Food companies are speeding up efforts to tap the market by fostering the health functional food business as a future growth engine. But competition with existing heavyweights such as drugmakers is fierce. Some say the contribution to earnings still falls short of expectations.
On the 7th, according to the food industry, Samyang Foods entered the healthcare market in May by launching the metabolism research-based health functional food brand "SPINDLE." Nongshim is targeting the inner-beauty market with its own health functional food brand "Lifill." Its independently developed ultra-low-molecular collagen ingredient received a functionality recognition from the Ministery of Food and Drug Safety.
CJ Wellcare is expanding its contact points with young consumers with the inner-beauty brand Innerb. Innerb is a brand introduced in 2009 with the concept of "edible cosmetics" by CJ CheilJedang in Korea. After CJ CheilJedang's health business unit was spun off as CJ Wellcare in 2022, Innerb has been operated as a flagship inner-beauty brand. Daesang Group is operating products such as New Care and My Meal through Daesang Welllife, and it is also introducing an artificial intelligence (AI)-based health management platform. In addition, major food companies such as Pulmuone and Maeil Dairies are operating health functional food brands.
Food companies are actively pushing into the health functional food business because of its strong growth potential. As aging accelerates and interest in health management rises, the related market continues to expand, and it is considered relatively more profitable than general foods. The ability to leverage research and development (R&D) capabilities and raw-material development know-how accumulated in existing food manufacturing processes also supports entry.
A food industry official said, "The domestic food market is already close to saturation, while demand for health functional foods continues to rise, led by older adults," and added, "Existing food companies also have technology and know-how, so they are eyeing the health functional food market as a new growth engine."
Still, many say settling into the market is not easy. Drugmakers have long dominated the market, and platform companies have joined in, intensifying competition. In particular, as consumers increasingly choose products based on functionality and ingredients rather than brands, it is difficult to differentiate with food companies' existing brand awareness alone.
In fact, many food companies run health functional food businesses, but results are still modest. According to the Financial Supervisory Service's electronic disclosure system, Pulmuone's health and life institutional sector posted first-quarter revenue of 10.7 billion won this year, accounting for 0.9% of total revenue. Nongshim also saw ramen and snack revenue account for 98% of first-quarter revenue, suggesting the health functional food business remains limited in weight. A food industry official said, "In the health functional food market, existing powerhouses in the pharmaceutical industry have already shaped consumer perceptions, so it is not easy for latecomer brands to build presence," adding, "Because platforms and drugmakers are all competing, establishing a foothold is harder than entering the market itself."
The need for continued investment in research and development, securing functional ingredients, and marketing is also a burden. Although expense is steadily投入 to launch new products and raise brand awareness, some say it is hard to yield visible results in the short term, so profitability versus investment falls short of expectations.
Even so, the food industry plans to nurture the health functional food business from a long-term perspective rather than scaling it back. Structural growth drivers—aging and rising demand for health management—remain intact, and it offers relatively higher profitability than general foods. Production facilities, brands, and distribution networks already in place are also assets that are hard to give up.
A food company official said, "General foods have low margins. By contrast, health functional foods fall between pharmaceuticals, which have high margins, and general foods, so they are relatively more profitable than foods," adding, "Given the market still has growth potential with aging, we will continue the business by strengthening differentiated ingredients and product competitiveness, rather than shrinking the business based only on short-term results."