Instant noodle makers face pressure to cut ramyeon prices

A consumer shops at the section of instant noodle products at a supermarket in Seoul on Monday. [YONHAP]

Instant noodle companies are exploring ways to cut the prices of their ramyeon products after Finance Minister Choo Kyung-ho called for the move as wheat prices fall.

The companies are scrambling for ways to reduce the burden on consumers after Choo's comment, but remain hesitant towards immediately cutting prices due to rising costs.

“It takes time, usually three to nine months, for the global wheat price to be reflected in the domestic wheat market,” said a Nongshim spokesperson. “We are not at a stage where we can cut the price immediately, but are examining various ways to reduce the consumer burden.”

“The Finance Minister only commented on the issue yesterday, so we cannot make an immediate decision on the price,” a Samyang Foods spokesperson said. “These things take time. However, we are aware that consumers are feeling burdened due to inflation, so we are deliberating on ways to reduce that.”

The average price in May for U.S. soft red winter (SRW) wheat, commonly used to make flour, was $228 per metric ton after having plummeted 45.6 percent on year, according to data from Korea Agro-Fisheries & Food Trade Corporation.

Choo raised the issue in his guest appearance on a talk show on Sunday.

“Prices of instant noodles climbed between last September and October, but the current U.S. wheat price fell more or less 50 percent in that period,” Choo said. “Companies should reduce the price now accordingly.”

Choo also asked consumer organizations to step up, saying that “the government cannot look into or control every cost factor and price of raw ingredients.”

Prices of instant noodle products have not gone down since 2010.

The consumer price of instant noodles in May rose 13.1 percent on year, the highest jump in 14 years after the figure rose 14.3 percent in February 2009 during the global financial crisis.

Instant noodle companies increased their prices near the end of last year citing rising costs in raw ingredients and human resources.

Nongshim and Ottogi rose their factory prices by 11.3 percent and 11 percent respectively in September. Paldo upped the price by 9.8 percent, while Samyang Foods upped the price of its instant noodle products by 9.7 percent in November.

Thanks to the forecast for decreased profitability if ramyeon prices go down, shares for the related companies traded lower compared to Friday. Nongshim's shares fell 6 percent to close at 411,500 won ($321) on Monday, while Samyang Foods plummeted 7.79 percent to close at 105,400 won and Ottogi fell 2.94 percent to close at 428,500 won.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]