The price of chicken is rising again... The impact of Brazilian chicken, and the shadow of the global supply chain behind it.

Introduction: Chicken in Everyday Life, No Longer a 'Light Choice'

Chicken has established itself as a representative dining menu for Koreans. It is a symbol of late-night snacks and an indispensable food for family gatherings or meals with friends, while the rise of single-person households and the spread of delivery apps have normalized chicken consumption. As a result, chicken has become more than just food it has evolved into a culture. However, in recent times, consumers have begun to double-check the price before ordering a whole chicken. Although there are differences among franchises, the price for a whole chicken has become commonly set in the mid-20,000 won range, and additional costs can bring it close to 30,000 won. Behind this price increase are not only simple inflation but also complex global supply chain issues. This essay aims to examine the recent phenomenon of rising chicken prices and the issues related to the increase in distribution costs of Brazilian chicken, focusing on the changes in the domestic chicken industry and consumer trends.

Price increase of Brazilian chicken and response of domestic franchises

The chicken franchise industry in South Korea is significantly dependent on not only domestically produced chicken but also imported frozen chicken. Particularly, smaller and medium-sized franchises tend to prefer relatively inexpensive imported chicken, with Brazilian chicken making up the largest share. Brazil is one of the largest exporters of chicken in the world, offering price competitiveness and supply stability. However, the concentration of imports from specific countries has the drawback of being vulnerable to external shocks. This leads to an increase in the distribution cost of chicken, impacting the domestic franchise industry and consumers.

Suspension of Imports Due to Avian Influenza (AI) and Price Surge After Resumption

In 2023, the outbreak of highly pathogenic avian influenza (AI) in Brazil led the South Korean government to temporarily suspend imports of chicken from that country. This significantly impacted the chicken supply chain, requiring the domestic market to secure alternative importing countries and increase the proportion of domestic chicken. However, prices rose in alternative exporting countries such as Thailand, Denmark, and Sweden due to increased logistics and production costs, and domestic chicken prices also had to rise due to increased demand. Although imports of Brazilian chicken resumed in 2024, the distribution unit price entered the market at a much higher level than before. As a result, domestic distributors and franchise headquarters had no choice but to reflect the increased raw material prices in the product prices.

Response by Franchise: The Case of Yellow Chicken

The supply chain crisis is affecting the entire franchise industry. For example, Yellow Chicken has announced that it will increase the prices of all menu items by 2,000 won starting June 23, 2024. This marks the first price increase in about a year, with original chicken going from 22,000 won to 24,000 won, and garlic chicken also seeing the same increase. Yellow Chicken cites rising raw material costs and increased distribution expenses as the reasons for the price hike, explaining that this decision is an unavoidable choice for the headquarters. Additionally, many small and medium-sized franchises are reviewing potential price increases, with some anticipating further hikes in mid-July. The franchise industry is reporting that a price increase is likely to become a general trend.

Consumer and Market Response

The reactions of consumers to price increases are clearly evident. Price-sensitive consumers are hesitating to purchase a whole chicken and are opting for smaller packaged products such as half a chicken or boneless sets. When the burden of delivery fees is added, it often raises the total payment amount to over 30,000 won, leading some households to exclude chicken from their dining options. In a market where such changes are being noticed, some franchises are trying to attract consumers by changing set menu configurations or enhancing discount promotions. Large supermarkets are presenting frozen chicken products and ready-to-eat meals (HMR) as alternatives, while convenience store chicken and lower-priced menus from local brands are gaining attention, leading to a polarization in the market.

Conclusion: The Shockwaves of the Global Food Supply System, Changing Standards of Consumption

The rise in chicken prices is not just a simple pricing issue. It is a case that illustrates how the vulnerability of global supply chains and the volatility of international markets affect everyday consumer goods. The excessive dependence on Brazilian chicken, unexpected variables like AI, and imbalances in distribution structures are ultimately returning to consumers as a direct burden. The reality that both franchises and consumers are forced to survive and adapt highlights the significance of the price of a single chicken. The government has announced that from August 2024, it will enhance the improvement of the import process and industry cooperation for a stable supply of Brazilian chicken, but without diversification of the fundamental supply and demand structure, it is likely to result in only temporary effects. Therefore, in the medium to long term, strategies for diversification of food materials, strengthening domestic production capacity, and improving distribution structure efficiency are necessary. For consumers, chicken remains an attractive food, but as prices rise, the criteria for selection are changing. The price of a single chicken is transforming into an indicator that reflects the current consumption structure and dining culture of Korean society.