Heavy Rain, Heatwaves, Typhoons, and COVID-19... Kimchi Becomes Priceless "Even Chinese Imports Are Scarce"

Average Wholesale Price of Baechu Rises 104% Year-on-Year
Kimchi Supply Price for Small and Medium Enterprises Increased by About 20%
Demand for Chinese Kimchi Up... But Prices Also Rise Due to COVID-19
Sales of Price-Stable 'Packaged Kimchi' Expected to Increase

[Asia Economy Reporter Choi Saeng-hye] Due to the unprecedentedly long rainy season and typhoons causing poor crop yields, the price of vegetables has skyrocketed this summer, driving the price of domestically produced kimchi up at a frightening pace. In the food service industry, many self-employed business owners are turning to Chinese-made kimchi instead of domestic kimchi, but the prolonged COVID-19 pandemic has also reduced import volumes. On the other hand, in the packaged kimchi market, where Daesang and CJ CheilJedang hold the first and second positions respectively, both companies have announced that they will not raise prices in the second half of the year, suggesting that the general consumer market will remain stable.

Cabbage and chili pepper prices double, kimchi prices surge= According to aT Agricultural Products Distribution Information on the 2nd, the average wholesale price of cabbage (standard product) per 10kg was 21,400 KRW as of the previous day, an increase of 103.8% from 10,500 KRW the previous year. The wholesale price of dried chili peppers (Hwageon, standard product) per 30kg was 913,400 KRW, up 87.7% from 486,500 KRW the previous year. According to a food service industry official, the price of domestically produced kimchi currently supplied to restaurants by wholesalers is about 36,000 KRW per 10kg, which is four times the approximately 9,000 KRW for the same weight of Chinese-made kimchi.

Small and medium-sized companies that manufacture and supply kimchi to restaurants have recently raised kimchi prices by about 10-20%. Given this situation, many self-employed food service operators are switching to cheaper Chinese-made kimchi instead of domestic kimchi. Posts sharing information about Chinese-made kimchi are increasingly appearing on self-employed community boards. Mr. Park, a self-employed business owner running a kalguksu (knife-cut noodle) restaurant in Dongjak-gu, Seoul, said, "I have insisted on using domestic kimchi for years, but recently the price has risen to an unbearable level," adding, "Moreover, with COVID-19 reducing in-store sales, I have no choice but to use Chinese-made kimchi to meet delivery demand," sighing deeply.

Unit: ton

Supply of Chinese-made kimchi also difficult= Due to the prolonged COVID-19 pandemic, even imports of Chinese-made kimchi have decreased. According to the Korea Customs Service's kimchi import records, from January to July 25 this year, kimchi imports totaled 149,600 tons, down by about 23,000 tons from 172,600 tons the previous year. In particular, kimchi imports in July were 17,597 tons, a 16% decrease compared to the previous year. The import price per ton also rose 22% year-on-year to 513 dollars.

According to the Agricultural Outlook Board, the domestic sale price of imported kimchi is 8,300 KRW per 10kg, up 22.7% from the previous year. In China, the cultivation area of cabbage in Hebei has decreased due to three months of heavy rain, causing poor crop yields and increasing kimchi production costs, which is also cited as a factor for the price increase. The price of Chinese chili peppers has also risen about 30% compared to the average year. A distribution industry official said, "With the prolonged COVID-19 pandemic, it has become difficult to expect stabilization of vegetable imports in the second half of the year," adding, "In Korea, following heavy rain and heat waves, typhoons are expected to continue causing poor crop yields."

No price change for packaged kimchi= For these reasons, demand for B2C (business-to-consumer) kimchi, which has almost no price fluctuations, is expected to increase further. Daesang and CJ CheilJedang, which hold most of the market share in packaged kimchi, have firmly stated that there will be no price increase for kimchi in the second half of the year. As of May, Daesang’s Jongga Jip holds a 42.2% market share in packaged kimchi, while CJ CheilJedang’s Bibigo, which is rapidly catching up, holds a 38.4% market share as of May.

Daesang and CJ CheilJedang raised packaged kimchi prices by 5.7% and 3% respectively in May due to raw material price increases, but stated, "We secure supplies year-round from production areas nationwide and procure cabbage through annual contracts, so we are not greatly affected by market prices," adding, "There will be no further kimchi price increases this year."

A food industry official said, "Kimchi sales peak in the third quarter, when inventory runs low," and added, "With the spread of COVID-19 increasing demand for home-cooked meals, the number of consumers purchasing kimchi is also rising, so sales of packaged kimchi, which guarantees price stability, are expected to increase significantly."

This content was produced with the assistance of AI translation services.