Korean Snack Industry Reduces Prices, Pressuring Foreign Imports

Published Sep 11, 2024

Despite rising inflation in South Korea, major snack companies like Haitai Confectionery and Orion have reduced prices on popular biscuit products, driven by declining global flour prices. Haitai Confectionery lowered prices by an average of 6.7%, while Orion discounted 22 products. In contrast, most imported snacks saw price increases in 2024, except for some Italian products. As domestic snack prices fall, imports may lose competitiveness, urging exporters to consider price adjustments to remain competitive in the Korean market.

Korean Snack Market

Despite the rising Consumer Price Index (CPI) in South Korea, Haitai Confectionery recently reduced the prices of its three biscuit products — Egg Crackers, Calorie Balance, and Salvia — by an average of 6.7%, helping to stabilize prices. The Korean CPI reached 114.54 points in Aug-24, up from 112.29 points a year earlier. Orion followed suit, launching a month-long discount event on Sep-24 for its 22 products, including the famous snacks like Choco Songi and Moist Choco Chip Cookie. These companies reduced prices and offered discounts mainly due to the decline in global flour prices. Rather than boosting their profits, they opted to alleviate consumer burdens.

This is not a one-off occurrence. In Jul-23, Haitai Confectionery reduced the price of Ivy Original by 10%. In Orion’s case, it has frozen its prices for its snacks, such as My Gummy and Choco Chip Cookies, for 13 years. Orion has also maintained Market O Brownie’s price since 2008, even increasing the product’s weight by 16.7% in 2020 without raising prices. Various factors, such as corporate management policies and market competition, likely influenced these moves.

Figure 1: South Korea CPI (2020=100)

Source: Korean Statistical Information Service (KOSIS), Tridge

Figure 2. Three Price-Reduced Products by Haitai Confectionery

Foreign Imported Snacks in South Korea

With these price reductions in the Korean snack market, imported snacks need to remain competitive with domestically produced snacks. According to Tridge’s Transaction Data Service (TDS), the top eight countries from which Korea imported the most snack products in 2023 were Japan, Malaysia, China, the United States (US), Indonesia, Vietnam, Thailand, and Italy. Among these, the average price of snacks imported from Vietnam, Indonesia, and China ranged between USD 2 to 4 per kilogram (kg), forming relatively low price categories. In contrast, Italy — the sole European country in this group — experienced average snack import prices ranging from USD 5 to USD 7 per kg. These imports primarily included flour-based products, like Loacker wafers and Colussi biscuits.

Figure 3. Top 8 Countries Exporting Snacks to South Korea in 2023

Looking at the more affordable, high-volume imported snacks, Omeli crackers from Vietnam's BAO HUNG INTERNATIONAL are quite popular in Korea, priced between KRW 10,000 (USD 7.44) and KRW 15,000 (USD 11.16) per kg on major Korean e-commerce platforms like Coupang. Richy Food’s Oatmeal Mini Bite, known locally as "human feed" and popular among office workers, is sold for KRW 7,850 (USD 5.84) to KRW 11,100 (USD 8.26) per kg. From Indonesia, PT MEGA GLOBAL FOOD INDUSTRY’s Kokola Cookies are also widely sold in Korea, priced between KRW 15,000 (USD 11.16) and KRW 22,500 (USD 16.73) per kg.

Figure 4. Major Low-Cost Foreign Snack Imports to South Korea

Unlike the recent price reductions of flour-based snacks by Korean food companies, the average import prices of foreign flour-based snacks per kg have increased in 2024 compared to 2023. Omeli’s import price rose by 7.35%, and Kokola’s by 9.36%. Meanwhile, the import price of Oatmeal Mini Bite has remained unchanged in 2024, likely due to the trading methods and relationships between the exporting and importing companies.

Figure 5. Price Changes in Low-Cost Snack Imports to South Korea

On the other hand, the import prices of Italian snacks have decreased in 2024 compared to 2023. The import prices of Loacker wafers and Colussi biscuits or crackers, the two most imported Italian snacks in Korea, have dropped by 2.61% and 20.40%, compared to 2023, respectively. This decrease seems to be due to the base effect from excessive price increases in 2023, where Italy’s monthly CPI growth reached up to 10%. However, the rate stabilized at around 0.5% to 1% in 2024. Loacker wafers are sold on Korean e-commerce platforms like Coupang for KRW 21,000 (USD 15.62) to KRW 28,000 (USD 20.82) per kg, while Colussi biscuits are priced between KRW 17,500 (USD 13.02) and KRW 22,500 (USD 16.73) per kg, relatively higher than Vietnam’s and Indonesia’s.

Figure 6. Price Changes of Italian Snack Imports to South Korea

Conclusion

While consumer prices in Korea continue to rise, Korean food companies are lowering the prices of their snack products. The decline in global flour prices has particularly contributed to the price reduction of biscuits and cookies, with domestic companies prioritizing reducing consumer burdens over increasing profits. In contrast, the import prices of foreign snacks have generally risen in 2024 compared to 2023, except for Italian products. Despite the recent decline in Italian snack import prices, they still remain relatively high. As Korean domestic snack prices fall, the price competitiveness of imported snacks may decrease. Tridge suggests that exporting companies could benefit from lowering their import prices to maintain competitiveness in the Korean market.