"Honey, We Need to Change Our Breakfast" Bagel Prices Soar 44% in Three Years [The Secret of Bread Prices]

Bagel Prices Up 44% in Three Years
Salt Bread Now in the 3,000?3,500 Won Range
Bakery Profitability Worsens Amid 'Breadflation'

Editor's Note
According to the consumer price trends released by Statistics Korea, while the price of processed foods rose by 4.1% year-on-year in May, bread prices surged by 6.4%. The bread consumer price index reached 138.48, up 38.48% over the past five years compared to the base year of 2020 (100). This increase outpaced even the beloved Korean snacks tteokbokki and fried chicken. Bread, once a snack enjoyed by everyone, has now become a choice that many hesitate to make due to its high price. How did bread prices in Korea end up rising so steeply?

Bagel. Pixabay

As 'breadflation' (bread + inflation) continues, prices of popular items among younger consumers, such as bagels and salt bread, have risen by more than 40% over the past three years, while twisted donuts have seen only a 4% increase. As bread consumption expands as a convenient meal or dessert, the price hikes for popular breads have become more pronounced. At the same time, the sharp rise in raw material costs is cited as a key factor worsening the profitability of the bakery industry.

According to the 'Bakery Market Trend Report' released recently by Korea Credit Data (KCD), salt bread accounted for the highest average monthly sales share among breads in the first half of this year at 15.7%. Sandwiches ranked second at 15.0%, followed by loaf bread at 7.2%, croissants at 5.3%, and bagels at 5.2%.

The price increases were particularly notable for popular items. KCD's analysis of the median price trends for the 10 best-selling breads in the first half of the year showed that bagels experienced the highest price increase. As of the end of June, the median price of a bagel was between 4,400 and 4,900 won, up about 44% compared to June 2022. Sandwiches (7,500-8,300 won, up 32%) and salt bread (3,300-3,700 won, up 30%) also saw increases in the 30% range. In particular, salt bread, which was priced between 2,000 and 2,500 won in the second half of 2022, has steadily increased to the 3,000-3,500 won range. In contrast, twisted donuts (4%), loaf bread (6%), and croissants (9%) saw relatively modest price increases.

This polarization in price changes is also linked to shifts in consumer bread preferences over recent years. In the past, sweet desserts such as macarons were popular, but as the trend toward health-conscious eating has spread, savory and filling meal breads like bagels have gained attention.

A report titled 'Bakery Industry Market Analysis and Competition Impact Assessment of Major Regulations,' commissioned by the Fair Trade Commission and conducted by Kongju National University Industry-Academic Cooperation Foundation, also analyzed that "among younger consumers, there is a growing tendency to replace rice meals with bread." The report added, "Breads that are easy to prepare and store, such as bagels, ciabatta, and pita bread, are gaining popularity." According to Naver Data Lab, the keyword ranking for 'bagel' steadily rose from 31st to 10th and then 5th between January 2022 and July 2024.

However, despite this breadflation, the profitability of bakery and confectionery businesses has deteriorated. This is because rising fixed costs, including raw material prices, rent, and labor costs, have prevented sales growth from translating into profits. KCD analyzed over 15,000 businesses in the two main sectors selling bread and found that as of June, the average monthly sales for bakery and confectionery businesses stood at 9,069,900 won, with a profit margin of -10%.

In contrast, the average monthly sales for teahouses, coffee shops, and cafes were only 7,243,118 won, but the profit margin was higher at 23%. KCD explained, "Stores that focus on selling bread have higher total sales than food and beverage establishments, but due to the higher proportion of ingredient and labor costs, they have recorded losses."

Meanwhile, the Fair Trade Commission has launched a focused investigation into allegations of raw material price collusion, which has been cited as a main driver of rising bread prices. This month, the commission will initiate sanction procedures (sending a review report) related to sugar price-fixing allegations involving CJ CheilJedang, Samyang Corporation, and Daehan Sugar. In addition, the commission is investigating suspicions of collusion over flour and egg prices, which have also contributed to higher bread prices. In particular, the investigation into egg price collusion is ongoing, and for flour, where there is a significant gap between domestic and international prices, the commission plans to take strict action if evidence of collusion is found.