South Korea’s $2.4 billion noodle giant, Nongshim Group, wants to get into bed with recently-listed South Australian dairy and meat business Beston Global Food Company to harness the "clean and green" image of Australian premium food.
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But Beston chairman Roger Sexton says talks between the two firms are centred on a distribution deal into South Korea and have not involved any proposed direct equity investment by Nongshim or its subsidiaries.
"We've been talking to them for three or four months," he said.
Beston owns dairy farms and has stakes in a range of premium food businesses selling milk, cheese, lobsters, tuna, beef and bottled water.
Nongshim, South Korea's biggest food and beverage maker, is a giant in the world of ramen noodles.
It has 11 manufacturing plants in South Korea, China and California, and annual sales of $2.4 billion.
Beston shares have risen 40 per cent since early April nearing 50 cents each early this week after a trading halt late last week.
Four executives from one of Nongshim's food manufacturing subsidiaries, Taekyung Food and Processing, including chief executive Bae Hyuk-jin, closely examined Beston's premium food operations over several days last week before flying home on July 21.
They inspected lobster operations in SA’s south-east, dairy farms, and milk processing and cheese plants near Murray Bridge, east of Adelaide.
The clean and green appeal of Australian brands has been behind the phenomenal growth rates in China and broader Asia of vitamin brands Blackmores and Swisse in the health sector.
Dr Sexton said Beston had thus far been focusing on China in its expansion plans and did not yet sell any of its products into South Korea, an important Asian market with a population of 52 million.
"This will be the start," he said of an expected distribution deal into South Korea in partnership with Nongshim Group.
Beston has a market capitalisation of $180m, has confirmed discussions with the subsidiary of Nongshim were about a strategic alliance to supply products into Korea.
Dr Sexton said the proposal did not involve any equity stake being taken up by Nongshim and the finer details were likely to take several weeks to cement.
He said Nongshim was aiming to move higher up the value chain by tapping into the "clean and green" premium foods produced by the firms Beston held investments in.
"They're primarily in noodles and they want to go up the value chain," he said.
Nongshim has an office in Sydney’s Parramatta and it noodles sell in Australia through Coles and Woolworths along with most IGA independent supermarkets, and Costco.
In South Korea its market share is close to 70pc.
Beston last year acquired two dairy plants near Murray Bridge, originally part of the old Dairy Farmers network, then sold to United Dairy Power which went into administration soon after.
