Milking A Market: Behind The Scenes Of UAE-Based Organic Dairy Company Koita's Inroads Into South Korea
"While I will admit that entering the South Korean dairy market has not been exactly smooth sailing, I remain optimistic about our future here."
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At my company, Koita Foods, we're on a mission to satisfy South Korea's growing demand for organic dairy with the recent launch of our (kids size) 200ml organic dairy milk.
Known for our range of ultra-high temperature (UHT) organic dairy milk, lactose-free dairy milk, as well as plant-based milk, our Koita family spreads the love (and milk) from our headquarters in the UAE to the rest of the Middle East (KSA, Kuwait, Jordan, Qatar), Africa (Mauritius), USA, and Asia (Singapore, Vietnam, and now South Korea).
The launch into our latest market, South Korea, comes on the back of a complex approval process, which even involved a failed shipment of product- but, as we say at Koita, failures = learnings.
THE APPEAL OF SOUTH KOREA
The South Korean market has always been on our radar for its sheer size and potential. One of the biggest markets in the Asia-Pacific region, it boasts a population of 52 million as well as a high gross domestic product per capita. It is also one of the most mature markets in the region, alongside Japan.
Organic foods, such as fruits, vegetables, juices, dairy, and snacks, are increasingly sought after in South Korea. In the country, organic foods are often associated with their health benefits, and despite their higher prices, citizens are willing to fork out more for such products. According to The Korea Herald, the organic dairy industry has grown 30% from 2016 to 2020.
This demand is likely driven by parents who are willing to spend money on high-quality food and beverages that taste good, while also being healthy for their children. That's exactly what led me to start Koita in the first place- when I couldn't find the organic foods I wanted to feed my own family where we live in Dubai.
Currently, the organic dairy industry in South Korea is dominated by a few local players, such as Maeil (a Sangha brand) and Namyang Dairy Products Co. At Koita, we believe there is a growing demand for quality European premium organic milk in the market. And guess what? Koita's milk is produced in Italy! We are committed to making the best tasting milk, and we found it on Italian organic, grass-fed cow farms.
Image courtesy Koita.
A LONG JOURNEY
Based on the huge potential of this market, we planned on expanding into South Korea as early as 2018, which was when we met a prospective South Korean distributor at a regional trade show. We eventually signed a contract with them in 2020, with the first order placed in mid-2020. Unfortunately, the first shipment was unable to clear customs, although this did not deter us, as the market opportunity was clearly evident.
Entering each market has its own obstacles, and the biggest challenge for us in South Korea was meeting regulatory compliance. The process involved changes to formulation and packaging, and it eventually led us to create a bespoke Koita product for the Korean market.
After that first hiccup, we knew we had to leave no stone unturned in order to gain approvals from the authorities, and to make the product fully compliant with local import laws. It took a couple of years, but we know it was worth the time and effort.
Needless to say, we knew that finding the right partner in South Korea was extremely important. It was essential that our partner believed in the brand and our values. It was also important that our partner was willing to work with us on the compliance journey, and ultimately strive towards success in the market, together.
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LAUNCHING THE PRODUCT
With the establishment of the bespoke product for South Korea, we eventually introduced our 200ml organic dairy milk. We're targeting parents with children ages two to 15, and this format is ideal for this consumer.
For one thing, it's an appropriate serving size for kids. Also, our milk comes in a Tetra Pak paper carton with a resealable twist cap, which makes it convenient to store. As we work to grow our presence in South Korea, this format is also great for promotional activities, like trade shows, where attendees can sample our milk.
We are also working on launching some of our plant-based products, including the 200ml- and 1l-sized almond milk and oat milk, in South Korea to target consumers interested in such offerings. After all, plant-based diets are being rapidly embraced in this market. According to Euromonitor Korea, South Korea's vegan food market is expected to grow from US$11.3 billion in 2022 to $14.6 billion by 2025. Depending on demand, we have plans to introduce the larger 1l organic dairy milk format in Q2 2023.
Image courtesy Koita.
AN ONLINE-FIRST STRATEGY
Currently, Koita is selling the 200ml organic dairy milk product on Naver, South Korea's first ever e-commerce platform. We've embraced an online-only strategy, with a focus on gathering consumer feedback.
I am personally thrilled that the initial feedback has been very encouraging. We have received over 400 reviews in the first six months, with an average score of 4.9 out of five. We have also quickly acquired a loyal customer base with numerous repeat purchases. Mothers have told us that their kids love the taste of Koita's milk, or that their kids were not drinking milk before but are now drinking Koita. We also had reviews on our packaging, and people are saying that the resealable cap makes it easy to save for later. Adults seem to love it too- they have commented that our milk goes well with coffee and lattes.
As the e-commerce channel in South Korea continues to grow substantially every year, we are targeting parents who are primarily online shoppers. The online marketplace is where most savvy young moms, who are better educated and more aware of organic products, are shopping. By selling online, we can reach our target consumer directly.
Our online strategy allows us to build a successful proof of concept in a new market, which is more cost-effective, time-effective, measurable, and of relatively lower risk, compared to launching a product in physical retail. In addition, the regulatory process takes longer, and it often requires more resources than expected , so our team wants to get it right beforetaking on more risk in the market. Our strategy at Koita is to continue growing the online presence in South Korea through e-commerce and online retailers like Coupang, and then eventually enter physical retail.
At the end of the day, while I will admit that entering the South Korean dairy market has not been exactly smooth sailing, I remain optimistic about our future here. If you believe in your vision, it serves as a guiding light, and every setback, failure, and challenge that you face along the way just becomes part of the process as you see it through.
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