President Lee Jae-myung recently pointed out the issue of high prices for daily necessities with the expression '2000 won for ramen,' causing the stock price of Nongshim, a leading ramen corporation in Korea, to fall for four consecutive days. The stock price of OTOKI, which has the next highest market share in the domestic ramen market, also saw a slight decline. In contrast, the stock price of Samyang Foods continues to trend upward.
In the food and ramen industry, it is assessed that the impact of President Lee's remarks has influenced investor sentiment regarding Nongshim's stock price. Both Nongshim and OTOKI have higher domestic sales compared to Samyang Foods. Therefore, with the reasons for reducing domestic ramen prices coming into play, concerns over poor performance due to price cuts are said to have been factored in.
According to the Korea Exchange on the 14th, Nongshim's stock price fell by 1.5% from the previous closing price of 391,500 won. OTOKI's stock price remained at 394,000 won, a decrease of 0.88%. In contrast, Samyang Foods' stock price was recorded at 1,197,000 won, up 0.42% from the previous closing.
This is a contrasting trend observed immediately after President Lee's remark about '2000 won for ramen' during the second emergency economic task force (TF) meeting on the 9th. At that time, President Lee instructed to prepare countermeasures, stating, 'Recently, prices have risen tremendously. Is it true that one ramen costs 2000 won? There is no reason for things to occur without cause, so there must be various factors.'
In fact, looking at the retail prices in convenience stores, Nongshim's Ppopatpongguri big bowl noodles, OTOKI's cheese ramen big cup, and Samyang Foods' Tangle are being sold at prices over 2000 won. These are primarily products referred to as premium ramen.
On the contrary, noodles regarded as steady sellers, accounting for 90% of the ramen market, are sold for around 1000 won. In convenience stores, Nongshim's Shin Ramyeon and OTOKI's Jin Ramyeon are sold for 1000 won, while Samyang Ramyeon is priced at 910 won and Buldak Bokkeummyeon at 1250 won. An industry insider noted, 'In general, amid rising prices, it seems the president alluded to ramen, a representative food for the public,' adding that 'given that ramen prices have already been increased once, the ripple effects appear larger.'
Although it is limited to certain products, the ripple effect of President Lee's remarks is still ongoing at Nongshim and OTOKI. Since the president's comments, the stock prices of Nongshim and OTOKI have been on a downward trend, while the stock price of Samyang Foods has been on an upward trend. Moreover, the previous closing was up 5% compared to the closing price on the 9th.
In the food and ramen industry, it is considered that differing sensitivities to domestic demand have affected stock prices. Nongshim is a representative ramen corporation holding a 56% share of the domestic ramen market. Its revenue for the first quarter of this year was 893 billion won, a 2% increase compared to the same period last year, but its operating profit dropped by 9% to 56.1 billion won. The share of overseas sales in total revenue is as high as 38.8%, indicating a strong focus on domestic sales. With a market share of 23% in the domestic ramen market, OTOKI offers a variety of products beyond ramen, resulting in a relatively slight decline in its stock price compared to Nongshim.
Samyang Foods, which holds an 11% market share in the domestic market, reported a revenue of 529 billion won for the first quarter of this year, a 37% increase compared to the same period last year. Its operating profit also rose by 67% to 134 billion won. Notably, its overseas sales reached 424 billion won in the first quarter, with international sales contributing 80% of total revenue, leaving only 20% from the domestic market.
An industry insider commented, 'The president's remark about 2000 won for ramen was interpreted as a need to lower the price of ramen, a representative food for the public. Concerns about poor performance due to ramen price cuts have already been factored into investor sentiment at Nongshim and OTOKI, which have a large domestic sales share,' adding, 'This is why the largest ramen corporations are bound to play a central role in the Lee Jae-myung administration's policy on price stabilization.'
Professor Seo Yong-gu of Sookmyung Women's University remarked, 'It is difficult to reduce prices once they have risen, but it is not entirely impossible. The government seems to be attempting to impose pressure for price reductions to stabilize prices.' He noted, 'Compared to Nongshim and OTOKI, Samyang Foods has a larger share of overseas sales, which has led to continuous reflection of investor sentiment relatively free from concerns over poor performance due to domestic price cuts.'