Home Business Council of Consumer Organizations “Ottogi, insufficient evidence to raise the price of ramyun… We must take a social responsibility and review it”

Council of Consumer Organizations “Ottogi, insufficient evidence to raise the price of ramyun… We must take a social responsibility and review it”

by news dir
Ottogi’s representative ramen product Jin Ramyun has a spicy and mild taste. (Photo courtesy of Ottogi)

[뉴스웍스=전다윗 기자] Consumer groups protested Ottogi’s decision to raise the price of ramen. Ottogi demanded the withdrawal of the raise, saying that the basis for the raise was insufficient and that it could be the starting point of a ‘domino raise’ in the ramen industry.

On the 22nd, the Council of Consumer Organizations issued a statement stating that “it opposes the price increase of Ottogi ramen. The Council is a consultative body composed of 11 consumer groups, including the Consumer Education Federation, Korea Women Consumers Association, and Korea Consumer Federation. It was established in 1976.

Earlier, Ottogi recently announced that it would raise the price of major ramen products, including Jin Ramyun, by an average of 11.9% from August. It is the first time since April 2008 that Ottogi raised the price of ramen. Previously, Ottogi tried to raise the price of Jin Ramyun by 9% in February, but it was canceled after being criticized by public opinion.

Accordingly, from August, the factory price of Jin Ramyun will rise 12.6% from 684 won to 770 won, and snack noodles will rise 11.6% from 606 won to 676 won. Yukgaejang will increase by 8.7% from 838 won to 911 won.

The council said, “Ottogi recently announced that it would raise the price of its major ramen noodles. It is said that the price increase was inevitably decided due to rising food raw material prices and labor costs.” The evidence appears to be weak.”

The council said, “The import price of wheat flour and palm oil, raw materials for ramen, has been on a downward trend from 2012 to 2019. Wheat flour was imported at 326.3 won per kg last year, which is a decrease of 18.0% from 2012 and 22.0% from 2013.” “In addition, contrary to media reports that wheat flour prices are soaring compared to the same period of the previous year, the average price of wheat flour imported in June was 358.2 won per kg, up only 4.5% compared to the same month of the previous year,” he explained.

He continued, “Palm oil also showed a declining trend at an average of 3.9% from 2012 to 2019. The average price last year was 813.0 won, a 26.8% increase compared to 2019 (641.1 won), but compared to 2012 (1163.3 won). “Wheat flour and palm oil have been on an upward trend since this year. However, in light of the fluctuations in raw material prices, when raw material prices go up, Ottogi shifts the burden to consumers through price increases,” he said. In case of a decline, I doubt whether it is directly absorbed by the company’s profits.”

Another reason for the price increase, which is the increase in labor costs, was also pointed out as insufficient. The council said, “The share of employee salaries in Ottogi’s cost of sales and sales and administrative expenses has risen from 2012 to 2015, but then turned to a declining trend. Last year’s share was 7.4%, down 0.4%p compared to 2019. This year’s 1st Quarterly, it was 6.8%, 0.6%p lower than last year. The amount of labor costs is rising in line with the increase in business size, but since sufficient sales are being generated, it is difficult to see this as a factor of cost pressure from the company’s point of view. Ottogi’s claim that the price increase is due to an increase in labor costs is weak,” he said.

In addition, the council feared that Ottogi’s price increase could signal a domino increase in the ramen industry.

The council said, “Ramen is a representative item that is responsible for the price of ordinary people. Ramen is a symbolic item that is inseparable from the consumer’s diet to the extent that the government considers the price increase to be the basis for price stability. “I am concerned that it could signal a series of price increases by manufacturers,” he said.

He continued, “I cannot but condemn the actions of companies that do not budge when raw material prices fall but raise consumer prices taking advantage of the times when raw material prices rise from normal years.” Ottogi, a business operator, urges them to take a social responsibility and reconsider this price increase as a company that manufactures food for the common people. did.

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