Korean ramyeon stocks lose ground on growing pressure to cut price

[Courtesy of Nongshim]

Korean instant noodle makers are facing a new challenge due to growing pressure from the government to lower prices, despite their soaring sales and profits in the overseas market.

Following Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho’s call to reduce ramyeon prices on June 18, shares of major companies dropped on June 19. Nongshim Co.’s stock dropped by over 6 percent, while Samyang Foods Co. and Ottogi Co. experienced declines of 7.79 percent and 2.94 percent, respectively. This downward trend continued over the following five trading days until June 23, with prices further dropping by 6 to 7 percent.

The business performance of Korean ramyeon manufacturers has been remarkable in recent times. Nongshim, for instance, witnessed a substantial increase in sales, with revenues surging to 3.13 trillion won last year from 2.66 trillion won in 2021. This year’s sales are expected to hit the 3.5 trillion won mark.

The export figures of Korean ramyeon companies also display a positive trajectory, as exports reached $765 million last year, marking a 14.4 percent rise from a year ago. Moreover, the total overseas sales, including exports from Nongshim and Samyang Foods, soared to some 1.5 trillion won in 2022, reflecting a substantial 36 percent growth from the previous year.

However, the deputy prime minister’s call to lower the price of ramyeon threw cold water on this sentiment. In a broadcast aired on June 18, Choo highlighted the significant price hikes observed in ramyeon last year, emphasizing that wheat prices have dropped by about 50 percent compared to a year ago and further fell by about 20 percent since the end of last year, whereas ramyeon prices increased significantly in September and October of last year. His statements underscored the need for price reductions in the industry.