Korea's Health Supplement Market Has Been Flat for Three Years — Yet Manufacturers Just Posted Record Results
Overview
Korea's health functional food market peaked at KRW 6.1498 trillion in 2022 and has hovered around KRW 6 trillion ever since (KRW 5.9626 trillion in 2025, +0.2%). Yet over the same period, contract manufacturers Novarex, Kolmar BNH, and Cosmax NBT saw operating profit grow anywhere from double digits to 452%, and KGC Ginseng Corp's revenue and operating profit both rebounded together in H1 2026. It's a signal that premium, personalized, and export volume are quietly growing inside an otherwise stagnant market.
Korea's health functional food market peaked at KRW 6.1498 trillion in 2022, then came in at KRW 6.1415 trillion in 2023, KRW 5.9531 trillion in 2024, and KRW 5.9626 trillion in 2025 (+0.2%) — essentially flat around the KRW 6 trillion mark for three straight years. Looked at as a whole, the natural read is "a mature industry that's stalled out." Yet over the same period, the three major contract manufacturers (OEM/ODM) — Novarex, Kolmar BNH, and Cosmax NBT — all posted double-digit revenue and profit growth in H1 2026, with Cosmax NBT's operating profit surging 452.8% as it swung to profitability. On the brand side, KGC Ginseng Corp (Cheong Kwan Jang) moved through a H1 2025 stretch of falling revenue and surging operating profit, then saw both revenue and operating profit rebound together, in double digits, in H1 2026. So what's actually happening inside this stagnant market?
What Happened — The Market and the Companies, by the Numbers
Start with the size of the overall market.
| Year | Total Market Size | Change |
|---|---|---|
| 2022 | KRW 6.1498 trillion | — |
| 2023 | KRW 6.1415 trillion | -0.1% |
| 2024 | KRW 5.9531 trillion | -3.1% |
| 2025 | KRW 5.9626 trillion | +0.2% |
By company production output (factory-gate shipment value, 2024 basis), the leaderboard looks like this.
| Company | Production Output | Note |
|---|---|---|
| Korea Ginseng Corp (KGC, Cheong Kwan Jang) | KRW 672.3B | #1 for the 4th straight year |
| hy | KRW 387.4B | |
| Chong Kun Dang Health | KRW 297.4B | |
| Novarex | KRW 283.2B | Contract manufacturer (OEM/ODM) |
| Kolmar BNH | KRW 272.9B | Contract manufacturer (OEM/ODM) |
The top 15 companies' combined production output comes to KRW 2.7207 trillion, or 67.8% of the total on this basis. What stands out is how close together the #3 through #5 spots are (Chong Kun Dang Health, Novarex, Kolmar BNH) — a finished-goods brand owner and two contract manufacturers are already roughly the same size by production scale, which itself is evidence of how much brand owners now lean on contract manufacturing rather than their own production lines.
Over the same period, the three contract manufacturers' most recent results (H1 2026) look like this.
| Company | Revenue | Operating Profit | Note |
|---|---|---|---|
| Novarex | KRW 222.6B (+17.3%) | KRW 25.1B (+29.2%) | Operating margin 11.3% (+1.1pp) |
| Kolmar BNH | KRW 245.4B (+8.1%) | KRW 20.6B (+46.7%) | Standalone basis |
| Cosmax NBT | KRW 195.5B (+32.3%) | KRW 18.8B (+452.8%) | Net income KRW 17.3B, swung to profit |
The brand-owner side tells a different kind of story — a stretch of falling revenue alongside improving profitability, followed by a rebound in both.
| Company | Period | Revenue | Operating Profit |
|---|---|---|---|
| KGC Ginseng Corp (Cheong Kwan Jang, a KT&G subsidiary) | H1 2025 | KRW 535.0B (-6.7%) | KRW 26.1B (+74.3%, highest since segment disclosure began in 2020) |
| KGC Ginseng Corp | Q1 2026 | KRW 332.6B (+5.8%) | KRW 27.9B (+53.3%) |
| KGC Ginseng Corp | Q2 2026 | ~KRW 223.8B (domestic KRW 174.2B +7.8%, overseas KRW 49.6B, down KRW 9.4B) | KRW 10.0B (+61.3%) |
| KGC Ginseng Corp | H1 2026 total | KRW 556.4B (+4.0% vs. H1 2025) | KRW 37.9B (+45.2% vs. H1 2025) |
| Chong Kun Dang Health (Lacto-Fit) | FY2025 (annual, most recent disclosure) | KRW 472.89B (-4.9%) | KRW 32.3B (swung to profit, highest in 5 years) |
Core Insight #1 — The Market Is Stagnant, But Premium and Personalized Live in a Different World
Even as the overall market shrinks, two segments are visibly expanding. One is premium. KGC Ginseng Corp has layered high-end lines on top of its standard red ginseng extract — "Red Ginseng Extract Cheon (天)," "Red Ginseng Extract Masterclass," "Red Ginseng Extract Limited" — while Dongkook Pharmaceutical opened a physical store for its health functional food brand Myfit's high-dose, department-store-exclusive line at Connect The Hyundai in Busan. The other is personalization. By industry estimates, Korea's personalized health functional food market reached roughly KRW 450 billion in 2025 — small next to the roughly KRW 5 trillion-scale overall market, but a subscription model built on individual genetic and lifestyle data is gaining traction quickly.
The picture comes together once you see why growth in these two segments feeds straight into the contract manufacturers' results. Premium and personalized products tend to run in small batches, wide variety, and high-spec formulations — conditions under which brand owners more often outsource to a contract manufacturer with specialized formulation technology than invest in their own production lines. Novarex naming "differentiated formulation and manufacturing technology, beyond a raw-material focus" as one pillar of its growth strategy, and its ongoing construction of a second plant in Osong, both read as moves to absorb this demand. Exports overlap here too. Novarex said it plans to attend "Vitafoods Asia 2026" in Thailand this September to secure overseas clients — and Korea's health functional food export value grew at an average 13.8% a year from 2023 to 2024, meaning overseas volume is offsetting a meaningful share of the stagnant domestic demand. In short, the manufacturers' strong results aren't coming from the domestic mass market — they're coming from a separate pipeline: domestic premium/personalized demand plus overseas exports.
Core Insight #2 — "Revenue Falls, Profit Rises" Keeps Repeating
The pattern on the brand-owner side is even more interesting. KGC Ginseng Corp's H1 2025 revenue fell 6.7%, yet operating profit rose 74.3% to the highest level since the company began disclosing segment results in 2020. The company attributed this to a smaller share of low-margin home-shopping sales, a lower cost ratio from improved raw-material yield, and a "both value and premium" strategy addressing the market's polarization. Chong Kun Dang Health tells the same story — in its most recently disclosed results, FY2025 revenue fell 4.9%, yet operating profit swung to a profit at its highest level in five years. Both companies made the identical choice: give up some revenue in order to strip out low-margin volume and protect profitability.
That the same pattern showed up simultaneously at two companies this different looks less like coincidence and more like a signal that Korea's health functional food market is shifting from an "era of growth" to an "era of selection." Where revenue scale alone used to signal market standing, now it's which channel and which segment that revenue comes from that determines the margin. KGC Ginseng Corp's most recent results, for H1 2026, show this "restructuring" moving into its next phase — revenue rose 4.0% versus H1 2025, while operating profit rose a much faster 45.2%, meaning the company captured revenue growth and margin improvement at the same time. That said, Q2 overseas revenue fell KRW 9.4 billion on Chinese distributor inventory adjustments — a reminder that the rebound isn't yet running evenly across the board.
Business Impact — Price Competition in the Mass Channel Remains Fierce
On the other side of this polarization sits a mass channel where low barriers to entry keep price competition brutal. In a market where cheap OEM products keep flooding in, smaller players without brand power absorb the full weight of that price pressure. When large brand owners like KGC and Chong Kun Dang Health say they're shrinking their low-margin channels, the flip side is that even large companies are struggling to protect margin in those channels (home shopping, discount promotions, and the like). As the big brand owners pull back from that space, smaller OEM brands and e-commerce private labels are likely filling the gap — with the same low-margin structure intact. In the end, today's "polarization" isn't the market uniformly trading up — it looks more like the top (premium, personalized, export) and the bottom (ultra-low-price mass channel) splitting apart, each moving at its own pace.
Practical Implications
- Department store/premium retail MDs: As with KGC's premium red-ginseng lines and Dongkook Pharmaceutical's Myfit department-store-exclusive store, health functional food is clearly being absorbed into department stores as a regular category. It's worth considering a dedicated curated-shop or pop-up strategy, the way luxury and beauty categories already get one
- Brand strategy/MD teams: Assume that KGC's and Chong Kun Dang Health's choice — sacrifice revenue to clear out low-margin channels and protect profit — is becoming an industry-wide strategy, and re-examine the margin structure of your own channel portfolio accordingly
- OEM/ODM vendor management teams: Since Novarex's, Kolmar BNH's, and Cosmax NBT's strong results are coming from premium/personalized/export volume rather than domestic mass demand, which line you get allocated to (mass vs. premium, domestic vs. export) when expanding a partnership will determine your future supply stability
- Investment/analyst teams: Don't read a health-functional-food company's "revenue decline" headline as automatically negative. As these cases show, a revenue decline is often a deliberate result of pruning low-margin channels that leads straight to improved operating profit — so the direction of revenue and profit needs to be tracked separately
Conclusion
"Korea's health functional food market has been stuck around KRW 6 trillion for three straight years" reads, on its own, like a story about a stagnant industry. Look inside it, though, and the three contract manufacturers are setting record results, while major brand owners have successfully pushed up margins even at the cost of some revenue. Running through both trends are three growth pipelines — premium, personalization, and exports — while on the other side sits a mass channel still stuck in brutal price competition. Korea's health functional food industry isn't really one market right now; it's splitting into at least two markets moving at different speeds.
What struck me most in this research is that KGC Ginseng Corp and Chong Kun Dang Health — two companies in the same industry but with entirely different ownership structures and product lines — showed up with the identical pattern of "falling revenue, record operating profit" at the same time. That's not one company's idiosyncratic management call; it means the whole industry is moving in the same direction, and a pattern that shows up simultaneously like this is better read as an industry structural shift than as individual company analysis. It's also worth noting that KGC Ginseng Corp has since moved into the next phase of that pattern, with revenue growth returning to double digits in H1 2026 — proof, in its own subsequent numbers, that pruning low-margin channels wasn't a one-off event but an actual turnaround that fed back into revenue growth.
It's also worth sitting with the fact that the three contract manufacturers' strong results had nothing to do with the shrinking domestic market. Usually, when "the market is shrinking but one company is doing great," the easy read is that the company took share from competitors. This case is different. That their growth stories feature far more talk of overseas exports, formulation technology, and facility investment than domestic market-share competition is itself a signal — they're not splitting up the existing domestic pie, they're building an entirely different pie (exports, premium contract manufacturing).
Finally, Korean retail shouldn't read this polarization purely as "health functional food is trading up like beauty and luxury did." As the premium side grows, price competition on the other side, in the mass channel, is likely to get even more brutal. Department store and duty-free MDs need one strategy — courting premium lines — while hypermarket and e-commerce MDs need a completely different one — defending margin in the low-price channel. That moment has arrived.