[K-ECONOMY 2] The Two Faces of K-Ramen…Nongshim Growing Old, Samyang the Export King

The years 2024 and 2025 will be recorded in the history of the South Korean food industry as a 'revolutionary period' that transcends the simple boundary of accounting years, where the existing order collapses entirely and a new paradigm is established. For decades, the South Korean ramen market has been dominated by 'Nongshim'. The formidable lineup of Shin Ramyeon, Ansungtangmyun, and Chapagetti was an untouchable sanctuary. However, now we are witnessing an unbelievable 'golden cross' occurring in the capital market. Samyang Foods, once a perennial second place and at one point on the brink of collapse, has opened the era of 1 million won stocks, overwhelming the 'giant' Nongshim in terms of market capitalization and operating profit margin.

To uncover the underlying reasons for this astonishing tectonic shift, I thoroughly examined the financial statements of both companies, the operational rates of their overseas factories, and even the subtle cracks in their marketing strategies. Why has Samyang's 'Buldak' become a cultural phenomenon that excites the entire world? Conversely, why does Nongshim's 'Shin Ramyeon', despite being an excellent product, fail to receive explosive valuations in the capital market like Samyang? The answer to this question does not simply lie in the difference in 'taste'. It stems from the ability to read changing global consumer trends, the management's willingness to take risks, and the strategic vision to design a global supply chain.

To understand the current state of Samyang Foods, we must turn back the clock to the desperate situation they faced in the early 2010s. At that time, Samyang was struggling with a decline in domestic market share and a lack of new products, despite its title as the original ramen maker. As the management adage goes, innovation comes not from abundance but from scarcity; the revival of Samyang Foods began with Vice Chairman Kim Jung-soo's 'desperate discovery'.

In 2011, witnessing a crowd sweating profusely while enjoying spicy food at a Buldak restaurant in Myeongdong, Vice Chairman Kim's intuition was not merely a directive for product development. It was the creation of a category through the 'extreme of taste'. Researchers traveled to famous Buldak and Buldak-gopchang restaurants across the country, consuming 2 tons of spicy sauce and 1,200 chickens in a grueling research process. During the development stage, internal criticism that "it's too spicy for anyone to eat" actually became a success factor for this product. There were plenty of ramen that were moderately tasty. However, the ramen that was painful to eat yet provided pleasure, stimulating dopamine, was uniquely Buldak Bokkeummyeon. Initially targeting a niche market upon its release in 2012, it ultimately ignited a global 'spicy challenge'.

The most distinct point of differentiation between Samyang Foods and Nongshim lies in how they define their products. For Nongshim, ramen is 'a meal that satisfies hunger', while for Samyang, Buldak Bokkeummyeon is 'play' and 'content'.

In 2016, the 'Fire Noodle Challenge' initiated by YouTuber 'Korean Englishman' Josh became a massive marketing asset that Samyang Foods could not have achieved even with hundreds of billions of won in advertising expenses. YouTubers and influencers around the world voluntarily streamed themselves eating Buldak Bokkeummyeon in agony, establishing it as a 'meme' that transcended language and borders.

Samyang Foods did not miss this trend and elevated it with the 'EATertainment' strategy, combining eating with entertainment. They did not simply sell products but created a 'stage' for consumers to participate and enjoy. This was further amplified as K-POP stars like BTS's Jimin were seen enjoying Buldak Bokkeummyeon. Through this, Samyang Foods demonstrated the pinnacle of efficiency in penetrating their brand into 97 countries worldwide without incurring separate massive marketing costs. This was qualitatively different from Nongshim's approach, which relied on traditional TV advertising and star marketing.

The fundamental reason for the surge in Samyang Foods' stock price is not merely due to high sales, but because they are selling 'expensively, in large quantities, and efficiently'. As of the first half of 2025, Samyang Foods' overseas sales ratio is nearing 80%. This signifies a complete departure from the limitations of a domestic company.

It is noteworthy that their operating profit margin (OPM) is astonishing. In the first quarter of 2025, Samyang Foods recorded an operating profit margin of 25.3%. This figure is considered nearly impossible in the food manufacturing industry, reminiscent of the profit margins of IT or biotech companies.

On the other hand, Nongshim's situation is not easy. As of 2023, Nongshim's sales exceeded 3.4 trillion won, and Shin Ramyeon remains a global bestseller. However, investors' perspectives are cold. The reason is that Nongshim's profit structure is the exact opposite of Samyang Foods.

Nongshim's overseas sales ratio remains around 37%. This means they still rely on the domestic market, where over 60% of sales are stagnant in growth. The domestic market is structurally bound to see a decrease in ramen consumption due to population decline and aging. To defend their market share in this narrow market, Nongshim must spend massive amounts on promotional and advertising expenses.

Even more serious is the operating profit margin. Nongshim's operating profit margin is trapped in the 4-6% range, which is one-fourth of Samyang Foods'. This is due to the characteristics of the domestic market, where they cannot pass on the rising raw material costs to product prices. Whenever international wheat prices fluctuate, Nongshim's profits swing wildly. The low overseas ratio also weakens the 'natural hedge' function that offsets cost burdens through exchange rate effects compared to Samyang.

Shin Ramyeon is great, but it is aging. While it may be considered 'delicious ramen' by the global Gen Z, it is not seen as a 'cool item' to share with friends like Buldak Bokkeummyeon. Nongshim is aware of this. The recent scarcity of 'Meoktaekang' and the launches of spin-off products like 'Shin Ramyeon The Red' and 'Shin Ramyeon Tumba' are manifestations of this sense of crisis.

In particular, Nongshim has recently attempted to target the younger demographic through collaboration with the Netflix animation 'K-Pop Demon Hunters'. This is a bold attempt for Nongshim, but it remains to be seen whether it will lead to a spontaneous and organic viral effect like Samyang's Buldak Challenge. The success of Buldak was a 'bottom-up' culture led by consumers, while Nongshim's strategy still leans heavily towards a 'top-down' campaign led by the company.

The market is disappointed with Nongshim's pace. While Samyang Foods completed and began operations at its Miryang Plant 2 in a flash, Nongshim's expansion of production capacity is cautious to the point of slowness. This seems to be influenced by a conservative approach to initial investment costs and the corporate culture established during the late Chairman Shin Chun-ho's era, which emphasized careful decision-making. Local production overseas has advantages such as reduced logistics costs, but it incurs significant fixed costs until the factory is established and stabilized. This acts as a factor that erodes Nongshim's operating profit margin in the short term.

Samyang Foods launched the first ramen in Korea in 1963, but learned the tactics of survival on the brink after experiencing the Uji crisis in 1989 and the company's crisis in 2010. Owner Kim Jung-soo demonstrated a 'primal impulse' to take risks and make bold decisions.

In contrast, Nongshim has maintained its number one position for decades, establishing a system management similar to 'Samsung of management'. Their perfectionism, which does not tolerate failure, has been advantageous for quality control, but has become a shackle in responding swiftly to rapidly changing trends. Nongshim's decision-making structure is quite conservative, and there are structural limitations that make it difficult for disruptive and experimental products like Buldak Bokkeummyeon to pass internal evaluations.

Samyang Foods has expanded 'Buldak' into a sauce brand rather than just ramen. The lineup of Buldak sauce, Buldak mayo, and Buldak snacks has attracted consumers who do not even eat ramen into their ecosystem. This is similar to how Disney utilizes its IP to make money through movies, merchandise, and theme parks.

Nongshim has also released various 'Kang' series and collaboration products after the success of 'Meoktaekang', but these have either remained one-time hits or variations of existing brands. While Shin Ramyeon is undoubtedly a strong brand, its function as a platform for infinite expansion into other categories is weak. Nongshim's new products tend to fight their own battles rather than create synergy with each other.

Nongshim has taken a direct approach with the philosophy that "the most Korean taste is the most global taste". The red broth and chewy noodles have worked in Asia, but they have become a barrier to entry for Western consumers who are not accustomed to broth culture.

Samyang's Buldak Bokkeummyeon cleverly adopted the format of 'stir-fried noodles'. This is a much more familiar format for Westerners who are used to pasta or stir-fried dishes. Additionally, localized products like 'Carbonara Buldak', which actively combine flavors preferred by Westerners such as cheese, cream, and rose, played a decisive role in lowering the barrier of spicy taste. While Nongshim insisted on 'kimchi' and 'spicy broth', Samyang flexibly transformed into 'delicious spicy taste' that consumers wanted.

Nongshim's position in the domestic ramen market remains solid. With a market share of over 50%, Nongshim's distribution dominance and the brand loyalty of Shin Ramyeon and Chapagetti are unlikely to crumble easily. In 2025, Nongshim is expected to continue a gradual sales growth of 3-4% through new product launches and renewals of existing products.

However, the 'quality of market share' will change. Samyang Foods' domestic market share currently hovers in the mid to high 10% range, but the success overseas is expected to create a 'halo effect' that will reverse-import into the domestic market until 2026. As brand preference for Samyang rises among the younger demographic, the gap in market share in convenience store channels is likely to narrow. Especially while Nongshim struggles with price increases, Samyang is expected to encroach on the premium dry noodle and sauce markets, increasing its 'market share based on operating profit'.

Currently, the capital market is siding with Samyang Foods. Numbers do not lie. Samyang's innovation has overwhelmed Nongshim's stability. However, Nongshim is a company with resilience. The trust built over more than 50 years in quality and its global network will not collapse overnight.

In 2026, we will witness one of two scenarios. Either Samyang Foods will evolve into a global comprehensive food company that surpasses 'Buldak' and forever leaves Nongshim behind, or Nongshim will announce a 'giant's return' through painful reforms and reclaim the throne.

What is clear is that the current way cannot continue. Samyang must guard against the intoxication of success, and Nongshim must forget the glory of the past. In the ever-changing tastes of consumers and the tumultuous international situation, both companies must remember that failing to change is synonymous with being eliminated.