Government Pressure Pushes CJ to Cut Flour Prices Again... Bread Prices Also Fall Across the Board (Comprehensive)

Additional Cuts After KFTC Says "Prices Should Be Cut by 10%"
Paris Baguette and Tous Les Jours Lower Bread and Cake Prices
Two Days After President Says "Benefits Should Be Passed On to Consumers"

The government's pressure to stabilize prices is spreading from the sugar and flour industries to the bakery sector. As CJ CheilJedang has decided on an additional cut in flour prices, bakery franchises have also begun lowering bread prices. It is drawing attention as the first case in which a reduction in raw material prices is being passed on to final consumer prices.

CJ CheilJedang announced on the 26th that it will cut the prices of its flour products by an additional average of 5%. This follows its earlier move to lower prices for business-use products by an average of 4% early last month and for consumer products by 5.5% early this month. The company has reduced prices twice in the span of a month, which industry insiders describe as "unusual."

A company representative said, "Although business conditions are difficult, we decided to take this step to actively support the government's policy stance on price stability," adding, "We will strive to reduce the burden on our clients and consumers."

This additional cut came after strong remarks from the Korea Fair Trade Commission. At a National Assembly Political Affairs Committee work report session on the 23rd, Joo Byunggi, a commissioner at the Korea Fair Trade Commission, stressed that the milling industry’s 5% price cut "should be at least around 10%." The point was that, given the consumer damage caused by price collusion, the scale of the reduction is not sufficient. Regarding the possibility of issuing a price redetermination order, he added, "We will actively consider it."

Previously, sugar and flour companies such as CJ CheilJedang, Samyang, Daehan Flour Mills, and Sajo DongA One lowered sugar and flour prices by around 5% following a collusion probe. Industry observers believe there is a high possibility that competitors will also move to implement additional price cuts.

Bread is displayed at a Paris Baguette store in Seoul. Photo by Kang Jinhyung

The government's price stabilization drive has now spread from sugar and flour to the bakery industry. Paris Baguette and Tous Les Jours both announced bread price cuts on the same day. This came just two days after President Lee Jaemyung said that the benefits of sugar and flour price reductions should be passed on to consumers.

Paris Baguette will lower the prices of 11 types of bread and cakes starting March 13. Six types of bread will be reduced by between 100 won and 1,000 won from their recommended retail prices for finished products. Red bean bread, streusel bread, and cream puff bread will each be lowered from 1,600 won to 1,500 won, a cut of 100 won (6.2%). Whole Grain Oat Bread will go from 4,200 won to 3,990 won, a reduction of 210 won (5.0%), and the three-slice castella will be adjusted from 3,500 won to 2,990 won, down 410 won (14.6%). French Boussee will be reduced from 2,500 won to 1,500 won, a cut of 1,000 won (40%), marking the largest price decrease.

The prices of five popular character cakes will also be reduced. The Huntrix Golden Cake will be lowered from 39,000 won to 29,000 won, a decrease of 10,000 won (25.6%), and the Soda Pop Cake will go from 33,000 won to 25,000 won, down 8,000 won (24.2%). The company explained that it aims to enhance consumers' sense of relief by significantly cutting prices in the high-end product segment. In addition, it plans to launch a "value-for-money croissant" priced at 1,000 won sometime in March.

Tous Les Jours will reduce the supply prices of 17 types of bread and cakes by an average of 8.2%. Starting March 12, the recommended retail prices of 16 items, including red bean bread, Magu Magu Chestnut Bread, and Fresh Fresh Whipped Cream Bread, will be lowered by between 100 won and 1,100 won. The popular character cake "Latso Very Good Day" will be discounted by 10,000 won.

A Paris Baguette representative said, "Despite ongoing cost increases that make the situation difficult, we decided to lower prices in order to ease the burden on consumers and participate in stabilizing prices."