Seoul, South Korea – Orion, a leading South Korean confectionery company, is facing mounting criticism for its recent decision to raise prices of 13 products, primarily chocolate-based snacks, by an average of 10.6%. The company has come under fire for implementing the price hikes exclusively in the domestic market, despite recording stable earnings.
Products such as Choco Songi and Bichobi saw the most significant price increases of 20%, while other popular items like Chokchokhan Choco Chip experienced a 16.7% hike. Orion attributed the price adjustments to surging costs of raw materials, particularly cocoa beans and nuts, which have seen their global prices quadruple and double, respectively, in recent years due to adverse weather conditions.
However, the company’s decision to limit the price hikes to the South Korean market has sparked outrage among consumers. Orion has justified this move by citing differences in distribution structures and market conditions across various countries, allowing it to set prices independently for each subsidiary.
Consumer backlash has intensified due to Orion’s previous pledge to maintain price stability in 2024. In March, Orion CEO Lee Seung-jun had publicly announced that the company would not raise prices to align with the government’s efforts to stabilize inflation. This sudden reversal has eroded consumer trust.
Furthermore, the company’s decision to increase prices while posting strong financial results has added fuel to the fire. Orion’s operating profit margin for the third quarter reached 17%, exceeding the industry average. Analysts predict that the company's annual revenue will surpass 3 trillion won.
Competitors like Haitai Confectionery have adopted a more nuanced approach. While Haitai also raised prices for chocolate-heavy products like Home Run Ball and Pocky, it simultaneously lowered prices for biscuit products that rely heavily on wheat, reflecting the decline in global wheat prices.
Critics argue that Orion's decision to hike prices while maintaining its profit margins and disregarding the government’s call for price stability is unfair to consumers. They point out that the company's previous commitment to reduce prices or increase product quantities when costs stabilized has not been fulfilled.
As the controversy continues, Orion faces a challenging task in regaining consumer trust. The company will need to address the concerns raised by consumers and provide a more transparent explanation for its pricing decisions.
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