Chairman Lee Jay-hyun of CJ Group.

CJ Cheiljedang is predicted to post more than 4 trillion won in overseas sales of processed food products last year, its best year ever in terms of sales.

Even though its business performance for 2020 Q4 was not disclosed, given that the company logged more than 1 trillion won in overseas sales of processed food products on a quarterly basis, the company is almost certain to surpass the 4 trillion won threshold in overseas sales during the whole of last year.

The company has made a quantum jump in a short period of time. The company’s latest business performance is a far cry from previous years, when CJ Cheiljedang posted about 700 billion won in overseas sales of processed food products.

CJ Cheiljedang’s strategies to expand its overseas business turf, with a focus on the United States, shined despite the crisis caused by the global spread of the COVID-19 pandemic.

The acquisition of Schwan’s Company, which prompted worries about a “winner’s curse,” has now borne fruit.

CJ Cheiljedang spent as much as 2 trillion won to get its hands on Schwan’s, the largest-ever M&A in the history of CJ Group. The group plunked down 2.75 trillion won in acquiring CJ Logistics.

Schwan’s is a U.S. major frozen food maker with 18 brands catering to local people like Red Barren pizzas and Mrs. Smith’s pies. Schwan’s has ranked first or second in the American pizza, pie and other food markets.

The acquisition is part of CJ Group Chairman Lee Jay-hyun’s scheme to enter the U.S. market to raise the portion of the group’s overseas sales of processed food products.

Chairman Lee envisioned a scheme of globalizing Korean food with a target of entering the U.S. food market about 20 years ago. He thought that if his company settles in the United States with diverse races and culture, it will be done with ease in other countries.

CJ Cheiljedang has conducted a series of M&As with a goal of raising the portion of overseas sales of processed food products to 50 percent. Starting with its acquisition of Annie Chun’s in 2005, CJ Cheiljedang took over the frozen food maker OmniFoods in 2006 and the mandu and noodle maker IMI Food Group in 2012, and the frozen home meal replacement maker Kahiki in 2018 in successive M&As. At the same time, CJ Cheiljedang has managed to raise U.S. sales by introducing the brand “Bibigo.”

A view of Bibigo Wanggyoja (King-size Dumpling), produced by CJ Cheiljedang. (Photos: CJ Cheiljedang)

CJ Group once entered an emergency management mode due to the worsening of its finances since he acquired Schwan’s. The company had restructured its financial portfolio by disposing of some properties to repay borrowings.

The fact that Schwan’s business performance was on the rise is noteworthy. Schwan’s saw sales surge 240 billion won in 2019 Q1 to a range of about 700 billion in 2020 Q1.

CJ Cheiljedang has synergetic effects with Schwan’s. CJ’s acquisition of Schwan’s has enabled the expansion of its local production and marketing outlets in the United States. Schwan’s owns 17 production plants in the United States.

CJ Cheiljedang once had five production centers in California, New York, New Jersey and Ohio. CJ’s acquisition of Schwan’s has brought to 22, a four-fold jump, the number of food production plants in the United States.

A CJ Cheiljedang official said Bibigo and other brands of CJ Cheiljedang had focused on entering largest retailing distribution networks such as Costco, but its acquisition of Schwan’s has diversified outlets to diverse channels”: securing a driving force to enter the U.S. market in earnest.