US functional coffee firm has eye on Asia growth with new Korea subsidiary

By Lester Wan contact

- Last updated on GMT

NuZee Korea's manufacturing facility is NuZee's first outside of the US and will help to better serve customers in China, Japan and Korea, and provide the resources to pursue new clients in Asia.
NuZee Korea's manufacturing facility is NuZee's first outside of the US and will help to better serve customers in China, Japan and Korea, and provide the resources to pursue new clients in Asia.
US functional coffee and matcha tea firm NuZee has established a new, wholly-owned subsidiary and broken ground on a new manufacturing plant in Korea as it seeks to boost its trade in Asia.

NuZee Korea will handle sales, marketing and related initiatives for NuZee’s Coffee Blenders line of Drip Cup functional coffees throughout the region.

"NuZee Korea will be our first manufacturing facility outside of the United States, and joins our Japan subsidiary, which we established in December of 2013 led by Katsuyoshi Eguchi, a successful businessman and entrepreneur who has served as CEO of Eguchi Holdings for 20 years,”​ said Masa Higashida, CEO of NuZee. 

“Together, these operations will allow us to better serve existing customers in China, Japan, and Korea, while providing the necessary resources to pursue new clients throughout Asia."

The company stated that Asia-Pacific retail sales of fortified or functional coffee were worth US$271m in 2015, with a CAGR of 12% from 2010 to 2015.

New Korean facility

The new manufacturing site is in Paju City, South Korea. Construction has already begun on the 3,600-square foot facility, and it is expected to be completed by June 2018.

The plant will produce NuZee's line of single-serve, pour-over functional Drip Cup coffee.

"This new facility will complement the recently completed expansion of our production facility in Vista, California, and support the continuing evolution of our business model towards co-packing agreements with global beverage and retail companies," ​said Travis Gorney, president and COO of NuZee.

NuZee Korea said the new facility will provide the necessary infrastructure for the company to engage in co-packing activities for Asia coffee brands, once any such agreements are finalised.

In NuZee’s December announcement, the company included entering into new co-packaging agreements for Drip Cup in its 12-month objectives, along with other marketing strategies such as implementing sales and marketing road maps with distribution partners, working closely with chosen brokers, broadening SKUs and expanding distribution channels.

The company had mentioned that it would also establish operations in China in the future.

Growing Asian market

Higashida said that the Drip Cup — single-serve, gourmet pour-over coffee — is now a common and popular brewing method in Asia, and the market in Japan alone is estimated to be approximately 2.3 billion cups per year. 

The company will target production of 100 million Drip Cups by 2020.

NuZee Korea will be led by businessman and entrepreneur Sung-Man Kim, who served as CEO of Mystery Golf for 13 years.  

"We have been selling Coffee Blenders products in South Korea since 2015, and we are excited to establish this local presence under the leadership of Mr Kim,”​ said Higashida.

"I am excited and honoured to join NuZee at this important time in its corporate development, and look forward to managing our growth in the Asia market,"​ said Kim.

NuZee uses only natural ingredients with clinically-supported nutraceuticals. Its functional coffee and tea products are sold in the US, Japan and South Korea, at more than 2,000 retail locations via B2B multi-store retail chains, wholesale distributors, office and home delivery, and B2C through its own website and on Amazon.com. 

According to NuZee, going into the 2017 financial year, the company’s nine-month revenue was already more than double that of the previous year.

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