SEOUL– Highland Group, South Korea’s leading meat importer by trading volumes, is on track to expand its overseas business partnerships to become the South Korean version of U.S. food firm Sysco Corp., the company’s chief executive has said.
Founded in 1999, Highland Group has cemented its leading status in South Korea’s imported meat market in terms of volumes, while ranking second after Hanjung Food Ltd. by sales. Sysco is North America’s largest wholesale food distributor.
“We aim to achieve sales of 5 trillion won (US$3.8 billion) by 2030 based on overseas business partnerships, investments in domestic facilities, and meat processing into ‘K-foods’ for global sales,” Highland Group Founder and CEO Youn Young-mi told Yonhap News Agency in a recent interview.
The unlisted company expects to earn more than 1 trillion won this year, up from 940 billion won the previous year, despite the prolonged COVID-19 pandemic.
Highland imports beef, pork, chicken and lamb from 16 countries, including Australia, the United States, Canada, Brazil, Thailand and the Netherlands, to meet rising domestic meat consumption.
Its overall meat imports are expected to reach 113,000 metric tons this year, up from 101,478 metric tons last year.
When it comes to beef, South Korea imports 65 percent of its overall beef consumption, 30 percent of its total pork consumption, and 15 percent of its chicken consumption. Sixty percent of the country’s imported beef comes from the U.S.
Highland brings 74 percent of its imported beef from Australia, about 8 percent from the U.S., and the remainder from Mexico and New Zealand.
The company feels the need to increase the “captive” volume of direct transactions with U.S. beef providers for stable supply and sustainable growth, the CEO said, adding many U.S. companies sell their meat products in Korea through their local offices.
To change the status quo, Highland set up its wholly owned U.S. subsidiary, Highland USA Inc., in Texas in July last year.
Highland USA partnered with U.S. meat trading firm Mercator, Inc. to form the 51:49 joint venture named HM Alliance. And the joint company bought two factory sites in Texas and North Carolina to do the meat-processing business.
“We are targeting not only to bring meat products (which are cut into small pieces and are processed in the form of semi-finished products) to the Korean market but also to sell them in local markets through our suppliers’ sales networks,” Youn said.
The products to be sold to overseas business-to-business customers, such as restaurants and hotels, will be mostly meat-based “K-foods,” such as bulgogi, dumplings, and galbijjim, which is braised beef short ribs, the 53-year-old self-made CEO explained.
The global livestock product market is the sellers’ market. So it’s important for Highland to invest in the “vertically integrated” multinational meat companies, which engage in the entire distribution of meat from feed, farm, butchery to the dinner table, she said.
Highland also looks to Europe for the same purpose, with a plan to set up a wholly owned subsidiary in Spain this month to support operations in the single economic bloc. It has similar plans in Brazil and Thailand, which supply a large amount of chickens.
South Korea lags behind China and Japan, which began investments in the vertically integrated meat firms in countries like the U.S., Australia and New Zealand three to four decades ago as part of efforts to secure food security.
Japanese trading firm Marubeni Corp. purchases harvested grains in the U.S., Australia and Brazil and runs cattle farms there for a stable supply of beef.
China’s state-run Shuanghui Group, now known as WH Holdings, acquired Smithfield Foods, the largest U.S. pork producer, for $4.7 billion in 2013.
“In Korea, the government needs to financially support companies in the private sector when they go abroad to make an investment in those vertically integrated meat suppliers,” the CEO said.
To achieve economies of scale, Highland plans to invest a combined 250 billion won to build two logistics and meat-processing facilities — the Busan Center in the southern port city of Busan and the Metro Center in Icheon, just south of Seoul — by 2022 and 2024, respectively.
“We don’t have an immediate plan to go public, but we are open to investments from global strategic partners, such as meat producers, investment banks and state lenders,” Youn said.
Source: Yonhap News Agency