Ramen Price Cuts Spark Widespread Movement Across Food Industry

Nongshim to Cut Shin Ramyun and Saewookkang Prices by 50 Won and 100 Won Next Month
Samyang Foods Also to Lower Prices on 12 Products Including Samyang Ramen
Confectionery, Bakery, and Dairy Companies Deliberate on Timing and Scope

The price reduction policy initiated by Nongshim, the leading ramen company in South Korea, is expected to spread throughout the food industry. With the government repeatedly urging price cuts based on the recent decline in international wheat prices, not only ramen but also snack and bakery manufacturers using flour as an ingredient are considering price reductions and coordinating the timing. Pressure to lower prices may expand to other product categories, and industry insiders are expected to continue watching closely to see who will be next.

Ramen display at a large supermarket in Seoul [Image source=Yonhap News]

Under Dual Pressure from Government and Consumer Groups... Industry ‘Surrenders’

According to the related industry on the 28th, SPC Samlip, the top bakery company in South Korea, has decided to lower product prices and is adjusting specific items and reduction rates, with an announcement expected as early as today. Bakery and confectionery products handled by SPC affiliates such as Paris Baguette and Dunkin may also be included in the price cuts.

It appears that companies have effectively ‘surrendered’ under repeated pressure from both the government and consumer groups. Earlier, the Korea Consumer Organization Council issued a statement the day before, saying, "SPC Samlip raised prices on about 50 products by an average of 12.9% in February this year," and argued that "a price reduction is necessary after cumulative increases of 24.3% since last year." Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho also mentioned the ramen price issue during a broadcast on the 18th, stating, "The government cannot investigate costs and control prices one by one," and added, "It would be good if consumer groups exert pressure on this issue."

The first company to respond to the successive price reduction recommendations was Nongshim. The day before, Nongshim announced that as of July 1, it would reduce the ex-factory prices of Shin Ramyun (bagged noodles) and Shrimp Crackers by 4.5% and 6.9%, respectively. This came just nine days after Deputy Prime Minister Choo publicly expressed his hope for ramen price cuts. Accordingly, the retail price of a bag of Shin Ramyun, sold at 1,000 won, is expected to drop by 50 won, and Shrimp Crackers, priced at 1,500 won, by 100 won. This is the first time in 13 years since 2010 that Nongshim has lowered the price of its flagship product, Shin Ramyun. At that time, raw material prices had fallen, leading to a 2.7?7.1% price reduction for Shin Ramyun and other main products. This is the first price cut for Shrimp Crackers.

Following Nongshim’s decision on specific items and reduction rates, Samyang Foods promptly announced that starting next month, it would sequentially lower prices of 12 representative products, including Samyang Ramen, Jjajjaroni, Delicious Ramen, and Yeolmu Bibimmyun, by an average of 4.7%. Major ramen companies have also decided to move toward price reductions and are weighing detailed items and timing. Ottogi stated, "We are reviewing price reductions for major ramen products next month," and Paldo is also internally discussing measures to lower prices.

Next ‘Target’ after Ramen... Confectionery and Dairy Industries on Edge

Attention is also focused on how much flour prices will be reduced by milling companies that received price reduction recommendations during a meeting with the Ministry of Agriculture, Food and Rural Affairs on the 26th. The international wheat futures price, the raw material for flour, rose to $419 per ton in May last year due to the Russia-Ukraine war but has since declined to $243 per ton as of this month, about 58% of last May’s level. Major milling companies have expressed concerns about various factors they must consider, such as the time lag of 3 to 6 months between wheat futures prices and import prices, additional costs, and exchange rate increases, but have agreed to review ex-factory price reductions next month in response to government recommendations.

If milling companies reduce flour prices, not only ramen and bakery but also the snack industry will inevitably face pressure. Previously, confectionery and bakery companies lowered product prices in 2010 following a drop in raw material costs. At that time, Lotte Confectionery (now Lotte Wellfood) reduced prices on seven snack products by 4?14%, and Crown Haitai Confectionery lowered prices of Cham Cracker and Ivy by 10?12%.

The dairy industry is also on edge. The Dairy Promotion Committee, composed of dairy farmers and dairy industry representatives, has been negotiating since the 9th to set this year’s raw milk price. Given the steep rise in production costs in the dairy sector, the raw milk price is expected to increase by 69?104 won per liter this year. This would bring the raw milk price to 1,065?1,100 won per liter.

As concerns about ‘Milkflation (Milk + Inflation)’ grow, the government dismissed the impact, stating that since the proportion of milk in food raw materials is low and the share of imported milk is high, the effect of raw milk price increases on processed foods is not significant. The Ministry of Agriculture, Food and Rural Affairs disclosed the proportion of milk used in major products: 95% in dairy products such as milk, butter, cheese, and fermented milk, 59% in ice cream, but only 5% and 1% in bread and snacks, respectively.

Within the food industry, there are complaints that "while overall production and distribution costs have risen, only the decline in some raw material international prices is being highlighted," and that companies may have no choice but to lower prices reluctantly under government pressure.

Professor Eunhee Lee of Inha University’s Department of Consumer Studies said, "Considering that the ramen industry and others are effectively oligopolistic and price competition is not properly functioning, the government’s demand for price reductions can be seen as a measure to manage inflation," but added, "There is also room to argue that it is not appropriate for the government to intervene and pressure individual companies to lower prices in a free market economy."

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