Rising food prices drive consumers towards convenient home dining options

[Photo by Yonhap]

Amid continued inflationary pressures, South Korean consumers are increasingly turning to convenient meal options at home, responding to the burden of dining out.

According to Statistics Korea on Tuesday, retail sales of food products in September reached 17.35 trillion won ($13.2 billion), up 10.2 percent from a year ago. This represents the biggest growth in 20 months since January 2022. Despite a slowdown in overall retail sales due to consumer spending constraints, the food sector exhibits a rapid recovery, accounting for 31.9 percent of total retail sales as of September. This surpasses 30 percent for the first time in eight months since January.

Retail sales of food products are calculated solely from retail stores such as department stores, large supermarket chains, convenience stores, and the like. While factors like increased fruit prices have contributed to the rise in basket prices, the surge in sales of processed foods like those found in supermarkets and convenience stores, seen as alternatives to dining out, has played a significant role. In terms of the index excluding price fluctuations, retail sales of food products in September increased by 3.6 percent on-year, while sales at restaurants and bars fell by 2.3 percent.

The trend of rising dining-out expenses persists this year. According to the Korea Consumer Agency, the price of kimbap in Seoul increased from 3,215 won in September to 3,254 won in October, while bibimbap rose from 15,000 won to 15,577 won over the same period.

As dining out becomes more expensive, there is a visible shift in demand towards processed foods seen as alternatives. This shift has led to increased sales of processed foods benefiting from the waning demand for dining out.

Riding on the increased sales of processed foods, food companies are reporting strong performances in the third quarter. CJ CheilJedang disclosed a 12 percent increase in operating profit in its food business segment, recording 234.1 billion won versus to a year earlier. While the first and second quarters saw declines in operating profit by 21 percent and 14.9 percent respectively, the third quarter marked a turnaround in the upward trajectory.

Instant noodle companies are also exhibiting robust financial performance. Nongshim reported a 103.9 percent on-year increase in operating profit in the third quarter, reaching 55.7 billion won based on consolidated figures.