A more than 40-year-old milk company in South Korea recently announced that it will close its doors for good next month as losses grow larger every year.

South Korea: Livelihood threatened, decision to close plant sparks discontent among dairy farmers

There is a well-established dairy chain in Korea's home of cheese, Insel-gun, Jeollabuk-do, in the southwest of the country, where the milk company's processing plant, which recently announced its closure, is located.

More than 20 local dairy farmers say they have been supplying raw milk exclusively to the plant for years, and now the company has unilaterally decided to shut down the plant, which is tantamount to suddenly cut off their livelihood.

Milk consumption declines, South Korea's milk industry in business difficulties

In South Korea, this is the first nationally known and long-established milk company to be forced to close its doors due to poor operations, with more than 400 employees also facing unemployment.

In fact, in recent years, milk consumption in Korea has declined and the profitability of the entire milk industry has deteriorated. According to data released by financial analysts, in the third quarter of this year, the operating profits of several large Korean milk companies fell or even fell into losses due to rising raw material prices and logistics costs.

Imported milk has more than half of the market share in Korea

Due to the high production cost and increasingly expensive price of domestic milk in Korea, the already sluggish milk market has been seized by imported brands. By the end of last year, the market share of imported milk, such as cost-effective sterilized milk, was more than half in Korea. Therefore, industry insiders fear that the crisis in the Korean milk industry is just beginning and more small and medium-sized enterprises will be out of the competition next.

Responding to market changes Korea's major dairy companies explore diversification

Currently, Korea's major milk companies are trying to adjust their business strategies in response to the changing market environment. With high-protein drinks favored by fitness people under the epidemic, companies are introducing a variety of flavors of plant-based milk and catering to the preferences of pet owners to create high-quality milk for pets, etc.

Some companies are also pinning their hopes on easy food for families with high market potential such as frozen pizza, while increasing the layout of new consumer scenarios such as cafes and ice cream stores.