* Taste for fried chicken and beer takes off in South Korea
* "Chimaek" boom fuels market share scrap among local
* U.S., Thai imports set to add to oversupply pressure
* South Korean per capita chicken consumption low, on the
By Jane Chung
SEOUL, Oct 16 Don't count your chickens before
Global poultry producers hoping to cash in on South Korea's
craze for fried chicken and beer face a market crowded with
local birds that have clipped prices and profits for Korean
The popularity of the combination, known as "chimaek", has
boomed in recent years, fuelled by its appearance in a hit South
Korean television drama and an explosion of restaurant chains.
Chimaek stores now dot Korea and their ubiquitous delivery
services shuttle freshly fried chicken and beer to homes,
offices and picnics.
At a Seoul outlet of the popular BBQ chain recently, Kim
Chang hoo said he and his colleagues had planned to go to a
sushi restaurant for a company dinner, but decided instead on
chimaek - a mashup of chicken and maekju, the Korean word for
"I cannot help think of chicken, even when I'm eating
sushi," Kim, 24, said. "I don't know if it's just me, but
chicken always comes to my mind and is always delicious."
The craze has pitted domestic chicken producers in an
increasingly tough battle for market share, prompting an
over-supply and a drop in farm prices.
Now imports are set to rise as South Korea lifts bans on
overseas suppliers who are attracted by still low per capita
South Koreans ate 14.2 kg (31 pounds) of poultry meat each
in 2015, a near three-fold increase since 1990 according to OECD
data, but only half the global average of 28.6 kg per person.
South Korea's market for chicken is expected to grow 5
percent to 1.01 million tonnes this year and a further 3 percent
in 2017, according to the U.S. Department of Agriculture (USDA),
boosted by the chimaek craze.
GAME OF CHICKEN
Supply is currently dominated by the country's three biggest
producers - Harim Co Ltd, Dongwoo Co Ltd
and Maniker Co Ltd.
All have seen their earnings hit in the first half of this
year as they ramp up production to secure market share.
Park Ju-No, the managing director at Harim, acknowledged
producers were engaged in a "game of chicken", each holding a
potentially dangerous course in the hope their rivals flinch
"We think it's more crucial to focus on quality
differentiation to survive instead of adjusting production, even
though it contributes to a glut," said Park.
Park expects the imbalance to ease in the second half as the
number of slaughtered chickens drops in summer, but sees the
market over-supplied again next year as imports from the United
States and Thailand resume.
In July, Asia's fourth-largest economy lifted ban on chicken
imports from the United States, imposed due to a bird flu
outbreak in 2015.
It is likely to resume imports in November from Thailand,
banned since a 2004 bird flu outbreak, according to Korea's
Animal and Plant Quarantine Agency.
Overall South Korean chicken imports are expected to rise 9
percent to 130,000 tonnes this year, and a further 8 percent in
2017, due to the resumption of U.S. chicken imports, the USDA
Analysts said the increase in chicken imports could squeeze
domestic producers with lower prices. U.S. suppliers might also
find conditions challenging.
"It's going to be a tougher market because the U.S. only had
to compete against Brazil before, but now there are more
competitors like Denmark and sooner or later Thailand," said
Jenis Bae, manager at KTSC, who has imported U.S. chickens for
almost 20 years.
Still, the competition is good for consumers and restaurants
drawn to the chimaek boom.
Even global giant KFC recently opened its first
"KFC Chimaek" outlets in South Korea, offering set menus such as
two pieces of fried chicken, cheese fries and a glass of draft
beer for 7,500 won (around $7).
Major Korean franchises are now expanding their overseas
stores, particularly in China where the TV show "My Love from
the Stars" is wildly popular and its heroine's chimaek cravings
strike a chord with viewers.
"We learned the food culture of South Korea from Korean
soaps," Gu Chenghu said at a chimaek outlet in Shanghai. "Also
many young people are willing to try something fresh. So it's
Genesis BBQ, Korea's top fried chicken franchise now has 350
stores abroad in 30 countries including China and the United
States. It wants to grow to 50,000 stores by 2020, company
director Kwak Sung-kwon said.
"Our aim is to having more stores globally than McDonald's
," he said.
($1 = 1,114.7500 won)
(Additional reporting by Xihao Jiang in Shanghai; Editing by
Jack Kim and Lincoln Feast)