Seoul, South Korea – The South Korean food and beverage industry is bracing for a potential domino effect of price increases after industry giants Dongsuh Foods and Starbucks announced consecutive price hikes. The moves have sparked concerns among consumers and experts alike, as they seem to contradict the government’s initiative to ease the burden on consumers.
Dongsuh Foods, the leading instant coffee manufacturer in Korea, will raise the prices of its instant coffee, coffee mix, and coffee beverages by an average of 8.9% from November 15th. This means popular products like Maxim Mocha Gold will see an increase from 17,450 won to 19,110 won per 500g. The company cited rising costs of raw materials, including coffee beans, sugar, and palm oil, as well as a higher exchange rate as the primary reasons for the price hike.
Starbucks, Korea’s largest coffee chain, has also raised its prices multiple times this year, citing increased direct and indirect costs. While the company did not specify the exact nature of these costs, consumers have expressed dissatisfaction with the continuous price hikes.
A recent survey by the Korea Consumer Agency revealed that 73.5% of respondents believe that the current prices of coffee at major chains are too high. The survey also found that consumers consider the average price of an Americano to be around 2,635 won, while the actual average price is 3,001 won.
Government Policies and Corporate Profits
The South Korean government has been urging food companies to lower prices to alleviate the burden on consumers. However, these recent price hikes by industry leaders seem to go against this policy. Critics argue that companies are prioritizing profit over consumer welfare, especially considering the strong performance of both Dongsuh Foods and Starbucks in recent years.
Dongsuh Foods reported a significant increase in both sales and operating profit last year. Similarly, Starbucks achieved record-high sales in 2023. Despite these strong financial performances, both companies have chosen to pass on increased costs to consumers.
Industry-Wide Impact
Industry experts predict that other coffee chains may follow suit and raise their prices. While some smaller chains have stated that they have no immediate plans to increase prices, the pressure to remain competitive could force them to reconsider.
Consumers have expressed frustration with the continuous price hikes, particularly as many have already been struggling with the rising cost of living. Social media platforms are filled with comments criticizing the companies for prioritizing profits over consumer welfare.
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