Food Makers Buckle to Demands for Price Cuts

Other instant noodle, snack and bread makers followed suit Wednesday after Nongshim and Samyang Foods caved in to demands to cut their prices a day earlier.

They were responding to demands from the government and consumer organizations. Earlier, Finance Minister Choo Kyung-ho and the Ministry of Agriculture, Food and Rural Affairs urged flour mills and food makers to correct their sky-high prices now global wheat prices have dropped. 

Ottogi agreed to cut prices of 15 ramyeon products by an average of five percent next month. Manufacturers of snacks and bread products also announced they are slashing prices. Lotte Wellfood (formerly Lotte Confectionery) decided to lower prices of three major snack brands by 5.9 percent on average next month.

SPC will also cut prices of 10 toast and baguette brands made by Paris Baguette and 20 toast and cream bread products made by SPC Samlip by an average of five percent, or W100 to W200 per product (US$1=W1,307). SPC Samlip takes up a 70 percent share of the packaged bread market. 

Instant noodles, snacks and bread had been leading drivers of inflation. According to the consumer price index for May released by Statistics Korea, prices of agricultural, livestock and fishery products fell by 0.3 percent on-year, but processed food prices rose by 7.3 percent, with a particularly steep rise in prices of instant noodles (13.1 percent), bread (11.5 percent)and snacks and cookies (10.5 percent). 

The price cuts are expected to stabilize consumer prices to some extent, but consumer organizations pointed out that food manufacturers have not reduced their prices proportionally to their previous increases. 

While welcoming the price cuts, some consumers still complain that this is not enough.

The Korea National Council of Consumer Organizations said, “Nongshim increased prices of 26 ramyeon products last September on the pretext of increased raw material prices, but it only cut prices of Shin Ramyeon by half as much as it increased them.”

“Samyang did not include Buldak spicy noodles, its most popular brand, in its list of products subject to price cuts,” the council added.

Buldak noodles account for about half of Samyang’s instant noodle sales in the country and some 80 percent of its exports. A Samyang spokesman claimed the company would “suffer a big blow in exports if we cut its domestic price, as the domestic price is linked to export prices.” 

Ottogi and Paldo Food also left out their flagship products. A Paldo spokesperson said, “We didn’t make any profit from our ramyeon sales in the country last year, but we’re joining the price cut campaign for some of our products to contribute to price stabilization.”