Nongshim, Samyang succumb to pressure, cut prices of products

South Korea’s top ramen maker Nongshim said Tuesday it will cut prices of its flagship ramen and snack products, after it came under government pressure to lower costs of daily food products amid prolonged inflation woes.

The company said it will cut the prices of Shin Ramyun and Shrimp Crackers by 4.5 percent and 6.9 percent, respectively, starting this Saturday.

Based on their retail prices, the price of Shin Ramyun will be lowered from 1,000 won ($0.77) to 950 won on average, while the price for Shrimp Crackers will be down from 1,500 won to 1,400 won.

This marks the first time in 13 years that Nongshim has decided to cut the price of Shin Ramyun, its top-selling instant noodles.

The company said the rare decision came a day after local milling firms agreed to lower the supply price of wheat by 5 percent from Saturday.

With the upcoming cut in wheat prices, the company predicted it could reduce operational costs worth 8 billion won annually, while expecting more than 20 billion won of direct benefits for consumers as well every year.

"Despite the continuous cost burden, Nongshim aims to return to consumers the profits the company will reap with the price cut in its main ingredients," said a Nongshim official.

But the official downplayed the possibility of lowering prices of other ramen or snack products that use wheat, saying it is expected to lose money from the planned price cuts of the two products.

“Shin Ramyun and Shrimp Crackers are the most beloved ramen and snack products, with each making almost 360 million won in annual sales,” he said.

“Even though the price cuts pose a financial burden, we decided to lower the prices" for the two Korean household staples, it said.

Other ramen makers are also following suit. Samyang Food, another ramen giant here, said it will reduce the prices of 12 major products by an average of 4.7 percent in phases starting in July.

A pack of five Samsung Ramen, its top seller, will be sold at 3,680 won at large discount chain stores, down 4 percent from 3,840 won. Its retail price per pack at convenience stores will be lowered to 900 won from 940 won.

Its smaller rival, Ottogi, also said they are currently considering plans to lower the price of its major ramen products in July, although it has yet to decide the size of the markdown.

On Monday, the Ministry of Agriculture, Food and Rural Affairs organized a rare meeting with local milling firms in a bid to increase pressure on industries to lower prices, as wheat prices have been declining globally.

A week before, Finance Minister Choo Kyung-ho also stated that local ramen companies should lower product prices following falling wheat prices. International wheat futures prices, which refer to wheat bought or sold at an agreed price at a specified future date, rose to $419 per ton in May last year, but have since declined to $243 in June, down 58 percent from May last year.