South Korean food giant CJ CheilJedang plans to divest its green bio division, which produces amino acids for animal feed, as Chinese competition erodes profitability in the once-lucrative business.
The unit’s sales climbed to 4.85 trillion won ($3.6 billion) in 2022 from 2.98 trillion won in 2020, but market headwinds have intensified. A slowdown in livestock product demand and aggressive pricing by Chinese manufacturers have undermined the division’s long-term outlook.
The Seoul-based company has already scaled back its low-margin lysine operations to less than 20% of the bio unit’s business, pivoting toward specialty amino acids like tryptophan. This shift helped boost the division’s operating profit by 75% in the third quarter.
The sale proceeds could fund acquisitions in the food sector, where CJ CheilJedang sees stronger growth potential. The company’s previous US purchase, frozen food maker Schwan’s for 2.1 trillion won in 2018, helped drive its American food sales above 4 trillion won during the pandemic.
While divesting the green bio unit, CJ CheilJedang will retain its white and red bio operations, which focus on eco-friendly materials and food technology innovations. The move aligns with Chairman Lee Jae-hyun’s strategy of concentrating on core profitable businesses.
