With egg prices continuing to climb recently, the expense burden for the confectionery and bakery industry is growing. Industry officials said it is not yet at the stage of considering product price hikes solely because of rising egg prices, but noted that profitability pressure is mounting as accumulated expense burdens grow amid a strong dollar-won rate and rising international materials and supplies prices.
According to Dabom, the livestock distribution information service of the Korea Institute for Animal Products Quality Evaluation, the nationwide average retail price for a pack of 10 extra-large eggs this month was 5,222 won, up 38.6% from the same period last year (3,786 won) and 16.7% from last month (4,476 won). In particular, this is the first time the monthly average consumer price for a pack of 10 extra-large eggs has exceeded 5,000 won. The price for a pack of 10 extra-large eggs, which had stayed in the 3,000-won range from March 2022 to April, surpassed 4,000 won last month, and from the 28th of the same month to the 19th, recorded an average in the 5,000-won range every day.
The rise is attributed to the fallout from highly pathogenic avian influenza (AI), a decline in laying hens, and concerns about lower laying rates in the summer. Eggs are a key materials and supplies used in a wide range of confectionery and bakery products, including castella, cakes, white bread, sandwiches, and pastries. However, industry officials say the current price increase is not enough to immediately translate into higher consumer prices.
A food industry official said, "When egg prices rise, it inevitably becomes a burden, but in fact it is not just eggs," adding, "Overall expense has increased to the point that it is hard to find materials and supplies unaffected by exchange rates, and eggs are just one of them."
Compared with the AI crisis in the past, the situation is somewhat different. In 2016–2017, large-scale culling of laying hens led to a shortage of egg supply itself, and at the time SPC (now Sangmidang) temporarily suspended production of some items with high egg usage, such as castella, muffins, and roll cakes, as the industry as a whole struggled to secure materials and supplies.
By contrast, although egg prices are rising now, assessments say the supply shortage is not at a severe level. As the government concurrently pursues supply-and-demand stabilization measures such as expanding imported eggs, there have been no production disruptions like in the past.
However, the industry laments that business conditions have become even more complex and worse than then. Prices of major materials and supplies such as cocoa, butter, flour, and packaging materials are already high, and with a strong dollar-won rate and logistics expense continuing, rising egg prices are adding an extra burden.
A food industry official said, "With domestic consumption contracting, prices of raw and subsidiary materials keep rising, so cost pressure is clearly intensifying," adding, "Given the government's price stabilization stance, there is also pressure on price hikes, making it a more difficult business environment than ever."
In fact, as major food and bakery companies this year have lowered or frozen prices of some products, it is not easy to reflect rising costs in selling prices. As a result, if higher egg prices persist, there are projections that the burden of managing profitability could grow further.
The industry is responding by diversifying strategies for procuring materials and supplies. A food industry official explained, "Realistically, the basic response is to diversify suppliers or consider alternative inputs," adding, "We are working to expand overseas sources and diversify supply chains to reduce cost burdens."
Another food industry official said, "For now, it is not to the point of disrupting production, and we are closely monitoring egg supply and price trends," adding, "If necessary, we plan to respond by diversifying import sources."