Even Dried Red Peppers... Processed Food and Dining Out Prices Rise Amid Soaring Ingredient Costs

Reduced Dried Chili Production Drives Sharp Price Surge
Supply Control Forecasts 'Severe Increase'
Packaged Kimchi Prices Also Expected to Rise

Rising Prices of Soybeans, Eggs, and International Grains
Processed Foods Like Ramen Face Inevitable Price Hikes
Feed Cost Increase Impacts Livestock Products

34% of Foodservice Ingredients Are Imported
Chinese Cuisine Tops with 48% by Industry Type

[Asia Economy Reporter Lee Seung-jin] The sharp rise in consumer prices that began at the start of the year continues even after the Lunar New Year holiday. Prices of agricultural, livestock, and fishery products are driving up processed food prices, and dining-out costs are also soaring. Recently, the price of dried red chili peppers has surged, and the price of packaged kimchi, which was raised once last year, is expected to increase again soon.

Dried Red Chili Peppers, Onions, etc. ‘Severe Price Increases’

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 4th, dried red chili peppers are expected to reach the ‘severe increase’ stage according to the supply-demand control manual. The supply-demand control manual classifies market conditions into stable, caution, alert, and severe stages based on agricultural product prices. When the severe stage is reached, the government may intervene by selling stockpiled goods at discounted prices or, if necessary, directly importing products.

Dried red chili peppers saw a sharp price increase due to a 20% drop in production compared to the previous year, caused by the longest rainy season last year. Last week, the price of dried red chili peppers was 15,408 KRW for 600g, nearly double the average price for the same period in previous years (8,176 KRW). Similarly, onion prices, also at the severe increase stage, have soared. As of last week, the price of onions was 2,004 KRW per kilogram, more than 70% higher than the average price for the same period (1,205 KRW).

The rise in dried red chili pepper prices is likely to lead to an increase in packaged kimchi prices by food companies. CJ CheilJedang and Daesang, which raised gochujang (red chili paste) prices citing raw material cost increases, are expected to sequentially reflect raw material cost increases in their packaged kimchi products. Last month, CJ CheilJedang raised prices of five types of ‘Haechandle’ brand gochujang by an average of 9%, and Daesang increased prices of the ‘Chungjungone’ brand gochujang product line by an average of 7% starting from the 1st of this month.

International Grain Prices Also in Emergency

Prices of domestic and international raw materials such as soybeans, wheat, and eggs are rising, causing processed food prices to increase one after another. The bakery and fast-food industries have also joined the price hike trend. SPC Group’s Paris Baguette, CJ Foodville’s Tous Les Jours, as well as McDonald’s and Lotteria have raised their prices.

The problem is that international grain prices continue to rise, raising concerns that prices of major processed foods like ramen and livestock products will increase. Ottogi recently attempted to raise ramen prices for the first time in 13 years but withdrew the plan due to concerns over rising living costs. However, if pressure from rising grain prices continues, price hikes in the ramen industry will be inevitable.

Feed prices have also increased, which is expected to affect prices of imported beef and pork. If prices of imported meat rise as well, the consumer price increase felt by customers will be even greater. Imported meat is widely used in dining establishments and home meal replacements (HMR), whose demand increased due to COVID-19, and is expected to directly impact consumer price inflation.

One-Third of Restaurant Ingredients Are Imported

According to a survey conducted by the Korea Foodservice Industry Research Institute from October 19 to November 1 last year on 300 dining establishments (restaurants), the average proportion of imported ingredients among 51 major food items was 34.1%. This is nearly double the 17.6% share of imported ingredients in 2018.

By ingredient type, seafood had the highest proportion of imports at 64.9%, followed by livestock products (31.7%) and agricultural products (18.0%). By dining sector, Chinese cuisine had the highest proportion of imported ingredients at 47.5%, followed by pizza, hamburgers, and sandwiches (44.6%), Japanese cuisine (38.2%), Western cuisine (36.8%), and Korean cuisine (24.3%).

The proportion of imported ingredients in chicken specialty restaurants was only 7.8%, indicating that most use domestically produced chicken. Among livestock products, the proportion of imported beef was 64.8%, higher than pork (21.7%) and chicken (21.8%).

Among agricultural products, soybeans (45.5%), carrots (28.2%), and garlic (20.8%) had high proportions of imports. Rice was only 4.2%. Among processed foods, kimchi had a high imported ingredient proportion of 61.9%.

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