Clark Park, a 35-year-old YouTuber, is one of many people in South Korea fed up with high food prices. That’s why he grabbed his camera and joined a huge crowd of shoppers clamoring for cheap fried chicken one August morning at Homeplus, a chain of hypermarkets that had just slashed its already heavily discounted prices by 12%.
“There were already more than 50 people in line,” Park told CNN Business, adding that many arrived early and waited over an hour. “We all ran together as soon as it opened. That’s when I felt like fried chicken.”
Fried chicken has long been a consumer favorite in South Korea — and now it also underscores the country’s inflationary problems, with food prices weighing more heavily on wallets lately.
The average cost of fried chicken in South Korea rose 11.4% in August compared to the same month a year ago, outpacing price jumps for other popular meal items like kimchi stew or beef barbecue, according to data. from the government.
Consumers may be feeling an even tighter grip, depending on how much restaurants or supermarkets pass on their costs: in some cases, retail chicken prices have “increased by more than 50%” in the past two years, according to Jeong Woo Park, a South Korean economist at Nomura.
People around the world have been dealing with similar struggles in recent months as global food prices have soared – and scenes like the Homeplus chicken run are a reminder of how families are adjusting to the broader inflation, which has hit 5.7% in South Korea. They also highlight how the country depends on other nations for much of its food.
A “national food”
Fried chicken is a major cultural hotspot in South Korea, similar to British fish and chips, which has also gotten more expensive this year. Many people see it as a must-have snack at sporting events, and it’s not uncommon for customers to grab it several times a month.
Anyone visiting the country is bound to stumble across a chicken and beer spot. That’s because one in 20 restaurants is a chicken restaurant, according to the government.
South Korea is the world’s third-largest fried chicken market, surpassed only by the much more populous. United States and China, show data from market research provider Euromonitor International.
Crispy chicken “can be called a national food in South Korea, like kimchi, bulgogi and bibimbap,” said Clark Park, the creator of the content, referring to other staples that locals enjoy. Like other culture favorites, it’s also serious business: Korean chicken restaurants reported $7.9 billion in revenue in 2021, according to Euromonitor.
This kind of devotion has created a conundrum for stores, which must take care of their bottom line without alienating customers. “All the costs related to fried chicken are going up really fast,” said Jeong Woo Park, an economist at Nomura, adding that suppliers are being hit by rising costs for oil, rent, labor, delivery services and even chicken feed. .
In response, he added, some restaurants have started using robots to reduce labor costs.
Fried Chicken War
Sellers have taken very different approaches to the situation in recent months. Major chicken chains have raised menu prices by an average of 2,000 Korean won ($1.50), according to Yunjin Park, senior food and nutrition research analyst at Euromonitor, citing “rising ingredient prices.” ”. This has led to an increase of around 10% to 15% in the price of fried chicken, he added.
While the difference may seem small, it could easily mean that customers will have to shell out nearly $22 for a simple meal, Yunjin Park told CNN Business: “Chicken, which used to be a comfort food for Koreans, is now no longer a staple. easy to eat -ask menu [item] without hesitation.” On the other hand, local hypermarkets are heading in the other direction.
The August sale that Clark Park participated in on Homeplus was for what the network called “chicken dangdang,” a fried chicken promotion for about a third of the price most retailers offer.
Other stores are feeling pressured to follow suit, albeit only for short periods. In August, emart, another large supermarket chain, launched a week-long sale to sell fried chicken at nearly 50% off — and sold all 60,000 pieces. Not everyone can afford to cut prices, and some smaller stores may be forced to close until their costs drop again.
“If you look at how these business chains are able to sell at these low rates, it’s basically because of economies of scale,” said Barsali Bhattacharyya, industry briefing manager at the Economist Intelligence Unit (EIU).
“They are able to buy more products and, consequently, ask for a better rate from their suppliers. Now their small family stores will not be able to take advantage of that advantage, which means they are looking at their much higher costs.”
a world crisis
One reason South Korea is experiencing these problems is that it imports nearly half of its food, according to the EIU.
It is one of the Asian economies most exposed to rising prices worldwide because it depends on other countries for many types of food, economists at Nomura warned in a June report. sSingapore, Hong Kong and the Philippines are also seen as vulnerable.
Global food prices have soared this year, largely because of Russia’s invasion of Ukraine. Both countries are typically major exporters of essential goods like wheat and sunflower oil.
The worst may be over: in August, the United Nations Food Price Index fell for the fifth straight month, and in Korea, overall inflation also declined more than projected. But things aren’t expected to improve significantly anytime soon.
“We think inflation has already passed its peak, but will likely remain above 5% for the rest of the year,” Min Joo Kang, ING’s senior economist for South Korea and Japan, wrote in a note to clients.
Chicken, which used to be comfort food for Koreans, is now no longer an easy menu to order without hesitation. Yunjin Park, senior food and nutrition research analyst at Euromonitor International Other pantry staples are also getting more expensive elsewhere in Asia.
Last month, Thailand — where the government sets prices for some staples — raised instant noodles prices for the first time in 14 years. A pack of a popular brand increased the equivalent of 3 to 20 cents, threatening to disproportionately hurt low-income households. “Food inflation is a complicated issue for Asia,” said Bhattacharyya.
As incomes in most of the region fall into the low or middle range, food often accounts for a large part of total consumer spending — in some cases as high as 30% to 40%, she said. She concluded: “I think it was only a matter of time before the global food price crisis hit Asia.”
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.