South Korea's major confectionery companies have decided to raise the prices of their popular chocolate snacks on the back of soaring cacao prices, driven by climate change.
Orion announced a 10.6 percent average price increase for 13 products starting Sunday. The price of its popular products like Choco Songyi and Bichobi will rise by as much as 20 percent. Orion also said it would temporarily suspend the supply of its chocolate bar, To You, instead of applying an unavoidable price increase of over 30 percent.
The brand blamed the spike in cacao prices, which have quadrupled in the last two years, and are expected to continue rising, as the reason for hiking its chocolate snack prices.
According to the Ministry of Agriculture, Food and Rural Affairs on Sunday, the price of cocoa, a processed form of cacao, reached $9,236 per ton as of last Tuesday, marking a 127 percent increase compared to a year earlier and a staggering 246 percent increase compared to the average over recent years. This price surge is attributed to reduced production caused by abnormal weather patterns and shrinking cultivation areas, the ministry announced.
"Even with this price adjustment, 12 of Orion's 61 product lines, which make up 20 percent of our total offerings, have kept their prices frozen for over a decade," said an Orion official. "We will continue our efforts to provide consumers with high-quality, value products through cost reductions."
Haitai Confectionery & Foods followed suit by increasing prices by an average of 8.6 percent for 10 products, including Homerun Ball and Pocky, that contain high percentages of chocolate. Earlier in June, Lotte Wellfood also raised the prices of 17 products, including Pepero and Ghana Chocolate, by an average of 12 percent.
Referred to as “climateflation,” price hikes have also affected palm oil prices, a key ingredient in snacks and instant noodles.
As of Tuesday, the price of palm oil recorded $1,089 per ton, up 19 percent from a year ago and 21 percent above the average for recent years. The palm oil price hikes are largely driven by forecasts of reduced production in Indonesia, the world’s largest producer, also due to abnormal weather conditions.
Conversely, as the price of flour has fallen compared to 2022, Haitai Confectionery has reduced the average price of flour-based products, which include some of its key items, by some 6.7 percent.
With growing consumer concerns, the government has pledged to strengthen communication with the food industry.
"We will closely monitor market conditions and price trends, identify and address the challenges faced by companies, and make every effort to stabilize the prices of processed foods," an official from the Agriculture Ministry said.
