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| A customer shops for red pepper paste at a large retail store in Seoul, in this 2022 file photo. Newsis |
By Kim Jae-heun
Food companies, eager to boost their profitability by raising prices of processed foods such as instant noodles, snacks and bread over the past year, appear to be neglecting investment in research and development activities, industry officials said Thursday.
Most major firms' R&D expenses came to only around 1 percent of their total sales, showing no growth compared to 10 years ago, if not having decreased.
CJ CheilJedang, the country's No. 1 food firm, spend 219.1 billion won ($165.2 million) in 2022, equivalent to 1.17 percent of its annual sales. Comparing to the 1.43 percent it invested in R&D in 2012, the portion actually decreased by 0.26 percentage point.
Instant noodle maker Nongshim spent 28.7 billion won on R&D in the same period, equivalent to only 0.9 percent of its sales. Considering that the company spent 29.3 billion won (1.1 percent) the previous year, both the amount and the portion of R&D expenses decreased year-on-year.
Orion, another food giant, also saw its R&D expenses decline from 0.84 percent of annual sales in 2020 to 0.56 percent last year.
"Food firms are inevitable to cut R&D cost due to sharply soaring prices of raw and auxiliary materials since last year," a local food firm official said.
Nonetheless, many companies have increased their budgets for marketing and promotional events recently.
CJ CheilJedang spent 244 billion won on advertising last year, up 38 percent from the previous year's 175.9 billion won. Nongshim also invested 75.3 billion won in marketing in the same period, up 24 percent year-on-year.
"If food firms continue to focus on only copying and selling popular products, the competitiveness of the local food industry will inevitably decline," a local retail firm official said.
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