisition of Soda Aromatic could also help expand the company's fragrance and cosmetic ingredients business by linking it with its own cosmetics brands, About Me and MediAnswer.

Samyang Corporation's active efforts to break into overseas markets are also connected to weak domestic demand. The company's consolidated revenue fell 4.1% year over year to KRW 2.5625 trillion last year, while operating profit declined 16.3% to KRW 111.7 billion. Food business revenue for the first half of last year also showed a contrast between the domestic and export markets: domestic revenue fell 2.9% year over year to KRW 638.4 billion, while exports rose 4.3% to KRW 107.9 billion.

Consumption of flour and sugar, among the products Samyang Corporation has emphasized as core businesses, has stagnated or declined in the domestic market. According to the Korean Statistical Information Service of the Ministry of Data and Statistics, annual per capita flour consumption in South Korea fell from 1.2 kg in 2016 to 0.9 kg in 2022 and has remained flat since. Domestic sugar sales, which stood at KRW 1.0627 trillion in 2023, fell 10.3% to KRW 953.1 billion last year.

The company also has to overcome the reputational damage of receiving the largest fines for price fixing in the sugar, flour, starch and starch-sugar businesses. According to data on sanctions against business groups from 2023 through August this year, provided to the Fair Trade Commission by Democratic Party of Korea Assemblyman Park Hongbae, a member of the National Assembly's Political Affairs Committee, Samyang Corporation ranked first in cumulative fines over that period, at KRW 435.378 billion. However, approximately KRW 210.3 billion in fines related to starch sugar was waived under the leniency program for voluntary reporting, while the effect of payment orders for approximately KRW 225 billion in fines related to sugar and flour was suspended by court rulings. The suspension for sugar remains in effect through December 31, while the suspension for flour remains in effect until 30 days after the ruling on the merits is issued.

Samyang Corporation CEO Lee Unik appeared at this year's National Assembly audit by the Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee and apologized, saying, "We are a company that receives support from the government and the National Assembly, and I am sorry that we failed to live up to the trust placed in us." He added, "We will establish an irreversible internal system and explicitly include provisions on collusion in our service regulations and employment rules to ensure that this never happens again," bowing his head.

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