Orion Freezes Prices on All Domestic Products

Domestic Corporations Freeze Prices for 8 Years
Some Price Increases for China and Russia Corporations

[Asia Economy Reporter Seungjin Lee] Orion Group announced on the 23rd that it will freeze prices on all domestic products. For overseas subsidiaries, price increases will be applied differentially depending on the situation, such as the impact of cost increases by country.

Orion decided to freeze prices amid a wave of product price hikes in the industry due to recent increases in major raw material prices. For the domestic corporation, this marks the eighth consecutive year of price freezes since 2013.

Orion explained that although the manufacturing cost ratio has continuously risen, it minimized the increase through various cost-efficiency efforts. By implementing efficient cost management such as data-driven inventory management in production and logistics, global integrated purchasing management, and elimination of inefficiencies, it is suppressing cost increases as much as possible. In fact, the operating profit margin in the first half of this year rose by 1 percentage point to 16.8% compared to the same period last year.

Since 2014, as part of ethical management, Orion has contributed to environmental friendliness by reducing the size and printing density of product packaging materials, and plans to continue the ‘Good Packaging Project,’ which returns the cost savings from packaging to consumers through price freezes and product quantity increases.

On the other hand, the China subsidiary will raise prices of four types of pies by 6-10% starting September 1. Since the second half of last year, the cost of raw materials has continued to rise, and the manufacturing cost ratio has steadily increased due to price hikes in key raw materials such as shortening, starch syrup, and frying oil. The affected products include Choco Pie and Cutie Pie. This price increase by the China subsidiary is the first in 11 years since 2010. Prices for 23 other brands including pies, snacks, biscuits, gum, and jelly will remain unchanged.

Russia, one of the countries most affected by rising raw material prices, will also raise prices. In addition to increases in raw material costs for sugar, flour, and cocoa, the relatively high impact of exchange rate depreciation compared to other subsidiaries has put strong upward pressure on costs. Therefore, starting October 1, prices for all products including pies and biscuits will be raised by about 7%.

The Vietnam subsidiary will freeze prices despite ongoing increases in major raw material costs such as palm oil, sugar, and fresh potatoes. For snacks, where market competition is fierce, the strategy is to expand market share through various new product launches and active sales activities instead of price increases. The pie category is judged to have a high profit margin, allowing defense against cost increases. The Vietnam subsidiary plans to continue its price suppression policy by steadily growing overall sales volume by double digits while efficiently managing operating expenses and reducing selling and administrative expenses.

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