South Korea’s favourite food is likely to see a price hike, as domestic manufacturers indicate that they will follow suit when market leader Nong Shim Co ups its prices to offset increased import costs. Nong Shim controls about 65% of the domestic instant noodle market, which is worth about US$919m.
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Since the beginning of April, as the dollar has strengthened against the won, the cost of importing flour and starch has risen by 12% and 10% respectively, cutting heavily into profitability and making current prices hard to maintain. Currently, about 70% of instant noodle products on the domestic market cost around US$0.34. The remainder cost between US$0.34 and US$0.53 on average.
An industry insider commented: “Nong Shim is said to be considering price increases because of such conditions.” He added that market competitors Samyang Food, Ottogi Co, Binggrae Co, and Korea Yakult are likely to follow in the case of an increase.
So far, the reluctance of such companies to implement a price hike reflects concern about the effect this will have on consumers. Nong Shim has stressed that any increases would be thoroughly discussed with civic groups and the government.
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By GlobalData
