Kim Young-sik, chairman of Foodcoa, said Tuesday that the first shipment of Foodcoa products bound for US Costco stores will set sail on Sept. 14. He also spoke of his ambition to pursue a second leap for the company through exports. Kim poses for a photo ahead of an interview. [Hong Seok-hee]
Kim Young-sik, chairman of Foodcoa, said Tuesday that the first shipment of Foodcoa products bound for US Costco stores will set sail on Sept. 14. He also spoke of his ambition to pursue a second leap for the company through exports. Kim poses for a photo ahead of an interview. [Hong Seok-hee]

8 billion won export line bears fruit as first shipment sails for US on Sept. 14

Securing US mass-retail channel; company eyes 11,550-square-meter site, 20 billion won investment

Survived near-insolvency during COVID-19; chairman targets top export bread maker in 5 years

"For any food company, getting into Costco in the United States is the dream. The sheer volume is on a different level. We are now looking to compete overseas rather than at home."

Kim Young-sik, chairman of Foodcoa, made the remarks Tuesday at the company's factory in Anseong, Gyeonggi Province, sharing news of the company's entry into US Costco stores. Foodcoa, which grew on the strength of its cream buns that became a hit in domestic convenience stores, is now poised to accelerate an export-driven growth strategy after breaking into a major American retail channel.

Foodcoa's entry into US Costco is more than simply adding one overseas client. It is a test of whether the company has the production capacity, food safety standards and price competitiveness to supply a large-scale retail channel — and a successful launch could translate into sustained, high-volume orders. The company's decision last year to invest 8 billion won ($5.84 million) in expanding its production facilities and securing additional land for further scale-up was itself made with overseas markets, including the United States, in mind.

"Costco is the retail channel every food company wants to get into," Kim said. "The market understands that supplying Costco means you have passed all kinds of conditions and tests. From a manufacturer's perspective, the most important thing is the sheer volume."

The product Foodcoa will supply to US Costco stores is its cream bun. According to the company, the shipment is scheduled to depart by sea on Sept. 14. After maritime transit and customs clearance in the United States, sales at Costco stores are expected to begin in earnest from October. Kim said the company obtained FSSC 22000 certification — an international food safety management system standard — and met US distribution requirements.

The starting point for Foodcoa's Costco push was a large-scale capital investment made last year. The company spent about 8 billion won to build an automated cream bun production line at its Anseong factory, adding capacity to produce roughly 100,000 cream buns a day. Foodcoa currently produces about 300,000 items a day across all product lines, and the new line was set up specifically to handle expanded export volumes. During a visit to the Anseong factory, the line was already running, producing items destined for US Costco stores.

"Last year we spent 8 billion won to build a line that can produce an additional 100,000 units a day," Kim said. "It was built with US Costco in mind, and it is currently producing actual export volumes."

Foodcoa's products have already been making inroads in overseas markets. Its bread is supplied to Taiwan, Vietnam, the Philippines and other parts of Southeast Asia, as well as to France, Germany and the United Kingdom. The company currently exports to 11 countries and plans to expand that list further.

Foodcoa is already preparing its next round of investment. The company acquired an additional 3,300-square-meter plot adjacent to its existing 8,250-square-meter Anseong factory site, bringing the total to roughly 11,550 square meters. If export volumes continue to grow, the company plans to build a larger production line on the newly acquired land. The investment under consideration for the new facilities stands at about 20 billion won — a step up from the 8 billion won committed last year, contingent on how much export demand expands.

"We expect the new site will need a larger production line than what we have now," Kim said. "We are thinking about roughly 20 billion won in capital investment, but we will decide on the scale after seeing how much export volume grows."

Foodcoa posted consolidated sales of about 143 billion won last year. Its target this year is about 150 billion won. The strategy is to grow while maintaining profitability rather than chasing rapid top-line expansion. The company views its Costco entry less as a way to add a new sales outlet and more as an opportunity to secure stable export volumes and scale up production. "There are quite a few small and medium-sized enterprises that run into trouble by pushing purely for sales," Kim said. "We are moving in a direction that protects both sales and profit while growing steadily."

The US market is also a proving ground where Foodcoa can validate overseas the cream bun manufacturing capabilities it has built up at home. While the company grew domestically through original design manufacturing, it is now cultivating its own brand, Swelly, in overseas markets to build greater independence in its export business.

Kim's path to growth has not always been smooth. When COVID-19 spread, the factory halted operations for about a month, causing cash flow to deteriorate sharply. Kim described that period as being on the verge of a "profitable insolvency" — not because the company was in the red on paper, but because the production shutdown froze cash circulation to the point where he had to worry about paying for raw materials and employee salaries.

"I had seen many companies go under because their earnings were bad, but that was the first time I felt that a company could face insolvency even while profitable, simply because cash flow broke down," Kim recalled. "We reached a point where we might not be able to pay suppliers for raw materials or pay our employees." He added that he pulled together funds from acquaintances and personal connections to get through the crisis, and repaid every won borrowed within a year.

What allowed Kim to repay those debts so quickly was, above all, the cream bun. Foodcoa had developed a production technology that allows a large amount of cream to be packed into each bun without it bursting, and used that edge to expand domestic sales. The company that once fought for survival during COVID-19 has since reached the stage of adding production lines and weighing a further 20 billion won investment to supply the same product to a major US retail chain.

The long-term goal is equally export-focused. Asked what kind of company he wants Foodcoa to be in five years, Kim said: "Just as Samyang Foods grew enormously overseas with its Buldak Bokkeum Myeon, I believe Foodcoa can become a domestic leader through overseas expansion. Rather than competing with large companies at home, our goal is to grow into a globally competitive company by riding the K-food wave abroad."


hong@heraldcorp.com