As the health functional food market grows to the 6 trillion won range, distribution channels such as Asung Daiso Co., convenience stores, delivery platforms, and drugstores are rushing in, but the food industry itself is cautious. On the surface, the market appears to be expanding, but some analyses say insiders are warning against overheated competition and structural risks.
According to related industries on the 24th, Baemin recently launched small-portion supplements at a flat price of 5,000 won on Baemin B Mart in collaboration with Dong-A Pharmaceutical Co. Asung Daiso Co. placed low-priced, small-pack health functional foods at the front of its stores. Convenience stores including GS25 and CU are also operating dedicated shelves. CJ Olive Young has expanded flat-price and dedicated shelves. Centered on retailers, the consumption structure for health functional foods is being reorganized toward fast turnover and low prices.
In the food industry, hy sells health functional foods through its own mall, Fresheasy. Korea Ginseng Corp. has solidified its position in the health functional food market with Jung Kwan Jang and is releasing a variety of non-red ginseng products in collaboration with several brands. Daesang Holdings, through its subsidiary Daesang Wellife, is offering Newcare, a balanced nutrition brand for patients, and MyMeal. Nongshim is launching collagen-based functional products under the Lifill brand.
However, most food companies are reluctant to enter the health functional food market. It takes months from product development to Ministery of Food and Drug Safety certification, functional efficacy verification, and labeling and advertising review, while cycles for trendy ingredients are short, creating high uncertainty. In particular, with fast consumption centered on social media and home shopping becoming the trend, the food industry views the risks as significant.
A food industry official said, "Companies whose existing main products are related to health, like hy or Korea Ginseng Corp., face less burden in research and development. But other companies such as confectionery makers risk missing shifting trends in health functional foods if they spend time on research and development." The official added, "In health functional foods, when a single ingredient becomes popular, related products flood the market, and after one to two years, another ingredient often takes the spotlight."
In addition, health functional foods combine pharmaceutical companies' planning and branding with retailers' price and display controls, meaning manufacturers must endure margin pressure amid the expansion of private brands and flat-price policies. While some food corporations such as hy have entered through subsidiaries or specialized brands, there is also analysis that as retailers have jumped in en masse, the sector has already become close to a red ocean, or saturated market.
A food industry official said, "There are already too many competitors in the market, so expectations for profitability relative to expenses such as research and development investment are not high," adding, "Food companies also feel burdened having to compete with pharmaceutical firms. It is not easy to surpass pharmaceutical companies in terms of channel access and consumer trust."
Strong regulations concerning the risk of misleading functional claims are also an obstacle. Ongoing crackdowns on false or exaggerated advertising and discussions on system improvements could increase the burden of investing in clinical trials and research. A food industry official said, "For labeling methods and more, the Ministery of Food and Drug Safety guidelines must be strictly followed, and there are many constraints, such as limits on usable ingredients," adding, "Because these products relate to health, regulations are unlikely to be eased and are more likely to be strengthened."
Accordingly, the food industry is moving to expand into healthcare businesses such as analyzing diet and health data and providing solutions using AI. Daesang Wellife is developing a personalized healthcare app, MyTHS, and Pulmuone introduced the Nutrition Design Program (NDP), which manages two weeks of diet, blood sugar, and daily rhythm data through nutrition assessments and diet analysis and proposes personalized health management solutions.