How a Quest for the Perfect Bowl of Rice Cooked Up a Billionaire
(Bloomberg) -- Rice is a staple for Koreans, but as New York restaurateur Bobby Yoon explains it, the connection is deeper, almost spiritual.
“We need the perfect bowl of rice for each meal," said Yoon, whose recently opened barbecue joint in Manhattan is an offshoot of Haeundae Somunnan Amso Galbijip, his grandfather’s venerable Busan institution. “It doesn’t have a flavor, but there is also a certain umami to it when cooked well.”
Perfecting rice that’s integral to such everyday dishes as bulgogi and kimchi jjigae needs the best cooker possible, one that produces perfect grains without scorching them. The countertop appliances are given as gifts when people get married or move to a new house, and can symbolize wealth and good health for the family.
By far the most popular brand is the Cuckoo, which emits a distinctive sound similar to the call of the bird it’s named after as it releases steam during the cooking process.
That obsession and stranglehold on the market has made Cuckoo Holdings Co. founder Koo Ja-sin a billionaire. The company controls about 70 percent of South Korea’s market for rice cookers -- easily outselling domestic rival Cuchen Co. -- and exports to more than two dozen countries, mostly in Asia.
“The market is not huge, and there were already technology barriers when other big brands were looking to penetrate it,” said Yang Ji-hye, an analyst at Meritz Securities in Seoul. “Cuckoo seized the niche market and has grown big.”
Koo, 77, started the firm in 1978 after a brief career in politics, where he served as secretary to a local lawmaker. He began by manufacturing rice cookers for large companies such as LG Electronics Co. After orders dwindled to a trickle during the Asian financial crisis, he started his own brand in 1998.
The public latched on to the “Do Cuckoo” catchphrase from the firm’s television commercials and sales quickly grew. Cuckoo shares have returned 127 percent, including reinvested dividends, since its 2014 initial public offering in Seoul, outpacing the 20 percent return of the Kospi Index of 780 Korean companies.
"Koreans believe that what’s made of rice is good for your health," said Jun Kyung-woo, the co-author of the book "Dining in Seoul." "When someone feels unwell, they even attribute that to not eating enough rice."
Koo now has a net worth of $1.1 billion, according to the Bloomberg Billionaires Index, based mainly on his and the family’s stake in the holding company and in Cuckoo Homesys Co., which rents appliances such as water purifiers. Koo is chairman of the holding company, while the oldest of his two sons -- Koo Bon-hak -- runs the business.
Koo Bon-hak, 48, is chief executive officer and holds the largest stake in Cuckoo. He joined the company in 1995 after earning a master’s degree in accounting from the University of Illinois.
A spokeswoman for Cuckoo, which also manufactures dishwashers, blenders and other kitchen appliances, declined to comment.
While Cuckoo dominates the market for cookers, it’s battling long-term trends that may undermine growth. Rice consumption in South Korea has tumbled by 50 percent in the past three decades as wheat-based products such as pasta and bread gained wider acceptance. The growing number of one-person households and dual-income families has contributed to the popularity of microwavable rice, which is less time-consuming and easier to cook.
Overseas sales, which account for about 10 percent of the company’s revenue, were hit by the fallout from tensions last year between South Korea and China over the U.S.-led deployment of an anti-missile system. Exports of Cuckoo rice cookers to China shrank 21 percent last year compared with 2016, according to a June research report by HI Investment & Securities in Seoul.
Cuckoo products are sold in 25 countries, including China, Russia and Vietnam, with China making up about 40 percent of overseas sales, according to the company. Its rice cookers are customized to match each country’s environment, accounting for differences in temperature and humidity.
For many Koreans living abroad, a rice cooker is a reminder of home and a link to their country’s culture. When Yoon, the New York restaurateur, was a student in Pennsylvania, he said his mother sent him a Cuckoo for his dorm room. But he was unable to make it work because the power outlet was different than in Korea.
“My mom cried because I couldn’t use it,” Yoon said. “That’s how much a rice cooker means for the family.”
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