CJ Freshway Reshapes Food Ingredient Distribution... Overcoming "Growing Pains" a Challenge

Food Ingredient Open Marketplace Sikbom Expands Its Reach as a Future Growth Driver
Produce Sales Section for Public Wholesale Markets Launched
Transaction Value Grows More Than Tenfold in Three Years
Investment Costs Rise Despite Expansion... Pr

CJ Freshway, a company specializing in food ingredient distribution and institutional catering, is expanding its reach in the online market for related products by promoting Sikbom, its business-to-business (B2B) online marketplace for food ingredients. Its core offering is a logistics service that quickly and conveniently delivers ingredients handled by the company, as well as products sold by vendors on the platform, directly to the premises of small business owners, including foodservice operators.

More recently, the company has also entered the business of purchasing agricultural products directly from public wholesale markets and supplying them to customers. Its goal is to address inefficiencies in the offline agricultural produce market, where distribution costs are mounting, and to supply products to clients at more affordable prices. However, overcoming growing pains that are affecting the company’s overall performance is seen as a challenge, as investment costs for its food ingredient platform business—a key future growth area—are also rising.

The Sikbom mobile app, an online marketplace for food ingredients. Provided by CJ Freshway.

According to industry sources on October 27, CJ Freshway recently launched an “Early-Morning Auction Direct Trade” section on the Sikbom platform and began selling agricultural products from public wholesale markets. The company plans to participate in the auction systems of wholesale market corporations, purchase products directly from intermediary wholesalers handling agricultural products such as vegetables, and offer them to foodservice operators at reasonable prices. This aligns with the government’s model for an online wholesale market for agricultural products, which it is promoting to reduce distribution costs. The model can shorten the distribution chain, while foodservice operators buying through Sikbom can save themselves the trouble of visiting markets to check products and prices. The service will initially focus on agricultural products frequently used in foodservice businesses, such as leafy vegetables and fruiting vegetables, with plans to expand its product range to include Western-style vegetables and root vegetables.

CJ Freshway said, “We will give specialist vendors the opportunity to trade with more customers by offering quality products, while expanding the options available to foodservice operators to purchase everyday ingredients at reasonable prices. We will build an online distribution environment where both sellers and buyers are satisfied and can continue doing business.”

CJ Freshway acquired a 27.48% stake in Marketboro, the operator of Sikbom, for approximately KRW 40.3 billion in August 2022. It then purchased an additional 27.5% stake for KRW 40.3 billion in February 2026, making the company a subsidiary. Sikbom’s core offering is a differentiated service that helps reduce logistics costs by combining orders for food ingredients placed by foodservice operator members across the platform—including ingredients handled by CJ Freshway and products sold by vendors on the platform, totaling approximately 240,000 items—and delivering them together. It also delivers fresh food directly to customers’ commercial refrigerators.

Sikbom’s annual transaction volume grew more than tenfold, from around KRW 20 billion in 2022 to KRW 234.2 billion last year, while its transaction volume in the first half of this year reached KRW 151.3 billion, up 25.8% from the same period a year earlier. As of the first half of this year, the platform handled approximately 24,000 CJ Freshway food ingredient products, and the number of consolidated deliveries was approximately 13,000; these figures rose 37.2% and 117.2%, respectively, from the same period last year. As of August, Sikbom had surpassed 300,000 cumulative business-member registrations, up 33% from a year earlier. Analysts forecast that Sikbom’s transaction volume would exceed KRW 100 billion in the third quarter of this year.

Despite this online growth and expansion, CJ Freshway’s food ingredient distribution business is expected to see its profitability deteriorate. This is because the company is increasing investment to strengthen Sikbom’s platform competitiveness. In fact, CJ Freshway’s operating profit margin (OPM) in its food ingredient distribution division fell from 0.3% in the second quarter of last year to -0.2% in the second quarter of this year. This also affected the company’s overall results: revenue rose from KRW 1.477 trillion in the first half of 2023 to KRW 1.7571 trillion in the first half of this year, but operating profit fell over the same period from KRW 44.7 billion to KRW 34.6 billion. The company attributed the decline to “the impact of strategic resource allocation to gain an early lead in the online distribution market and strengthen the platform’s competitiveness.”

Ha Hee-ji, an analyst at Hyundai Motor Securities, said, “It is positive to see online growth accelerating for CJ Freshway in the food ingredient distribution market.” However, she noted, “Upfront spending is inevitable to drive aggressive growth, so expectations for short-term performance need to be adjusted.” 

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