Pulmuone Posts Profit Turnaround in US after 29 Years of Operation

◦ Pulmuone Foods USA reported its first quarterly profit in Q2 2020 with $53.9M sales and $0.6M surplus

◦ Pulmuone achieved both growth and profitability through business portfolio restructuring

◦ After entering US in 1991 and acquiring no.1 tofu brand Nasoya in 2016, Pulmuone’s US business picks up pace

◦ Pulmuone’s Chinese business also saw a $2.8M profit in Q2 2020 and 14.2% operating margin in 1H 2020

SEOUL – August 23rd, 2020 – Pulmuone, after improving its U.S. business portfolio, is set to drive further profit by leading the tofu market growing with plant-based protein trends.

Pulmuone announced on 23th its first quarterly profit since its entrance to the U.S. market in 1991.

Sales and operating profit of Pulmuone Foods USA over the last four quarters are an indication of both quantitative growth and profitability improvement. In the third quarter of 2019, Pulmuone Foods USA posted sales of $44.5 million and ran a $5 million deficit. In the second quarter of 2020, however, its sales were up by 20% to mark $53.9 million and the company turned first profit with $0.6 million surplus.

▲ Pulmuone USA Quarterly Sales and Operating Profit

Pulmuone began its business in the U.S. as an ethnic food maker in 1991 and acquired Nasoya, the nation’s no.1 tofu brand, in 2016 to rapidly expand its product portfolio. After 29 years of operation, and 4 years after its acquisition of Nasoya, the company finally reported its quarterly profit by achieving both growth and profitability.

Since its acquisition of Naosya, Pulmuone began to invest and restructure with an aim to improve profitability throughout manufacturing, logistics, sales and marketing. By expanding product portfolio to include tofu, Asian noodles and kimchi, Pulmuone’s sales figures also saw a large increase to surpass $165 million mark for the first time in 2019. The rise in sales led to an improvement of efficiency and enabled Pulmuone to realize the economy of scale.

▲ Pulmuone USA's various tofu products in the U.S. market

The key to success for an overseas business is to secure a wide distribution network. Pulmuone, with a nationwide distribution network across the U.S which is the world’s largest economy with a population of 328 million, successfully leveraged synergy among its sales, marketing, manufacturing, logistics and other business functions:

First, based on its acquisition of Nasoya, Pulmuone established a nationwide distribution network of 20,000 retail operations in Walmart, Kroger and Costco stores. Pulmuone is providing the U.S. consumers across the country with high quality tofu products made with Pulmuone’s best technology. With the recent plant-based protein trends in the U.S., tofu is back in the limelight as a classic protein source. The size of the tofu market in the U.S. has been growing up to 8% annually for the recent years and the first half of 2020 saw a 50% year-over-year growth, according to Nielsen data.

To meet the surging demand for tofu in the U.S., Pulmuone is maintaining 100 percent operation rate at its tofu manufacturing plants and importing 1 million packs of the soybean curd made in its plant in the home country every month. Currently, the market share of Pulmuone’s tofu in the U.S. market stands at 75 percent.

Second, the distribution network expansion of Pulmuone led to more aggressive sales and marketing. Pulmuone began to sell fresh noodles, one of its signature products, in the U.S. market after its acquisition of Nasoya. Starting with Black Bean Sauce Noodles, Pulmuone made a second hit after tofu with fresh Asian noodle items such as Teriyaki Stir-fry Udon, Beef Udon and Knife-cut Noodles. Sales of Pulmuone’s Asian noodles grew six-fold in last four years from $5 million in 2015 to $30 million in 2019, and the first half of 2020 saw a 30 percent jump year-over-year.

Then Pulmuone’s product portfolio has expanded to include kimchi. With its nationwide fresh food distribution network and experience as a tofu and fresh noodle seller, Pulmuone has proved capable of providing kimchi, a fermented vegetable dish. Pulmuone is currently the only kimchi seller in the U.S. capable of nationwide distribution. The K-wave is gaining more popularity, and the U.S. kimchi market is anticipated to provide lucrative opportunities as American consumers perceive kimchi as healthy, probiotic food. The market share of Pulmuone in the U.S. kimchi market is 43 percent, according to Nielsen’s data.

Third, Pulmuone located its manufacturing facilities on both coasts of the country, one in Tappan, New York and the other in Fullerton, California, to realize innovation in logistics. In a country with a vast area such as the U.S., the geographic distribution of manufacturing plants is a critical factor in profit margin. Pulmuone’s acquisition of Nasoya and diversification of its manufacturing plants led to savings in fixed costs and profitability improvement.

“Foodmakers are reporting sales growth with the surging demand amid the coronavirus pandemic, but Pulmuone’s brisk performance in the U.S. is a consequence of profitability improvement rather than a temporary phenomenon,” said Pulmuone General CEO Lee Hyo-yul. “With a strong synergy among product strategy, distribution, logistics, manufacturing and marketing in the U.S., Pulmuone is expected to generate a significant growth of sales and profit. in the U.S. and abroad.”

Meanwhile, Pulmuone’s Chinese business saw operating profit for two consecutive quarters in 2020. The Chinese branch posted its first quarterly profit in the first quarter of 2020 with $0.6M and generated a surplus of $2.8M in the next quarter, with 14.2% aggregate operating margin in the first half of 2020. The upbeat performance was led by Pulmuone’s strategy of focusing on new channels such as e-Commerce and O2O(Online to Offline) which resulted in sales increases of 176% for pastas and 87% for tofu.

Previous press releases on Pulmuone's overseas business:

(Jul 22) Pulmuone Reports Brisk Performance in First Half with Rapid Sales of Tofu and Convenience Foods in US, China and Japan

(Jun 1) Pulmuone Posts First Quarterly Profit in China in 10 Years with Pasta and Tofu Sales

(Mar 24) Pulmuone Asian Noodle Sales in US Rapidly Grow with 6-fold Increase in 4 Years

About Pulmuone Co., Ltd.

Pulmuone, Korea’s leading company for wholesome foods, conducts business in a wide variety of areas, including functional foods, meal services, concession businesses, whole food distribution, mineral water, and fermented milk.

Pulmuone first entered overseas markets in 1991 by establishing a subsidiary in the U.S. Now with additional subsidiaries in China and Japan, and as an owner of U.S.’s #1 tofu brand Nasoya, the company is growing into a global enterprise.

About Pulmuone Foods USA.

Pulmuone Foods USA, a wholly-owned US subsidiary of Pulmuone, is the only tofu maker of South Korea to have manufacturing plants both in eastern and western parts of US and nationwide retail distribution channels. After acquiring the to US tofu brand Nasoya in 2016, Pulmuone Foods USA is providing tofu products to over 20,000 stores in US. Amid the growing global demand for plant-based protein food, Pulmuone Foods USA is leading the US tofu market with a 75 percent market share.