'Nongshim Faces "Deficit Shock," Plans Another Price Increase for Shin Ramyun'

Major Ramen and Snack Price Increases After Chuseok... Average 11.3%, 5.7% Rise
Costs Push Prices Up Again After One Year

[Asia Economy Reporter Eunmo Koo] Nongshim, the leader in the ramen industry, will raise the prices of major ramen products such as Shin Ramyun after the Chuseok holiday. Amid the ongoing burden of rising international raw material prices such as flour and palm oil, the company has pulled out the price increase card as a solution, compounded by a poor performance marked by a domestic market deficit for the first time in 24 years. Following the price hike decision by the industry leader, it is expected that ramen prices will rise across the board.

Nongshim announced on the 24th that starting from the 15th of next month, it will raise the shipment prices of major ramen and snack products by an average of 11.3% and 5.7%, respectively. The items to be increased after Chuseok include 26 ramen brands and 23 snack brands, with the main products’ price hikes based on shipment prices being Shin Ramyun at 10.9%, Neoguri at 9.9%, Saewookkang at 6.7%, and Honey Twist (Kkul Kkwabaegi) at 5.9%. Accordingly, the price of Shin Ramyun, currently sold at an average of 736 won per pack in large supermarkets, is expected to adjust to about 820 won, and Saewookkang’s price will rise from 1,100 won to approximately 1,180 won.

Nongshim also raised the prices of major ramen products by an average of 6.8% last August. The representative product Shin Ramyun was increased by 7.6%, raising the shipment price per pack from 676 won to 736 won based on large supermarket sales, and from 830 won to 900 won at convenience stores. With another price increase within a year, the convenience store price of Shin Ramyun is approaching 1,000 won per pack.

This price adjustment is interpreted as a measure to overcome worsening profitability issues caused by rising international raw material prices such as flour and palm oil, as well as increased logistics and labor costs. Since the beginning of this year, the volatility of international grain prices has increased following Russia’s invasion of Ukraine, and cost pressures have mounted due to the rise in the won-dollar exchange rate and maritime freight charges, making a price increase inevitable. A Nongshim official explained, “Since April, raw material prices have surged sharply due to international conflicts and inflation, and the exchange rate has risen, intensifying cost burdens. After the second quarter, the delivery prices from domestic partner companies were raised, further increasing Nongshim’s manufacturing cost burden.”

Moreover, the recent deterioration in performance also seems to have influenced the decision to raise prices. Nongshim’s consolidated operating profit for the second quarter this year was 4.3 billion won, down 75% from the same period last year. In particular, based on separate financial statements (domestic performance excluding overseas subsidiaries), the company recorded an operating loss of 3 billion won, marking the first domestic operating profit deficit in 24 years since the second quarter of 1998.

As Nongshim, the number one ramen company, moves to raise prices, it is expected that other ramen companies facing similar situations, such as Ottogi, Samyang Foods, and Paldo, will follow suit with price increases. Ottogi raised ramen prices by an average of 11.9% last year, the first increase in about 13 years, while Samyang Foods and Paldo raised prices by an average of 6.9% and 7.8%, respectively.

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