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Food industry rushes to raise prices at year-end

Food industry rushes to raise prices at year-end

Consumer groups raise concerns over rapid increase in prices

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Published : 2013-12-27 20:26
Updated : 2013-12-27 20:26


Concerns over a possible increase in consumer prices are rising as producers of some food items pushed up their key product prices at the end of the year.

Orion Confectionery, the nation’s No. 1 snack maker, increased the price of its flagship snack brand “Choco Pie” by 20 percent on Thursday.

The surprise move pushed up the price of a box containing 12 Choco Pies to 4,000 won ($3.79) from 3,200 won. It is the second price hike of the snack in 15 months, with the company raising prices 25 percent in August last year.

Besides the best-selling cake with marshmallow filling, Orion raised prices of five other snack items by 7-25 percent as well.

“Management decided to raise the price of six snack items, pressed by rising costs for production and sales & marketing. The company will not increase the price of dozens of other food items, considering the impact on consumer prices,” Orion said in a press release.

Lotte Confectionery, the second largest snack maker, followed suit, increasing the price of its snack brand Pepero by 20 percent on Friday.

The company claimed that they increased the size of the box by 25 percent, rather than just hiking the price.

The snack maker allegedly reviewed a plan to raise the price of other best-selling snack or cookie brands, including Monshell and Kokalcon, early next year, industry sources said.

Ahead of major snack makers, Coca-Cola Co., a global soft-drink giant, raised the prices of some of its beverages including Coca-Cola and Georgia Coffee Original by 6.5 percent on average on Tuesday, which will be effective from the beginning of next year.

The measure by the industry leader is expected to have a ripple effect and lead other drink makers to raise their product prices.

Consumer protection and civic action groups called for authorities like the Fair Trade Commission to look into possible price fixing among food makers.

“It is hard to understand why food makers raise the prices of their best-selling product items in a time when their operating profit margin is on the rise, boosted by the continued stability in price of raw materials,’’ Cho Hyun-sook from Consumer Research said.

“Orion’s operating profit margin, for instance, was ranked first among the top 30 food makers in Korea in the third quarter, reaching up to 11.4 percent, from a year ago.’’

Other civic groups raised speculations that food makers are making the most use of a low-consumer-price period for a product price hike.

The nation’s consumer price has been stabilized, staying below 1 percent throughout the year. The nation’s consumer price index stood at 0.9 percent in November, according to Statistics Korea.

By Seo Jee-yeon (jyseo@heraldcorp.com)

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