Samyang Foods (003230) has decided to freeze its product prices amid a wave of price increases across the food industry, drawing attention.
According to the food industry on the 27th, Samyang Foods has decided to freeze prices on products including ramen.
The move runs counter to that of other food companies. Earlier, Nongshim announced it would raise prices on major cup noodles, snacks, and beverages starting on the 1st of next month. Shipment prices for 18 cup noodle brands, including Yukgaejang Sabalmyeon and Shin Ramyun Cup, will rise by an average of 6.0%. In addition, 23 snack brands such as Saewookkang and Honey Twist will rise by an average of 5.5%, while two beverage brands including Capri-Sun and Welch's will rise by an average of 7.7%. As a result, Yukgaejang Sabalmyeon is expected to increase by 100 won, from the current 1,100 won to 1,200 won at retail stores. CJ CheilJedang will also raise prices on a total of 27 items across 8 categories, including Hetbahn, dumplings, and grilled fish, by an average of 8% — starting on the 30th of this month at large supermarkets and on the 1st of next month at convenience stores. CJ Foodville's Tous les Jours will also raise the recommended consumer prices on a total of 76 items, including bread and cakes, by an average of 8.2% starting on the 31st of this month.
The high proportion of overseas sales is cited as the reason Samyang Foods decided to freeze prices. With overseas sales accounting for 82% of total revenue as of the first quarter of this year, the decision is interpreted as a strategy to boost overall performance by focusing on overseas markets, where price adjustments are more flexible, rather than causing friction by raising domestic prices.
"With its high overseas proportion, Samyang Foods' strategy is to secure profitability by continuously expanding the share of overseas sales rather than raising domestic prices," a Samyang Foods official said. Regarding growing cost pressures from surging prices of raw materials such as naphtha, the official explained, "Rather than making additional price adjustments, we intend to respond appropriately through increased production efficiency and channel mix."
Samyang Foods can show such confidence because its production capacity (CAPA) has expanded significantly, easing supply issues. First, the Miryang No. 2 plant, completed last year, made it possible to produce an additional maximum of 830 million units annually, and a plant in China is also set to begin new operations from next year. This plant alone will produce 1.13 billion units of ramen annually. Jang Ji-hye, a researcher at DS Investment & Securities, said, "This year's revenue is projected at 3 trillion won, up 30% from the previous year, with operating profit projected at 720.3 billion won, up 37%." She added, "Samyang Foods' total annual production capacity will expand from the existing 2.45 billion units at the Wonju, Iksan, and Miryang No. 1 plants, as the Miryang No. 2 plant and the China plant are added."
Overseas sales are also expected to grow further. Kyobo Securities forecast that Samyang Foods' domestic revenue this year would rise 10.1% from the previous year to 515.4 billion won, while overseas revenue would increase 38.9% to 2.6158 trillion won.
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