Korean ramyeon makers face backlash as popular items excluded from price cuts

Ottogi Corp.’s Jin Ramen is displayed at a mart in Seoul. [Photo by Yonhap]

Major ramyeon manufacturers in South Korea have recently cut ramyeon prices for the first time in 13 years under government pressure, but most of them have excluded their popular products from the price cuts, prompting consumer dissatisfaction and claims of deceptive practices.

On Wednesday, Ottogi Corp. announced a 5 percent average price reduction for 15 of its ramyeon products from July 1. Based on the selling price at large supermarkets, the price of Snack Ramen was cut by 5.9 percent to 3,180 won ($2.41) for a pack of five from 3,380 won, Sesame Ramen by 4.3 percent to 4,480 won for a pack of four from 4,680 won, and Jin Jjamppong by 4.6 percent to 6,180 won for a pack of four from 6,480 won. However, its flagship product, Jin Ramen, was excluded from the price cut. Jin Ramen accounts for 30 percent of the company’s total instant noodle sales.

“Jin Ramen is our core product, so lowering the price would have a significant impact on profitability,” said an Ottogi official. “Since the price of Jin Ramen has been frozen for 11 years since 2010, it is still cheaper than other brands.”

Samyang Foods Co. also decided to gradually cut the prices of its 12 flagship products, including Samyang Ramen, Jjajjaroni Jjajang Ramen, Delicious Ramen, and Yeolmu Bibimmyun Sweet Spicy Stir Noodle, by an average of 4.7 percent starting next month. However, the company excluded Buldak Bokkeummyun, a hot chicken flavor ramyeon which is very popular at home and abroad, from the price reduction. Buldak Bokkeummyun, released in April 2012, accounts for more than 80 percent of the company’s ramyeon exports and about 40 percent of its domestic sales.

“Although we are joining the government’s efforts to stabilize prices, it is difficult to lower the price of our flagship product,” said an official from Samyang Foods. “Considering that Buldak Bokkeummyun is being exported worldwide, a decrease in domestic sales price could lead to demands for price cuts overseas as well.”

Paldo Co. also announced a 5.1 percent average price reduction for 11 ramyeon products, including Ilpum seafood Ramen and Wang Ttukkeongbonjimyun from next month, but excluded its most popular products, Paldo Bibimmyun and Wang Ttukkeong Cup Ramen.

The country’s top ramyeon manufacturer Nongshim Co. was the first to announce a price cut plan on Tuesday. It decided to cut the prices of its flagship Shin Ramyun by 4.5 percent and Saewooggang shrimp flavored snack 6.9 percent, respectively, from July 1. Nongshim said that it limited the price cuts to its popular products because if the benefits of the price cuts, estimated at about 20 billion won per year based on sales, were divided among all products, the decrease in the cost of living felt by consumers would be small.

“The price of flour, which rose by more than 30 percent last year, has only dropped by 5 percent,” said a Nongshim official. “It is impossible to lower the price as much as we raised it last year.”

Although ramyeon manufacturers have made some price adjustments in response to government pressure, they have limited the price reductions to certain products or excluded popular items in order to avoid a significant decline in profitability.

In fact, Paldo posted a loss in the domestic ramyeon business last year, and the situation has not significantly improved this year. Nevertheless, the company is known to have decided to lower prices as other companies are lowering prices one after another amid pressure from the government to stabilize prices.