SPC and CJ Foodville will each cut prices for bread and cakes at Paris Baguette and Tous Les Jours, drawing attention to whether price adjustments will spread to the instant noodle and confectionery industries. With prices of some raw materials such as wheat flour falling and the government's push to stabilise prices, pressure is growing across the industry to adjust prices.

The industry said on Wednesday that SPC and CJ Foodville announced plans to cut prices at their franchises Paris Baguette and Tous Les Jours. Paris Baguette will lower prices for 11 bread and cake items from March 13. Tous Les Jours will cut supply prices for 17 items from March 12.

Paris Baguette cut the prices of sweet red bean buns, streusel buns and custard buns by 100 won each to 1,500 won from 1,600 won. It also lowered prices for five cake items by up to 10,000 won. Tous Les Jours will lower recommended retail prices for 17 major bread items, including sweet red bean buns, Magu-Magu Chestnut Loaf and Fresh Fresh Cream Bread, by 100 to 1,100 won. It will also cut prices for some character cakes by 10,000 won.

SPC and CJ Foodville said the price cuts were aimed at joining efforts to stabilise prices and easing the burden on consumers.

The industry sees the bread price cuts as largely a political judgement made under pressure from the government's push to stabilise prices. With the government maintaining its stance, including pointing to collusion by major sugar and flour companies, there is a sense the firms responded pre-emptively.

The Fair Trade Commission last month said it uncovered price collusion in sugar by three sugar makers - CJ CheilJedang, Samyang and Daehan Sugar - and imposed fines totalling 408.3 billion won. In particular, after CJ CheilJedang cut flour prices for general consumers (B2C) and business customers (B2B), attention also turned to whether Tous Les Jours, run by group affiliate CJ Foodville, would cut its product prices.

The recent moves by Fair Trade Commission Chairman Byung-ki Joo (주병기) are also seen as having had an impact. At a signing ceremony on Feb. 27 for an agreement with seven dining-out companies including CJ Foodville, Genesis BBQ and Paris Croissant to provide information on price increases, Joo asked them to "pay attention so the public can enjoy the benefits from cuts in raw material prices".

As the impact of lower flour prices has partly fed through into bread price adjustments, attention is also focused on whether the mood for price adjustments will spread to instant noodles and confectionery.

The instant noodle industry is united in saying that adjusting noodle prices is realistically difficult even if flour prices fall. It cited the limited share that ingredient costs have in final production of instant noodles. It also pointed to overall costs such as exchange rates, labour, marketing and logistics.

The industry also shares the view that it is difficult to rush into price adjustments this year because the sector has carried out both price cuts and hikes in recent years. Nongshim, Ottogi, Samyang Foods and Paldo cut noodle prices after then Deputy Prime Minister and Finance Minister Kyung-ho Choo said in a broadcast in July 2023 that global wheat prices had fallen and called for lower noodle prices.

In March last year, Nongshim, Ottogi and Paldo raised prices again. Samyang Foods did not join last year's price increases, and the mood is that it would be difficult to lower prices again.

The confectionery industry's calculations are not much different. It said that depending on the product category, flour and sugar account for a small portion of costs, while other cost items such as cocoa, oils and fats, and packaging materials have a bigger impact, making it difficult to adjust prices as quickly as bakeries.

The industry sees the spread of price adjustments to instant noodles and confectionery as likely to play out selectively by item, depending on cost structures and variables such as distribution and marketing expenses.

An instant noodle industry official said, "Flour accounts for less than 20 percent of raw materials in instant noodles, and the share of flour costs in the price of instant noodles is only about 1 percent when producing the finished product." The official added, "Even if a review begins, it is uncertain whether it will affect an actual price cut."