From the Start of the New Year, Price Crisis... Ice Cream 10,000 Won · Americano 5,000 Won

Haagen-Dazs Raises Ice Cream Prices by 14% Since Early Year
Angel-in-us Adjusts Prices for 29 Items... Hamburger and Cola Also Up
Price Hikes Expected to Surge This Year... Companies Seek Breakthrough Amid Profit Decline

[Asia Economy Reporter Lee Seon-ae] "Coffee prices are rising, ice cream prices are rising, there is no item that hasn't gone up. If you have lunch and then a cup of coffee at a coffee shop, 20,000 won just flies away."

From the beginning of the new year, food prices have been rising one after another, showing signs of a real price crisis. There are hardly any items that haven't increased, from coffee to ice cream, carbonated drinks, hamburgers, and ramen. Companies cite rising labor costs and raw material costs as reasons for the price hikes. Although there is criticism that price increases are a habitual measure repeated every year at the end and beginning of the year, they say it is unavoidable to recover the sharply decreased profit margins from last year. Moreover, this year, price increases are expected to flood even more than last year, which is likely to increase the burden of grocery prices that consumers directly feel.

According to the related industry on the 5th, coffee franchise Angel-in-us raised the selling prices of 29 products, including Angel-in-us Snow and Single Origin Coffee, among all sales products from the 3rd. The items raised include 8 types of Angel-in-us Snow, 8 types of coffee, and 13 types of tea and beverages, with an average increase rate of 0.7%. Prices went up by about 100 to 200 won. Accordingly, 'Americano' was adjusted from 5,100 won to 5,200 won, 'Single Origin Americano' from 5,000 won to 5,200 won, and 'Royal Chamomile Tea' from 4,900 won to 5,100 won.

An Angel-in-us representative said, "Due to the continuous rise in raw material costs, labor costs, and rent, we had no choice but to raise prices on some items," adding, "We will strive to present improved services and high-quality products in the future."

H?agen-Dazs raised ice cream prices sold at stores, convenience stores, and large supermarkets from the 1st. The price of H?agen-Dazs Mini increased from 4,200 won to 4,800 won, a 14.3% increase, and the pint from 11,300 won to 12,900 won, a 14.2% increase. H?agen-Dazs cited the rise in the main ingredients of ice cream and the increase in packaging and transportation costs due to domestic and international inflation as reasons for the price hike.

Nongshim raised the ex-factory prices of Dongji Naengmyeon and Saengsaeng Udon by 12.1% and 9.9%, respectively, from the 27th of last month. Retail prices increased by about 200 won. A Nongshim official explained, "Due to the continuous rise in manufacturing costs and selling and administrative expenses, price increases were inevitable."

On the same day, Coca-Cola Beverage also raised the ex-factory prices of 11 items by an average of 5.8%. The main item increase rates were 4.8% for the 250ml can and 500ml PET bottle of 'Coca-Cola,' 5.0% for the 1.5L product, and 5.2% for Canada Dry. Hamburger prices also rose across the board. Lotteria raised prices of 13 types of burgers, 6 types of desserts, 2 types of beverages, and 5 types of chicken by 100 to 500 won from the 19th of last month. Burger King raised prices of 20 types of burgers including Whoppers, 6 side menu items, and 1 beverage by 100 to 300 won each, and KFC raised prices of major products by 100 to 200 won each.

Companies unanimously say that price increases are inevitable because at the turn of the year, factors such as raw materials and minimum wage increase lead to more reasons for price hikes. This year's minimum wage is 8,590 won, a 2.9% increase compared to last year. Although this is lower than the 16.4% increase in 2018 and 10.9% in 2019, it is still a burden for companies. However, there is fierce criticism that price hikes are a 'habit' because they are concentrated every year at the end and beginning of the year when consumption increases and attention is relatively focused elsewhere. In fact, at the end and beginning of last year, most food and beverage companies such as Nongshim, Angel-in-us, Lotteria, Seoul Milk, Namyang Dairy Products, and Lotte Confectionery implemented price increases.

Housewife Lee Ji-seon (35) said, "The phenomenon of prices rising all at once when consumption is active at the end and beginning of the year is a sneaky price hike," adding, "Especially considering that this year's minimum wage increase rate is 2.9%, the lowest since 2010's 2.8%, the explanation for price increases of over 10% is insufficient."

There is a prevailing forecast that food price increases will be even more rampant this year than last year. This is based on the judgment that last year's major food companies' performance deteriorated, making profitability improvement through price increases inevitable. A food industry official said, "Although we receive criticism for sneaky price hikes every year, raising prices at the end and beginning of the year is relatively less burdensome than raising them throughout the year," adding, "If leading companies raise prices, competitors will follow, and this phenomenon is expected to continue this year."