[IB토마토]Aekyung Industrial, struggling to secure its own dry food raw materials… New growth engines are disrupted

This article is September 16, 2022 14:31 IB Tomato Paid pageThis is an article exposed in

[IB토마토 김윤선 기자] Aekyung Industrial (018250)It is suffering successive difficulties in accreditation of individually recognized ingredients for health functional food, which it is developing in-house. Although a human application test was conducted, it was found that the functionality was not recognized by the Ministry of Food and Drug Safety (hereinfollowing referred to as the Ministry of Food and Drug Safety), and the search for new growth engines was stopped.

According to related industry sources on the 16th, Aekyung Industrial applied to the Ministry of Food and Drug Safety for individual recognition raw material recognition for ‘CAEC’, a raw material for health functional food being developed by the company’s research institute, but it has been confirmed that it has failed to receive functional recognition twice so far.

Aekyung Industrial is developing CAEC as a functional raw material that helps immune function, and has been conducting human application tests to be recognized as an individually recognized raw material. When it comes to accrediting individual approved raw materials, the company’s human application test results are the main review data.

The Ministry of Food and Drug Safety’s Health Functional Food Review Committee (herefollowing referred to as the “Committee”) found that CAEC had no problem in safety. However, it was judged that the functionality was difficult to recognize. It is said that the committee evaluated that it was difficult to recognize the validity of the test results because the interaction between drugs and food was not evaluated in the human application test.

Although they have suffered twice, Aekyung Industrial continues to challenge for the commercialization of newly discovered raw materials. In fact, it has been confirmed that the company is conducting human application tests once more on the raw material recently.

Aekyung Industrial, which previously withdrew from the health functional food business once in 2018, is expected to re-challenge the health functional food business by discovering its own raw materials.

(Aekyung Tower panoramic view. Photo=Aekyung Group)

Aekyung Industrial entered the health functional food business through the brand ‘Health&’ in 2014, but practically closed the business in 2018.

At that time, it was analyzed that it was difficult to differentiate the health functional food from other companies’ products because it did not use its own raw materials.

Although the size of the health functional food market is growing every year, the number of competitors is also increasing, so more companies are trying to differentiate themselves from raw materials. As a result, it is known that the competition to secure individual-recognized raw materials is fierce.

key players in the same industry AMOREPACIFIC (090430)or LG Household & Health Care (051900)has secured individually recognized raw materials. Major raw materials include Amorepacific’s ‘L-glutamic acid fermented GABA powder’ and LG Household & Health Care’s ‘Fermented Pig Placenta Extract’. Amorepacific is applying its own ingredients to the company’s health functional food brand ‘Vital Beauty’, and LG Household & Health Care is also using the ingredients in some products of its own brand ‘Life Garden’.

Aekyung Industrial is being evaluated as the need to secure new growth engines due to the recent decline in sales of major businesses such as cosmetics and household goods.

Cosmetics (product) sales, which are the biggest contributors to Aekyung Industrial’s sales, are on a declining trend to ▲354.4 billion won in 2018 ▲334.7 billion won in 2019 ▲2030 billion won in 2020 ▲215.6 billion won in 2021. The proportion of total sales, which exceeded 50% in 2018, fell to 37.6% in 2021.

Laundry detergent sales, the second highest contributor to the company’s sales following cosmetics, slowed to 94.3 billion won in 2018, 100.5 billion won in 2019, 103.4 billion won in 2020, and 97.9 billion won in 2021.

The decline in earnings continued in the second quarter of this year. Consolidated sales in the second quarter of this year were 141.8 billion won, down 1% year-on-year, and operating profit decreased 28% to 4.2 billion won during the same period. The operating profit margin fell 1.1 percentage points from 4.1% in the second quarter of last year to 3.0% in the second quarter of this year.

However, the cash flow from operating activities is steadily being created and the amount of cash and cash equivalents is maintained at 100 billion won, so it is evaluated that there is good room for investment in R&D such as health functional food. Aekyung Industrial’s total R&D expenses were 15 billion won in 2019, 14 billion won in 2020, and 14.1 billion won in 2021.

Aekyung Industrial’s position is that the research and development of its own raw materials is not carried out with the health functional food business in mind.

Aekyung Industry official explained, “(CAEC human application test) is one of the various studies conducted at the company’s research institute.” He added, “Health & brand products launched in 2014 were sold until 2018 and are not currently being sold.”

By Kim Yun-seon, staff reporter [e-mail]

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