Bakery prices are raised by 6.6%
Paris Baguette, Korea’s leading confectionery franchise, announced Friday it will increase prices on 193 items, accounting for 34 percent of its product list, by an average of 6.6 percent. The price hikes went into effect as of Sunday, and they are the first hikes since February 2014.
SPC Group controls 60 percent of the market share of franchised bakery products in Korea.
By categories, the price of desserts - 27 different individual items, such as slices of cake sold in individual containers - will be raised the most, 10.4 percent. Basic bread products, including sweet red bean buns and plain bread, will be 7.9 percent more expensive than before. Whole cakes, a particular Christmas season favorite, will rise 6.1 percent.
The price of red bean buns will go from 800 won (68 cents) to 900 won, a 12.5 percent rise, and cheesecakes from 23,000 to 24,000, a 4.3 percent rise.
According to the company, rises in the cost of administrative costs and general overhead forced the price hikes.
“Overhead costs [such as rent and supplies] comprise about 30 percent of the total cost of manufacturing,” the staff said. “And this played the biggest role behind our decision, more so than the costs of ingredients. We’ve been bearing the cost internally for the past couple of years but finally decided to go ahead with the price hikes.”
On Nov. 1, Oriental Brewery, Korea’s leading beer manufacturer, upped the price of its products. The price of OB’s Cass went up by six percent. Coca-Cola increased the prices of its beverages around the same time by five percent.
After Paris Baguette announced its increases, other bakery franchises could follow suit. In December 2012, the price of soju, a popular Korean liquor distilled from rice, experienced a domino effect. Hite-Jinro pumped up its price by 5.6 first, followed by other soju manufacturers such as Lotte Liquor.
But Tous Les Jours, CJ Foodville’s bakery franchise and the main competitor of Paris Baguette, said it will not increase prices anytime soon. “We have no such plan at the moment,” an official from the company said.
The announcement came just a day after the Ministry of Trade, Industry and Energy reported that basic living expenses for Koreans rose 1.1 percent year on year in November, the highest growth since July 2014, when they rose 1.4 percent.
BY CHOI HYUNG-JO [firstname.lastname@example.org]