LISTEN: South Korea’s functional probiotics market sees faster growth than generic strains – AceBiome CEO

Founded in year 2017 by Myeong Hee Kim, who is also the company’s CEO, AceBiome is a subsidiary of KOSDAQ-listed Bioneer Corporation which specialises in diagnostics.  

With a mission to improve the quality of life for people who are overweight, AceBiome is best known for its probiotics for weight management, specifically its Lactobacillus gasseri BNR17.

The strain is approved by South Korea’s Ministry of Food and Drug Safety (MFDS) as a functional ingredient to help reduce body fat.

Its product, BNRThin Pro, also won the Probiotic Product of the Year in NutraIngredients-Asia Awards 2020.​

Speaking to NutraIngredients-Asia ​in March’s episode of Nutrachampion, Kim pointed out that the probiotics market has been witnessing tough competition in recent years, but companies could seek to differentiate their products by using strains that offer specific health benefits.

This is especially helpful in markets such as South Korea where consumers have a higher understanding of probiotics and that their functions extend beyond gut health.

In fact, functional probiotics, or proprietary probiotic strains making specific health claims​ that could span across weight management, cognitive health, and immune health, are seeing a faster growth rate than generic products designed for general gut health.

These functional or proprietary probiotics allow companies to differentiate their products in an overcrowded probiotics market dominated by “me-too” products, she said.

“Many people who consume probiotics, particularly in Korea, know the benefits they offer.​

“This has resulted in shaping the probiotics business landscape. Consequently, the Korean market for functional probiotics has been growing even in a recession last year, while the generic probiotics market is a bit shrinking, resulting in a 2 per cent decrease in the entire probiotics market in 2023.​

“This growth of the premium functional probiotics sector has been driven by increased consumer awareness, scientific validation, and a desire for preventive health solutions,”​ said Kim.

Last year, probiotics was the third largest category in South Korea’s health functional food market, only behind red ginseng and vitamins and minerals. The entire health functional food market value was estimated at KRW$6.2 trillion (US$4.65 tr) last year, which 27 per cent higher than five years ago, the Korean Health Functional Food Association​ said last year. 

In year 2022, the generic probiotics market in South Korea, which accounted for 84 per cent of the entire probiotics market, grew at a rate of 0.4 per cent, while functional probiotics expanded at a faster rate of 26.4 per cent.

Kim also said previously​ that functional probiotics that offer “dual care” for weight management and intestinal health was leading the growth of the functional probiotics market in South Korea.

Haleon also observed a similar demand for probiotics for weight management last year when it launched three microbiome products for sleep, immunity, and weight management – with the one for weight management said to have “went out of stocks in a few weeks.”​​

Businesses that thrive on selling generic probiotics might also face challenges such as having to keep product price low to keep their competitiveness. This might affect business sustainability as a result, said Kim.

“It can be challenging to differentiate your business if you sell generic probiotic products. The low barrier to entry means there are many players in the market, making competition fierce. As a result, business sustainability is not guaranteed.​

“To stand out, a company may want to commercialise probiotics with health claims,” ​she said, adding that AceBiome achieved an annual sale of US$180 million last year, with an operating profit margin of 15 per cent. 

While it could be more lucrative, market demand for functional probiotics is still largely reliant on consumer awareness.

“Consumer education is crucial in this case. They must be informed that the strain's scientific research and health benefits have been clinically proven before making a purchase. Even if a product is excellent, if consumers are unaware of it, they will not buy it,” ​she said.

Listen to the podcast to find out more.