Beverage Companies Raise Product Prices from the 1st
Impact of Rising Raw Material, Labor, and Logistics Costs
Milkflation Becomes a Reality... Expected to Continue Through Year-End and Early Next Year
[Asia Economy Reporter Song Seung-yoon] As the overall food prices, including milk and dairy products, continue to rise in a phenomenon dubbed "Milkflation" (milk + inflation), beverage prices have also started a domino effect of increases.
According to the industry on the 1st, beverage companies simultaneously raised product prices starting that day. Lotte Chilsung Beverage increased the prices of 10 brand beverage products, including commercial-use Chilsung Cider and Pepsi Cola, by an average of 4% from that day. This included juice, coffee, and bottled water products such as ▲Del Monte ▲Jeju Gamgyul ▲Cantata ▲Let's Be ▲Isis ▲Evian ▲Volvic. Chilsung Cider and Pepsi Cola prices were raised for the first time in about a year since December last year.
A Lotte Chilsung Beverage official explained, "We have made various efforts to suppress price adjustments as much as possible, but due to increases in raw materials such as sugar, oranges, and coffee ingredients, as well as packaging materials, labor costs, and logistics expenses, we had to raise product prices."
LG Household & Health Care also raised the prices of four brand beverage products, including Powerade, Minute Maid, Toreta, and Monster, by an average of 6.1% starting the same day. Coca-Cola was excluded from this round of price increases. Dong-A Otsuka also decided to raise the prices of beverage products such as Pocari Sweat by an average of 8.6% starting that day. The products affected include Pocari Sweat, zero-calorie Narangd Cider, Oran-C, Demisoda (four types), and Oronamin C.
Beverage companies cited international raw material price increases, the impact of a strong dollar, rising labor costs, and logistics expenses as reasons for the recent product price hikes. With all related costs rising, the burden of production costs has reached an unbearable level. Companies that have not yet decided on price increases are internally reviewing the timing and extent of hikes while monitoring the situation.
The price increase trend began earlier in the dairy industry before the beverage sector's price hikes. On the 17th of last month, major domestic dairy companies such as Seoul Milk Cooperative, Maeil Dairies, and Namyang Dairy Products simultaneously raised prices for products including white milk. Seoul Milk raised prices for all milk products by an average of 6%. Maeil Dairies increased the price of 900ml white milk products by 9.6%, and the ex-factory prices of chocolate milk and strawberry milk were raised by about 10%. Namyang Dairy Products also raised white milk product prices by approximately 8%, and Dongwon F&B, Binggrae, and hy sequentially increased prices for milk and dairy products. Beyond dairy products, price hikes are continuing across the food industry, including snacks and ramen. This has raised concerns about milkflation, where prices of secondary processed foods, including dairy products, rise in a chain reaction triggered by the increase in milk prices.
An industry insider said, "This price increase trend is expected to continue through the end of the year and into the beginning of next year," adding, "Although there are burdens such as reduced consumption and consumer backlash, we are currently monitoring the situation as food and beverage prices are rising in a chain reaction."
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