Starting next year, shelf-stable milk from the United States and the European Union (EU) will be imported with no tariff. Korea's dairy industry is moving to improve its fundamentals. Imported shelf-stable milk is already about half the price of domestic milk. If the tariff is abolished, the price gap is expected to widen further. Instead of a "price war," the industry is overhauling its survival strategy by strengthening premium and functional product lineups and diversifying businesses.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 20th, imports of foreign shelf-stable milk jumped more than tenfold from 4,291 tons (t) in 2018 to 48,699 t last year. Shelf-stable milk removes all microorganisms through high-temperature sterilization, allowing long-term storage at room temperature. It can generally be stored for more than a month and, at the longest, over a year. Demand surged after COVID-19 as the "stockpiling consumption" trend took hold.
For retailers, shelf-stable milk is easy to manage as inventory, accelerating channel expansion. In the past, large supermarkets and online platforms were the main channels, but since last year, convenience stores have also begun selling shelf-stable milk in earnest. In contrast, domestic pasteurized milk undergoes low-temperature pasteurization and must be refrigerated. Its shelf life before opening is short at about 11 to 14 days, but it is considered advantageous for minimal nutrient loss and maintaining a fresh taste.
The issue is price. A 1-liter product of Polish shelf-stable milk sells on domestic e-commerce sites for about 1,700 won per liter. That is roughly half the price of domestic milk. An industry official said, "Not only general consumers but also coffee franchises and restaurant operators are expected to increase their use of imported shelf-stable milk," adding, "Using milk with a long shelf life, in addition to price competitiveness, reduces the burden of inventory management."
Judging that price competition will be difficult, domestic dairy companies are putting product premiumization and market expansion at the core of their strategies. They are segmenting their approach with premium products, functional beverages, and foodservice and plant-based lineups.
Seoul Milk aims to convert all milk products to A2 raw milk by 2030. It is seeking differentiation by promoting A2 beta-casein milk, known to be easier on the stomach. It is expanding premium dessert categories such as Jersey milk ice cream and stepping up its push into the ready-to-eat and dessert markets with convenience store collaborations on cream rolls and cream donuts.
Namyang Dairy Products Co. is accelerating a revamp of its product lines around functional and low-sugar offerings, such as the "Take Fit" protein drink series and the unsweetened "ChocoEmong Mini."
Maeil Dairies Co. has put forward non-milk-based products such as the "Selex" protein brand, the "Amazing Oat" oat drink, and the plant-based "Almond Breeze." In addition, it is diversifying its business by maximizing operational efficiency through the integration and absorption of restaurant affiliates, bringing together M's Seed, which operates the Paul Bassett coffee franchise, with M's Food and Crystal Jade.
An industry official said, "The era of duty-free milk is demanding structural changes across Korea's dairy farming and processing industries," adding, "The dairy sector is expanding beyond simple milk sales into the lifestyle category as it seeks new markets." The official added, "Next year is expected to be a litmus test for whether the industry's strategies translate into real results."