Pulmuone is expanding its overseas footprint on the back of its growing global tofu business. In the United States and China, results are improving thanks to localization strategies and the healthy eating trend, but in Japan, falling sales and continued losses are weighing on profitability across the overseas portfolio. Pulmuone is speeding up a recovery in profitability by consolidating production facilities in Japan and restructuring its local operations.
According to the Financial Supervisory Service's electronic disclosure system on the 27th, Pulmuone's overseas sales last year were 666.9 billion won, up about 5% from the previous year (635.2 billion won). However, sales at the Japan subsidiary were 86.6 billion won, down about 12% from the previous year (98.3 billion won). After dropping below 100 billion won last year from 109.9 billion won in 2023, the decline has continued. Among the major overseas markets Pulmuone has entered, only Japan recorded negative growth.
The trend was similar in the first quarter of this year. Pulmuone's overseas division sales rose 13.8% year over year to 189.8 billion won. Overseas operating profit and loss also improved from a 5.3 billion won deficit in the first quarter of last year to a 30 million won deficit this year, rebounding to around the break-even level. By contrast, sales at the Japan subsidiary were 19.7 billion won, down 11.3% from the same period a year earlier (22.2 billion won).
The issue is that the Japanese market itself is not in a slump. In Japan, the market for protein supplements and healthy convenience foods has been steadily growing. As interest in health management and protein intake rises locally, the market for high-protein snacks and functional foods is becoming more segmented.
Pulmuone's signature product launched in Japan, the "tofu bar," also enjoyed strong popularity at first. It quickly gained a foothold in the Japanese convenience store market and surpassed a cumulative 70 million units sold. However, growth appears to have slowed recently due to the increase in competing products and the expansion of the protein convenience food market.
Industry watchers also point to Japan's unique competitive structure as a burden. Japan is already a mature market where tofu is deeply embedded in everyday food culture, and many local food companies are positioned there, making competition intense. While the market itself is growing, intensifying competition is making it increasingly difficult to secure market share.
The slump in Japan is affecting Pulmuone's global business structure as well. The overseas business currently relies heavily on the United States, and as weak results persist in Japan, the U.S. concentration is deepening. The U.S. and China businesses are near break-even or posting some profit, but with continued losses in Japan, the overseas business as a whole has yet to establish a stable profit-making structure.
The U.S. and China operations are relatively maintaining growth momentum. After entering the U.S. market in 1991, Pulmuone expanded a fresh foods business centered on tofu, but persistent losses continued for a long time due to disposal expense and logistics costs tied to short shelf lives. It then broadened its lineup to frozen dumplings, frozen ready-to-eat meals, and frozen noodles, improving the cost structure and, as a result, moved into a profit-turning trend from the second half of last year. The China subsidiary is also sustaining sales growth by increasing the share of high-margin products such as pasta and frozen kimbap, and by strengthening online and membership channels.
Accordingly, Pulmuone has begun restructuring its Japan business. It is consolidating tofu bar production plants from five to three and is reorganizing its portfolio to expand around convenience foods and healthy snacks. The strategy is to cut expense while boosting responsiveness to new demand.
Still, some in the industry say simple restructuring has its limits. As competition in Japan's health food market intensifies quickly, the outlook is that without securing differentiated product competitiveness, a rebound in results will be difficult. At a shareholders meeting in Mar., Pulmuone said it would broaden its global growth base by turning around its core markets of the United States, China, and Japan while expanding into Europe and Canada, making the normalization of the Japan business a key variable in its future global strategy.
A Pulmuone official said, "Japan is seeing a slow improvement in profitability due to weak local consumption and the burden of fixed costs," adding, "We plan to break away from a low-profit structure and gradually reorganize into a profit-centered business structure by rationalizing production and improving the cost structure." The official added, "We aim to restore profitability across the business and return to the black by expanding K-food and shelf-stable product lines."