Buldak instant noodle products are on display at a supermarket in Seoul, June 29. Yonhap

Company to hike consumer prices in US

Buldak instant noodle maker Samyang Foods is under pressure to deal with the United States’ 15 percent tariff on all Korean imports, which took effect this month.

The instant noodles have gained major popularity across global markets, especially seeing spiking demands in the U.S., but the company remains cautious. The company has no manufacturing facility in the U.S., meaning the new tariff will hit every Buldak packet on shelves at retail outlets in the world’s biggest economy.

With the Buldak brand now at an inflection point in the U.S. market as it establishes itself to be as common a product as sriracha hot sauce, Samyang is considering how to maintain its popularity while sustaining exports, which accounted for 80 percent of its total sales last year.

Instant noodles were in a tariff-free zone until April, when the Donald Trump administration began levying a 10 percent “basic tariff” on all imports regardless of origin. The pressure has now intensified further, as Korea and the U.S. have agreed on a 15 percent blanket tariff.

Though details remain unclear, Samyang Foods has decided to raise the retail prices of the Buldak products it exports to the U.S., saying the measure is “inevitable.” The decision came after the company tried to keep the products’ prices intact for American consumers despite the tariff’s impact by streamlining manufacturing process and logistics to lower operation costs and implementing discount promotions.

Samyang Foods is currently distributing Buldak products to major retail chains and e-commerce platforms in the U.S., including Walmart, Costco, Amazon, H-E-B and Sam’s Club.

Each Buldak packet is currently priced between $1.40 and $1.70 at Walmart and between $1.80 and $2.00 on Amazon, but it remains to be seen how much and when the company will raise the prices.

The company in the second quarter of this year piled up its inventory in the U.S., but said it needs to have discussions with each U.S. distributor to determine new prices for the products and when they will take effect. Given their strong buying power, industry officials assume that those retail giants hold the upper hand in price negotiations.

The strengthening value of the Korean won is another setback for Samyang Foods because exports dominate the company’s sales. The Korean won traded at 1,471.45 against the U.S. dollar on Jan. 2, but closed at 1,388.87 won on Thursday, meaning the company earns less in won for the same amount of dollar-based sales.

Offices for Samyang Foods' holding company, Samyang Roundsquare, in Seoul's Seongbuk District / Courtesy of Samyang Foods

The most effective measure for Samyang Foods to deal with the U.S. tariff is building a manufacturing plant in the U.S. and supplying Buldak products to American consumers locally.

But the company last month began building its first manufacturing plant outside Korea in China’s Zhejiang Province, which will facilitate supplying another major export market for the company. The plant is scheduled for completion in 2027 with a production capacity of 840 million Buldak packets annually.

Samyang Foods said it will reduce sales risks from the U.S. tariff by diversifying export routes. In the second quarter, its Chinese subsidiary, Samyang Foods Shanghai, posted sales of 650 million yuan ($90 million), up 30 percent from previous year. Its European subsidiary in the Netherlands, Samyang Foods Europe, posted sales of 32 million euros ($37 million), double the previous quarter.

Samyang America in California, meanwhile, posted sales of $94 million during the same period, up 32 percent from the previous year.

Samyang Foods’ total overseas sales during the three-month period reached 440 billion won ($317 million), four times its domestic sales.

"With our recently completed second Miryang manufacturing plant robustly supplying our exports, we will keep expanding our Buldak export volumes this year," a Samyang Foods official said. "With our increasing production capacity, we will further diversify our export destinations and introduce localized marketing strategies for different countries."

Industry experts speculated that Buldak’s soaring popularity in the U.S. will work as a buffer against the anticipated price hike for now, adding that the adjusted prices will not damage the company’s sales immediately. Currently, Buldak supply across the U.S. is not meeting surging demands.

Source : Korea Times