1. Behavior of Rice consumption in Korea Korea Rural Economic Institute Lee, Kye-Im

2. - Contents - 1. Change in rice consumption 2. Comparison of rice consumption depending on age and consuming place 3. Determinant factors of consuming rice 4. Family behavior of consuming rice 5. Purchasing trends in food industries 6. Implication

3. per capita consumption decreased per capita consumption decreased 1970 ’ s -0.3% →1980 ’ s -1.0% →after 1990 -2.6% 1970 ’ s -0.3% →1980 ’ s -1.0% →after 1990 -2.6% 1. Change in rice consumption home: 1980 ’ s -1.4% after 1990 -3.7% decreasing rapidly home: 1980 ’ s -1.4% after 1990 -3.7% decreasing rapidly →

4. Diminishing household rice consumption is due to increased Diminishing household rice consumption is due to increased eating-out and meat consumption by westernization and eating-out and meat consumption by westernization and pursuing convenience and externalization of dietary life pursuing convenience and externalization of dietary life Rice Restaurant Meat BreadNoodle Rice

5. 1) Rice consumption structure by age 1) Rice consumption structure by age 2. Comparison of rice consumption by age and consuming place by age and consuming place

6. over 50 ’ s : regular 3 meals per a day over 50 ’ s : regular 3 meals per a day 10~40 ’ s : little breakfast or substituted by bread 10~40 ’ s : little breakfast or substituted by bread - Amount of breakfast is more than that of lunch by 30g - Amount of breakfast is more than that of lunch by 30g

7. 2) Rice consumption structure by consuming place 2) Rice consumption structure by consuming place 69% of rice consumption as a main dish is consumed at home 69% of rice consumption as a main dish is consumed at home Source : National Statistical Office, Survey on Household Economy(2002, 33,119 samples)Source : National Statistical Office, Survey on Household Economy(2002, 33,119 samples)

8. 3. Determinant factors of rice consumption Expenditure on rice = f(income, social demographicExpenditure on rice = f(income, social demographic characteristics, opportunity cost of housewife) characteristics, opportunity cost of housewife) Ratio of non consumption household 37% Ratio of non consumption household 37% (double-hurdle model) (double-hurdle model) coefficient of opportunity cost of housewife: (-), coefficient of opportunity cost of housewife: (-), decreasing income elasticity of rice consumption decreasing income elasticity of rice consumption : 0.24(1982) →0.16(2002) : 0.24(1982) →0.16(2002)

9. 4. Family behavior of rice consumption 1) Trend of rice consumption 1) Trend of rice consumption 62% of urban households purchase at market 62% of urban households purchase at market 76% of rice consuming households go market in person, 21% of them use the telephone, and 1% of them use the Internet 76% of rice consuming households go market in person, 21% of them use the telephone, and 1% of them use the Internet Although 45,000~48,000won per 20kg is in general, there are obvious differences by the level of income Although 45,000~48,000won per 20kg is in general, there are obvious differences by the level of income

10. rice purchasing place : Near rice market(21%), rice purchasing place : Near rice market(21%), Big discount store(21%), Big discount store(21%), NACF market(18%), NACF market(18%), General supermarket(18%) General supermarket(18%) 80% of purchaser choose 20kg, 12% of them select 10Kg 80% of purchaser choose 20kg, 12% of them select 10Kg Rice purchased is consumed for 1 to 1.5 months generally, there are Rice purchased is consumed for 1 to 1.5 months generally, there are 24% of household for over 2 month 24% of household for over 2 month When purchasing rice, 49% of purchasers choose other brands When purchasing rice, 49% of purchasers choose other brands and 41% of purchaser buy same brand. and 41% of purchaser buy same brand. Reason Near rice market, General supermarket : convenient delivery NACF market, Department store : creditable quality Big discount store : low price, one stop shopping

11. Flavour(45.4%),Price(27.2%), Safety(20.5%) Flavour(45.4%),Price(27.2%), Safety(20.5%) Flavour and safety become the standard of selecting Flavour and safety become the standard of selecting rice according to increasing income rice according to increasing income 2) Standard for Rice Choice

12. There are some positive response that rice of high price has good taste (58.1%) and there are taste difference by brand among rice that has similar price (45.3%) There are some positive response that rice of high price has good taste (58.1%) and there are taste difference by brand among rice that has similar price (45.3%) As a determinant factors of taste of rice, the way of cooking, produced area, processing method, cultivating skill and reserving way are regarded as important, however, date of milling is not a key factor. As a determinant factors of taste of rice, the way of cooking, produced area, processing method, cultivating skill and reserving way are regarded as important, however, date of milling is not a key factor. Rice of good taste is estimated by means of luster, transparency and existence of half-crushed rice, however, size and color are not considered as prime factors. Rice of good taste is estimated by means of luster, transparency and existence of half-crushed rice, however, size and color are not considered as prime factors. 3) Consumers ’ evaluation to quality and price of rice 3) Consumers ’ evaluation to quality and price of rice

13. Ordered by brand recognition Ordered by brand recognition : 1) King – 2) Cheolwonotaemi – 3) Rice of Kanghwa island : 1) King – 2) Cheolwonotaemi – 3) Rice of Kanghwa island Because information for taste of rice is based on personal information that acquires individually such as surroundings person 44%, seller inducement 25%, than objective information Because information for taste of rice is based on personal information that acquires individually such as surroundings person 44%, seller inducement 25%, than objective information There is royalty to a certain brand not because of much preference, but because of constraints of distribution.There is royalty to a certain brand not because of much preference, but because of constraints of distribution. Therefore, there is little firmly formed royalty to rice. Therefore, there is little firmly formed royalty to rice. Comparing to royalty to other food (Shin noodle-83 points, Haepyo oil of bean- 80 points), there are low brand recognition point (Yicheon rice-30, Otaemi-23 points), according to a study of Rural Development Adminstration (2003) Comparing to royalty to other food (Shin noodle-83 points, Haepyo oil of bean- 80 points), there are low brand recognition point (Yicheon rice-30, Otaemi-23 points), according to a study of Rural Development Adminstration (2003) 4) Evaluation of brand rice 4) Evaluation of brand rice

14. Willing to purchase the imported rice : 54% Willing to purchase the imported rice : 54% willing to purchase when price of imported rice is low and quality of that is good : 44% willing to purchase when price of imported rice is low and quality of that is good : 44% willing to purchase without considering price if imported rice has good quality: 9% willing to purchase without considering price if imported rice has good quality: 9% - the more income, the less willing to buy imported rice - the more income, the less willing to buy imported rice 5) Purchasing Intention to imported rice and high quality rice 5) Purchasing Intention to imported rice and high quality rice

15. Recognition of certified and functional rice : 71% Recognition of environment-friendly rice, washed rice, instant milling rice : half of response Recognition of perfect rice : 16% - the more income, the higher recognition especially in environment- friendly rice and functional rice (doubled in recognition of higher income ) - the more income, the higher recognition especially in environment- friendly rice and functional rice (doubled in recognition of higher income ) - Few consumer understands what certified rice means, many consumer have high distrust in environment-friendly rice. - Few consumer understands what certified rice means, many consumer have high distrust in environment-friendly rice. high willing to purchase : certification of environment-friendly(76%), high quality(75%) rice Low willing to purchase : washed rice, perfect rice Low willing to purchase : washed rice, perfect rice 66% of consumer think that taste ordering mark is needed and shows distrust of current notice system with difficulty in gathering correct information of rice.

16. 5. Purchasing trends in eating out industries 1) Price of purchasing price of eating out industry 1) Price of purchasing price of eating out industry

17. Restaurants and food companies usually purchase rice at the unit of 20Kg Restaurants and food companies usually purchase rice at the unit of 20Kg - food companies purchase rice weekly (35% of food companies) - food companies purchase rice weekly (35% of food companies) Restaurants purchase 2~3 times in a week (38% of restaurants) Restaurants purchase 2~3 times in a week (38% of restaurants) 54% of food companies purchase rice via suppliers (or vendors) 54% of food companies purchase rice via suppliers (or vendors) 55% of restaurants purchase rice directly without help of intermediaries. 55% of restaurants purchase rice directly without help of intermediaries. 42% of restaurants purchase rice via suppliers (or vendors). 42% of restaurants purchase rice via suppliers (or vendors). - Among the restaurants that have direct purchase, 62% of them get rice near stores while 22% of them from big discount store. - Among the restaurants that have direct purchase, 62% of them get rice near stores while 22% of them from big discount store. Recent 3 months period survey reveals that more than half of interviewers said that purchase only one type of rice, and rest of them said that they purchase 2~3 types of rice. Recent 3 months period survey reveals that more than half of interviewers said that purchase only one type of rice, and rest of them said that they purchase 2~3 types of rice. 2) Purchasing behavior of rice

18. Quality and price consistency are important, but food safety is not a key factor. Quality and price consistency are important, but food safety is not a key factor. The portion of retailers as a supplier will be reduced The portion of retailers as a supplier will be reduced For food companies other than restaurants, engagements with warehouse type discount stores and direct purchase will be increased. For food companies other than restaurants, engagements with warehouse type discount stores and direct purchase will be increased. For restaurants, engagements with big discount stores and suppliers (or vendors) are to be increased. For restaurants, engagements with big discount stores and suppliers (or vendors) are to be increased. In the case of opening the rice market, 65% of interviewers said that they will purchase imported. However, if the quality of both imported rice and domestic rice is similar, acceptable price of imported rice will be 80% of that of domestic rice. In the case of opening the rice market, 65% of interviewers said that they will purchase imported. However, if the quality of both imported rice and domestic rice is similar, acceptable price of imported rice will be 80% of that of domestic rice. 3) Factors to be considered when purchasing rice 3) Factors to be considered when purchasing rice 4) Prospective of purchasing behavior and purchasing intention of imported rice 4) Prospective of purchasing behavior and purchasing intention of imported rice

19. 6. Policy directions for encouraging rice consumption  Need to differentiate the consumer group which give high weight to quality of food such as taste and safety and the other, low income group which give high weight to price and would purchase imported rice.  To encourage the improvement of quality of domestic rice, it is essential to coordinate production capabilities for high-quality rice and supply chain managements as well as to encourage labeling and marketing improvement to obtain creditability from consumers.  Need to promote education for quality management specially focused on the stage of consumption such as the length of good taste and storage methods, etc.

20.  Development and popularization of Korean menu using domestic rice and promotion of domestic rice consuming companies  Increasing quality of government supporting rice for school lunch and supporting for broadening traditional meals.  The more young, the more reluctant to eat breakfast, promoting of eating breakfast is important to increase rice consumption.  To keep successive campaign for breakfast using rice; to develop the easy-to-preparing breakfast using rice; to propagate convenient rice menu for breakfast.

21. Thank you