In recent months, more and more consumers in South Korea are purchasing packaged kimchi as the prices of napa cabbage, the pickled side dish's key ingredient, have soared a market tracker said Thursday 20 Oct.
The market for packaged kimchi rose 13.5 percent in July from a year ago before spiking 23.6 percent in August and surging more than 30 percent in September when cabbage prices were at their peak, according to LinkAztec.
Sales of packaged kimchi flirted with 100 billion won (US$89 million) in the first eight months of the year, compared with 137 billion won for all of last year.
Local kimchi companies, however, are stuck between a rock and a hard place as rising sales don't translate into increased profits due to higher costs and difficulties securing quality cabbages.
In addition, they are not in a position to jack up kimchi prices simply because of a jump in cabbage costs out of concern over consumer complaints, according to industry sources.
South Korea's leading kimchi producer Daesang FNF has seen sales of its packaged kimchi products surge roughly 20 percent from a year ago since March, when cabbage prices began to go up.
"Surging sales don't lead to more earnings, and it is difficult to raise prices simply because the record summer heat and drought sent cabbage prices soaring," a company official said.
There is a high possibility that demand for packaged kimchi will drop once cabbage prices go down, he said, adding the positive thing is that new consumers are picking up packaged kimchi.
Prices of farm products in South Korea have remained high due to the record summer heat and recent torrential rains.
According to the Bank of Korea, the producer price index for agricultural and fisheries goods stood at 119.69 in September, up 5.4 percent from the prior month, with prices of Chinese cabbages and radishes shooting up 34.7 percent and 49 percent, respectively.
Source: english.yonhapnews.co.kr
