Market trends

The forces fuelling demand in the nutritional supplements market include demand for improved lifestyle as Korea’s economic growth continues. In particular, greater concern for disease prevention and a rapidly growing aging population are major factors driving demand for nutritional supplements. Given the current trends, bone/joint care products, weight-loss supplements, anti-oxidant products, and multi-vitamins are the most popular product groups in the Korean nutritional supplement market.

Leading product items in the Korean market include aloe, squalene, chitosan, glucosamine, chlorella, and multi-vitamin with minerals. They are expected to remain popular for the next three years. Also, there is particular interest in herbal ingredients or plant extracts among local consumers. However, the broad variety of herbal or botanical products that are available in the USA and other foreign markets is not yet available in Korea due to the restrictive regulatory system.

The industry believes that greater variety of products and new products have great potential in the Korean market since Korean consumers are very open to new products to improve or maintain health. For instance, cancer and cardiovascular diseases are major killers in Korea; therefore, demand for nutritional supplements that enhance the immune system is strong. Some importers in Korea introduce their products to patients at hospitals since doctors prescribe nutritional supplements along with drugs.

The import market for nutritional supplements was approximately 20 per cent of the total market demand. Among imports, US companies dominate the market with approximately 80 per cent of the import market, while Japanese products are second and account for about seven per cent of the import market. Major foreign subsidiaries that are selling through multi-level marketing or direct sales include Amway, Herbal Life, Sunrider, Nuskin (NSE), el International, Unicity, Melaleuca and Usana.

Country regulations

Contrary to other over-the-counter (OTC) medicines, vitamins and dietary supplements are predominantly registered as quasi-drugs or general food products. In particular, dietary supplements were under the control of the Food Hygiene Law until 2003, being considered food products in legal terms. This led the product group being exempt from a series of pharmaceutical legislative measures, partly contributing to the rapid expansion of its consumer base.

Meanwhile, the current absence of exclusive legal supervision on dietary supplements has emerged as a major issue in the pharmaceutical and food industries. Under loose control of production and distribution, a number of poor quality operators used exaggerated or false advertisements, with incredibly high margins and poor product quality.

The Ministry of Health and Welfare drafted the Functional Health Food Law in 2003, intended to be effective from August 2003. Manufacturers expected this law would clarify the role and operational ranges of functional health food, contributing to sound and transparent operations. Its actual enforcement was realised in January 2004 due to ongoing arguments regarding detailed provisions among different parties.

A year from the enforcement of the law, the Ministry of Health and Welfare announced the operation of a task force team for the improvement of the Functional Health Food Law. The task force team comprises of 11 experts and will work to protect consumers and to support health and the functional food industry by establishing effective regulations and systems.

Distribution

In 2004, functional health food grew to nearly 2000 billion Won, which partly included products within the processed food industry.

Pharmacy is also a major distribution channel of functional health food, bringing increased customer confidence due to the counselling available from pharmacists. However, a dominant portion of sales is realised through direct sales, such as door-to-door visits and multi-level marketing.

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