Choco Pies, yes Choco Pies, might become more expensive

Economy

Published: 13 Jul. 2022, 17:15 Updated: 13 Jul. 2022, 17:50

Choco Pies, yes Choco Pies, might become more expensive

Orion Choco Pie [ORION]

Even the mighty Choco Pie may be no match for inflation, with Orion possibly raising the price of the marshmallow-chocolate delight.

The move could shake the industry as the snack, both an icon and a bellwether, has been selling at a steady 4,800 won ($3.68) per dozen for nearly a decade.

"It's true," admitted a source within Orion, the confectionery giant. "We are currently reviewing a price increase for all items, but specifics, such as for which products and the exact timing of the increase, has not been confirmed."

Orion raised the price of a box of a dozen Choco Pies from 4,000 won to 4,800 won in 2013 but has not raised the price since then.

Insiders in the handheld snack industry expect Orion to raise the price of Choco Pies this year. This is because raw materials for food products, including wheat, have become more expensive, putting the squeeze on margins.

Prognosticators anticipate an increase in the range of a few hundred won per box.

Lunch boxes could go out incomplete. Parents my find their budgets squeezed. In countries where Choco Pies are used as currency, rates of exchange could be upended.

It's not just Choco Pies.

KFC, which raised the prices of some of its products in the first half of this year, raised the prices of some burgers and chicken sandwiches once more on Tuesday. Zinger Burgers went from 4,900 won to 5,300 won.

Subway upped the price of 15-centimeter (5.9-inch) sandwiches by 5.8 percent Tuesday after a price increase earlier this year.

The ramyeon Big 3 — Nongshim, Ottogi, and Samyang Foods — are seen as the next to fall. They upped prices last August and could do it again as profits are hit by rising raw material prices.

Nongshim, the No.1 company in the industry, is expected to report under 20 billion won of operating profit in the second quarter, from 34.3 billion won in the first quarter.

"The government is promoting price stabilization as the top priority, so companies are walking on eggshells about raising prices," said an official from the food industry. "When a company raises the price of a major product, competing companies in the industry are likely to follow, so each of us are cautious."

Prices of major foods, which factor into the consumer price calculation, have increased remarkably. On July 1, Ottogi raised the price of thin noodles from 4,300 won to 4,800 won, while Sajo raised the price of pressed olive oil from 4,500 to 5,300 won.

The Agricultural Observation Center of the Korea Rural Economic Institute predicts that the price of imported grain will rise 13.4 percent on quarter.

"With the Russian invasion of Ukraine, uncertainties in supply and demand in the grain market and prices are continuing to rise," said Kim Min-soo, CEO of Agscouter, a private grain market research and consulting firm based in Seoul. "Market instability is further exacerbated by the measures taken by major countries to restrict grain exports."

"The shortage of grain supply is still serious due to worsening weather conditions and high fertilizer prices," said Choi Jin-young, an analyst at eBEST Investment & Securities. "High grain prices will continue until the end of this year."

BY KANG KI-HEON [lim.jeongwon@joongang.co.kr]