Far East spotlight

Eight in 10 Korean food firms raise prices—as manufacturing costs drop

18-Jun-2017 - Last updated on 19-Jun-2017 at 09:48 GMT

Eighty per cent of food and beverage companies have increased their consumer prices in the last six months, even though production costs for manufacturers have dropped over the same period.

According to an analysis released by business tracker CEO Score, AB InBev’s OB, Hite Jinro, Coca-Cola and Lotte Chilsung Beverage raised their prices for soft drinks and beer by up to 7.5%, at a time when their cost-to-sales ratios fell by 0.6-1.4 percentage points.

Instant noodle majors Nongshim and Samyang Food increased their prices by around 5.5% for various brands as their cost-to-sales ratios fell 1.4 percentage points and 1 percentage point respectively.

Of the 10 companies analysed by the tracker, only Dongwon F&B and SPC Samlip saw their cost ratios rise, by 1.7 percentage points and 3.4 percentage points, respectively.

“It will be hard for these companies to avoid criticism that they raised prices while the country was distracted by recent political confusion,” a CEO Score spokesperson said.

However, manufacturers say the price increases reflect real rises in costs in delivery and manufacturing over the past few years.

“We raised our prices for the first time in five years last year, so looking at the cost ratio difference over the past year alone is misleading,” a Nongshim spokesperson told the Korea Herald.

“The production costs are not the only factor in determining price. Other factors such as the cost of labour and delivery, which have been going up each year, must also be taken into consideration.”

TNA opens new Tokyo office

Processing and packaging major TNA has opened of a new office in Japan to host local technical support and sales staff.

The Tokyo headquarters will be managed by Shuntaro Yamasaki, two years after the company began operations in Japan

“We felt it was time to further establish our local presence in such a highly innovative and flourishing market,” said Paul Webster, general manager of TNA Asia.

“The opening of TNA Japan is an exciting milestone for us and yet another important step in our global expansion strategy, which now consists of 30 offices around the world.”

Yamasaki said the local processing market has become one of most innovative in the world.

“I’m excited to be part of such a dynamic business and look forward to support our existing and new customers with cutting-edge food processing and packaging solutions,” he added.

The company has also launched a website in Japanese, which features TNA’s product portfolio and library of brochures, product sell sheets and demo videos. Visitors also have access to technical white papers and solution-based blogs.