Rising costs drive restaurants towards cheaper alternatives

[Photo by Lee Chung-woo]

Cheap, imported food ingredients are taking over South Korean dining tables as the country continues to experience high consumer prices following the Covid-19 pandemic. Foreign food imports are expected to hit a record high as local restaurants switch from using home-grown chicken to imported frozen alternatives, and switch cooking oils from expensive soybean oil to palm oil.

According to data from the Korea Customs Service on Wednesday, the cumulative import volume of frozen chicken (including cut and processed chicken) was 206,299 tons from January to November 2023. Imports of frozen chicken have surged since 2022, when the trend of high inflation became prominent.

Annual food ingredient imports, which hovered around 140,000 tons until 2021, rose to 181,530 tons in 2022, surpassing 200,000 tons for the first 11 months of 2023. Among the countries supplying the most frozen chicken, Brazil accounted for 82.1 percent of the total import volume during this period, followed by Thailand, the United States, Sweden, and Denmark.

The sudden surge in imported frozen chicken is due to its significantly lower price compared to domestic chilled chicken. The import price per kilogram for frozen chicken ranges from 2,000 to 3,000 won ($2.3), which is half the price of domestic chicken. Although the government applied a 0 percent tariff to imported chicken from July 2022 onwards to stabilize prices, consumers struggling with tightened budgets are showing a preference for imported chicken.

The demand for inexpensive imported ingredients is widespread, notably in edible oils. The restaurant industry commonly uses various oils like soybean, palm, and sunflower seed oil, with palm oil being the most affordable. Palm oil, derived from the fruit of the oil palm tree, makes up around 80 percent of total oil imports and is primarily used in processed foods and frying. It is relatively resistant to spoilage, stores easily, and priced about 30 to 40 percent lower than soybean oil. But it has been criticized for elevating cholesterol levels and neutral fat in the bloodstream.

The import volume of palm oil totaled 626,925 tons from January to November 2023, breaking the previous record of 641,965 tons in 2019.

Despite health concerns, Korean restaurants are quickly adopting cheaper palm oil to reduce ingredient costs. In contrast, the import of soybean oil saw a decrease of about 6 percent during the same period, with imports totaling around 334,510 tons.

The restaurants are also increasing their use of Chinese-made kimchi, leading to a rapid rise in kimchi imports. The cumulative import volume of kimchi amounted to 263,185 tons from January to November 2023, up 9.5 percent from the previous year. If this trend continues, kimchi imports could increase to levels near 2019’s record-high of 306,060 tons.