Ramen firms under pressure to lower prices

South Koreans ramen makers said Monday that it is currently difficult to adjust the prices of their ramen products, in response to the South Korean government's recent call for them to cut prices amid the fall in raw material costs.

"Milling companies were supplied with months' worth of raw materials when their costs were high. Even if the prices of wheat and other major materials needed for making ramen have fallen recently, it is difficult to adjust the price of ramen immediately," said an official from a ramen company on the condition of anonymity.

However, he said his company will review possible ways to lower the prices of its ramen products.

Another representative from a local ramen maker agreed that it is currently difficult to lower prices.

"There are lots of factors to consider. Other costs such as labor costs and logistics costs have risen sharply nowadays. It's a difficult situation," he added.

The South Korean government recently called for local instant ramen manufacturers to cut their prices, citing falls in international wheat prices.

"(Ramen companies) raised (their prices) significantly between September and October last year, but international wheat prices are now about 50 percent lower than what they were then," said Finance Minister Choo Kyung-ho during a program aired on KBS Sunday.

"I hope companies will lower their (ramen) prices accordingly, following the drop in wheat prices. Since the government cannot control prices by examining costs one by one, I hope consumer groups exert pressure (on ramen companies to lower the prices of their products)," he added.

During the second half of 2022, a number of major Korean ramen manufacturers raised the prices of ramen products.

Nongshim, Korea's number one ramen maker, raised the price of its ramen products by an average of 11.3 percent in September 2022, while other ramen giants such as Paldo and Ottogi raised the prices of their products by an average of 9.8 percent and 11 percent, respectively, a month later. Local ramen maker Samyang Food also raised its prices by an average of 9.7 percent in November 2022.

Following this series of price hikes, as of May, the annual percentage of increase for Korean ramen products recorded its highest level in 14 years, with the ramen consumer price index showing an overall increase of 13.1 percent compared to last year.

The price hikes generally came as the costs of major imported raw materials, such as flour and vegetable oil, soared due to supply issues caused by the Russia-Ukraine war.

However, compared to last year, the international prices of a number of the major ingredients needed for making ramen, including wheat, have recently seen a downturn.

According to the Korea Agro-Fisheries & Food Trade Corporation, the international price of wheat, which is mainly used for making flour, fell by 37.8 percent in June to around $231 per ton.

The price of soybeans, another main ingredient in ramen, also fell by more than 19 percent. The price of corn also fell 19.8 percent from $298 to $239.