Hanaro Mart caves in, so milk prices will rise

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Hanaro Mart caves in, so milk prices will rise

The nation’s largest dairy producer Seoul Dairy Cooperative, also known as Seoul Milk, finally decided to raise prices of its milk products by 220 won ($0.19) per liter starting tomorrow.

Other dairy manufacturers are expected to follow suit, according to industry sources, despite weeks of on-again, off-again rises.

Seoul Milk said it will start selling 1 liter of milk for 2,520 won, nearly 10 percent higher than the current 2,300 won, starting tomorrow at large discount stores. The rise reflects a recent hike in raw milk prices.

“We suggested the retail price taking into consideration a sluggish domestic market situation and its impact on consumption,” said a spokesman for the Seoul Dairy Cooperative.

“Also, the company has absorbed about 6 billion won of costs since the price of raw milk increased and [realizes] the difficulty of raising retail prices.”

Before the official announcement yesterday, Seoul Milk negotiated with discount retailer Hanaro Mart, which had refused hikes in milk prices due to heavy competition in the retail sector.

Hanaro Mart’s action was followed by other discount store chains, which didn’t want to lose customers.

The dairy industry has been trying to persuade Hanaro Mart through negotiations to allow the price hikes. When it wanted to raise the price of a liter of milk by 250 won on Aug. 9, the discount retailer said it would subtract the 250 won from the distribution margin and not pass it on to consumers.

The dairy industry reached an agreement with Hanaro Mart for the 220 won hike.

Meanwhile, other dairy companies such as Maeil Dairy, Namyang Dairy and Dongwon F&B were reportedly reviewing their options for their price hikes.

Industry sources said the companies will announce rises of 220 won to 230 won within the week.

BY KIM JUNG-YOON [kjy@joongang.co.kr]
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