"Milk Prices Rise, Followed by Mix Coffee and Cider... Food and Beverage Prices Increase One After Another"

Price Increase Parade from Early This Year to Year-End
Price Rise in Beverages, Instant Coffee, and Groceries
Concerns Over Milk Price Hike Triggering Milkflation

[Asia Economy Reporter Song Seung-yoon] Amid a continuous wave of product price hikes in the food and beverage industry since the beginning of this year, another domino effect of price increases is occurring ahead of the final price adjustment period this month.

According to the industry on the 3rd, beverage companies simultaneously raised product prices on the 1st. Lotte Chilsung Beverage increased the prices of 10 beverage brands, including commercial-use Chilsung Cider and Pepsi Cola, by an average of 4% starting that day. This included juices such as Del Monte and Jeju tangerine, coffee brands like Cantata and Lets Be, and bottled water products such as Icis, Evian, and Volvic. The price hike for commercial-use Chilsung Cider and Pepsi Cola marks the first increase in 1 year and 11 months.

LG Household & Health Care also raised prices of four beverage brands?Powerade, Minute Maid, Toreta, and Monster?by an average of 6.1%. Dong-A Otsuka likewise decided to increase prices of beverages including Pocari Sweat by an average of 8.6% starting that day. The affected products include Pocari Sweat, zero-calorie Narangd Cider, OranC, Demisoda (four types), and Oronamin C.

Instant coffee prices are also rising. Dongseo Food will increase the wholesale prices of instant coffee and coffee mix products by an average of 9.8% starting from the 15th of this month. For example, the Maxim Original Refill 170g product will rise from 6,090 won to 6,680 won, Maxim Mocha Gold Coffee Mix 1.2kg will increase from 12,140 won to 13,330 won, and Maxim Kanu Americano 90g will go up from 15,720 won to 17,260 won.

Food product prices are also on the rise. Ottogi raised prices of sesame oil, ketchup, and mayonnaise by 13%, 15%, and 9%, respectively, while CJ CheilJedang increased sesame oil prices by 20%, apple vinegar by 26.7%, and cooking wine by 6.1%.

Food and beverage companies cited international raw material price hikes, the impact of a strong dollar, and increases in labor and logistics costs as reasons for the recent product price increases. They explained that with all related costs rising, the burden on production costs has reached an unsustainable level. Companies that have not yet decided on price hikes are internally reviewing the timing and extent of increases while monitoring the situation.

Earlier, the dairy industry also experienced a wave of price increases. On the 17th of last month, major domestic dairy companies such as Seoul Milk Cooperative, Maeil Dairies, and Namyang Dairy Products simultaneously raised prices of products including plain milk. Seoul Milk increased prices of all milk products by an average of 6%. Maeil Dairies raised the price of 900ml plain milk by 9.6%, and the wholesale prices of chocolate milk and strawberry milk by about 10%. Namyang Dairy Products also raised prices of plain milk by approximately 8%, and Dongwon F&B, Binggrae, and hy sequentially increased prices of milk and dairy products. This milk price hike has raised concerns about milkflation, where prices of dairy products and secondary processed foods rise in a chain reaction.

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 concerns about reduced consumption and consumer backlash, we are currently monitoring the situation as food and beverage prices are rising in a chain reaction."