THE KOREA ECONOMIC DAILY, GLOBAL EDITION

South Korea’s instant noodle giant Nongshim Co. will build a local plant dedicated to producing ramen -- or ramyun, as the company spells it -- for exports at home to meet growing demand for its instant noodles abroad, especially in Europe.

The move is also intended to fend off the ascent of its cross-town, smaller rival Samyang Foods Co. famous for its globally popular Hot Chicken Flavor Ramen.

Nongshim announced on Friday that it will add a new, export-only spicy instant ramyun factory in Busan, Korea’s biggest port city where it already runs two factories.

It said it will spend 191.8 billion won ($144 million) to build the new ramyun manufacturing facility with an annual production capacity of 500 million ramyun packs, all of which will be shipped to other countries.

The addition will double Nongshim’s total production of export-only ramyun to 1 billion packs once the factory is up and running in the first half of 2026. The company plans to break ground on the plant early next year.

The news comes five months after Nongshim Chairman and Chief Executive Shin Dong-won hinted at a plan to build the company’s first local factory in 17 years to meet burgeoning demand for its instant noodles from around the world. But he did not elaborate on details like the factory’s location or size.

Nongshim shippe307 million won worth of instant noodle products, including its flagship Shin Ramyun, to overseas markets in 2023, a 70% jump from 2019. Over the same period, its total overseas sales of instant noodles surged 63% to $1.3 billion.

To meet the zooming demand, Nongshim added two lines at its existing plant in Busan, but there is no more room for expansion at the existing factories, the company said.

The new export-oriented factory in Busan will start operating with three lines first and then add lines up to eight later depending on demand. As it is built next to Nongshim’s old plant, the two plants will also share utility infrastructure, the company added.

EUROPE ON THE RADAR

With the upcoming factory, Nongshim hopes to diversify its ramyun export markets, which currently rely heavily on the US and China.

It has been eyeing Europe where demand for Korean instant noodle products is still weak. Its efforts to advance into the region have paid off recently after it in June started supplying its instant noodle products to 250 stores in France’s two largest supermarket chains – E. Leclerc and Carrefour.

It also plans to expand its sales network in Spain, Italy and Sweden this year and set up a sales entity in Europe early next year.

Nongshim is also seeking to venture into South America and Africa.

The company will add cup noodle production lines at the second factory in California in October to meet soaring demand for its ramyun in the US. Once the expansion is completed, its annual ramyun output from the US will jump to 1.01 billion packs from 850 million.

Since the opening of its second factory in California in May 2022, sales from Nongshim’s US entity have increased 36%.

STRIVING TO KEEP THE CROWN

Nongshim’s aggressive expansion push is also seen as its bid to cement its lead in the global ramen market against its local rival Samyang.

In May, it was unseated as Korea’s No. 1 market cap ramen producer by Samyang whose stock surged in recent years thanks to an insatiable appetite for its spicy chicken flavor noodle from around the world.

Nongshim’s operating profit even fell below Samyang’s profit in the first half.

“To keep its lead, Nongshim needs to make bigger bets on overseas sales, which accounted for 44% of its entire sales last year, than the saturated local market,” said an official from the food industry.

Early next month, Nongshim will issue 138.5 billion won worth of exchangeable bonds, which can be converted into its 300,019 treasury shares, and use the proceeds to invest in building production facilities at home and abroad.

Write to Hun-Hyoung Ha at hhh@hankyung.com

Sookyung Seo edited this article.