While the government has been emphasizing price stability in recent times, foreign and multinational companies are exacerbating domestic price increases.
According to the retail industry on Oct. 28, it has been pointed out that despite the government’s recent call for restraint in price increases, some foreign-based food and beverage companies are proactively raising the prices of their products, solely focused on maximizing their corporate profits.
Contrary to this, the domestic retail industry is closely monitoring government and consumer sentiment, making efforts to minimize product price increases even in the face of rising prices of raw materials and ingredients. These global companies, for the most part, hold the top 1 to 2 market share positions, making it inevitable that they are criticized for triggering a domino effect of price increases by competing firms.
In fact, the multinational company McDonald’s Korea has decided to increase the prices of some of its menu items starting from Nov. 2. This marks the first price increase in six months since August last year. As part of this increase, McDonald’s will raise the prices of 13 menu items, including four types of burgers, one breakfast menu, seven side dishes and desserts, and one beverage by a maximum of 400 won (US$0.29) with an overall average increase of 3.7 percent. Following McDonald’s, South Korea’s burger franchise brand Mom’s Touch has also announced that it will raise the prices of four burgers that use chicken breast patties by 300 won each, starting from the 31st of this month.
Furthermore, foreign-based beer company, Oriental Brewery (OB), increased the average price of domestic beers such as Cass and Hanmac by 6.9 percent starting from the 11th of this month. OB had already raised the prices of imported beers by an average of 9.1 percent in April of this year, and in the same month, it faced criticism for leading price increases in beer, even reducing the volume of Cass practical packs. Notably, OB’s price hike has prompted competitors such as HiteJinro and Lotte Chilsung Beverage to contemplate raising their alcoholic beverage prices as well.
When comparing the financial performance over the past three years of the top three companies in the domestic beer market – OB, HiteJinro and Lotte Chilsung Beverage -- OB’s operating profit margin in 2022 was over three times that of HiteJinro at 7.4 percent and Lotte Chilsung Beverage at 7.7 percent.
Not only these companies but also foreign whiskey brands have been significantly raising prices every year without paying much attention to consumers’ reactions. The government has not issued any specific messages regarding whiskey prices and related matters.
Diageo Korea, the market leader in Scotch whisky, has raised the selling price of Johnnie Walker Black Label, based on convenience store standards, to 69,900 won this month, a 14.8 percent increase. William Grant & Sons Korea has also increased the price of Glenfiddich to 109,000 won, which is 5.8 percent higher than the previous price. Additionally, Pernod Ricard Korea has raised the price of Ballantine’s 12 Year Old to 53,100 won, a 10.9 percent increase, and Royal Salute 21 Year Old to 372,900 won, which is 8 percent higher than before.
Previously, Diageo Korea had increased the prices of its major products, including Johnnie Walker, by more than 20 percent last year. William Grant & Sons Korea had also raised the prices of Balvenie and Glenfiddich by up to 9 percent. Additionally, Pernod Ricard Korea had increased the prices of Royal Salute products by up to 18 percent, and Ballantine’s by up to 14 percent.
On the other hand, the domestic whiskey brand Golden Blue initially reduced its product prices by up to 8 percent in 2019, but in October of this year, it adjusted its prices to the levels from four years ago. Golden Blue’s representatives explained that despite the high price increases by competing imported whiskey brands, they refrained from raising prices to maintain price stability. Golden Blue is a domestic company headquartered in Busan.