Trick to Exploit Disaster Relief Funds? Convenience Stores Feel Unfairly Accused

Ministop 'Boneless Chicken'

[Asia Economy Reporter Seungjin Lee] An unexpected controversy over ‘trickery’ has erupted in the convenience store industry. As the government began distributing disaster relief funds, convenience stores where the funds could be used allegedly raised the prices of chicken products one after another. While there were criticisms that the price hikes were a sneaky tactic despite no price increase factors, this has been confirmed to be untrue.

According to the convenience store industry on the 26th, GS25, CU, 7-Eleven, and Ministop raised the prices of some chicken-based products such as fried chicken pieces, skewers, and fried foods by about 100 to 200 won since the beginning of this month. This led some to accuse the convenience store industry of engaging in sly business tactics and trickery to take advantage of the emergency disaster relief funds.

In particular, they claimed that despite domestic chicken prices showing little fluctuation and even a downward trend recently, price increases were implemented on ‘cash cow products’ such as fried chicken pieces. According to the Korea Agro-Fisheries & Food Trade Corporation (aT), as of the 25th, the average retail price of chicken per kilogram was 4,990 won, lower than 5,271 won a year ago.

However, the products whose prices were raised this time used imported chicken as raw materials, so the domestic chicken prices were irrelevant. About 15% of the total chicken consumption in South Korea is imported. Among these, over 80% is from Brazil, where the number of confirmed COVID-19 cases has recently surged, causing major poultry processing companies to shut down one after another.

In this situation, the volume of imported chicken continues to decline. According to aT, last month’s chicken import volume was 61,000 tons, down 11.4% compared to the same month last year, and serious supply disruptions are expected to begin this month. A convenience store industry official explained, “It was an unavoidable decision due to the rise in raw material prices of imported chicken,” adding, “There was also a factor where small and medium-sized companies supplying chicken products faced management difficulties due to COVID-19 and requested price increases.”

Also, the products with price increases account for only a portion of all chicken-based products, so it is not easy to benefit from the emergency disaster relief funds through chicken price hikes as some have claimed. Currently, the convenience store industry handles about 20 types of chicken-based products, and only about five types had price increases this time. Moreover, stores handling the raised-price fried chicken pieces and skewers account for only 20 to 30% of the total, so the profit the convenience store industry can gain from this price increase is minimal.

A convenience store industry official said, “It is true that consumers looking for chicken at convenience stores are increasing, but the sales proportion is not large, so the profit the industry can gain from a 100 to 200 won price increase is very small,” adding, “It is regrettable that the timing of the disaster relief fund distribution and the price increase coincided, causing misunderstandings among consumers.”