Room 701, Seoul YWCA, 1-1, Myeongdong 1(il)-ga, Jung-gu, Seoul,
TEL +82-02-774-4050, FAX +82-02-774-4090
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Effective Date |
: June 29, 2012 |
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Dept. in Charge |
: Cost Analysis Team |
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Tel. |
: 02-774-4060 |
Premium coffee KANU adds 5% of roasted coffee, and its price is two times!. | |
The Cost Analysis Team of The Korea National Council of Consumer Organizations (KNCCO) (President Kim Yeon-hwa) analyzed the appropriateness of the price of Maxim KANU(1), a premium coffee contained in plastic bags introduced by Dongsuh Foods, to keep pace with the present trend.
To look at the raw materials of coffee in plastic bags for comparison to the appropriateness of Maxim KANU, 'Arabica 100' uses 100% of Arabica coffee, and KANU uses 95% of Arabica and 5% of roasted coffee beans (Refer to [Table 2].). So 'Arabica 100 Black' was selected as comparable to KANU, and the costs were estimated on the consumption that the only difference between 'Arabica 100' and KANU lies in the 5% of roasted coffee beans.
[Table 1] Price of a small plastic bag of coffee produced by Dongsuh Food (2)
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Classification |
Arabica 100 Black |
KANU Americano |
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Price (KRW) |
149.0 |
315.0 |
Before estimating the cost for raw materials, as is shown in [Table 1], one has to pay 2.11 times the price of Arabica 100 in order to have a cup of KANU. However, the content of KANU is 200ml, while that of ordinary plastic bag coffee is 100ml. A mass unit was used for more accurate comparison, but still KANU was 1.18 times more expensive than Arabica 100.
[Table 2] Composition of Arabica 100 Black and KANU Americano
KNCCO assumed that the raw material of both KANU Americano and Arabica 100 Black is Arabika, a supreme brand of coffee bean, and other production costs were the same.
The results of the analysis of the material costs for the coffee in plastic bags were that material costs occupied about 4% among the total cost for the plastic bag coffee and the price of KANU Americano can be lowered by KRW47.68 (15%), taking into consideration the cost and price of Arabica 100 Black.
However, in a debate held to gather opinions, it was pointed out that the yield rate should be applied due to the special character of the process of extracting coffee powder. So to be more accurate, the yield rate of coffee powder was reflected on the cost analysis. As a result, the portion of material cost rose to 10% for Arabica 100 Black and 20% for KANU Americano. And in comparison to the same quantity of Arabica 100 Black, the price of KANU Americano increased by KRW50.11, while its material cost rose by KRW38.66. Therefore they charged consumers more than the material cost.
Even if the yield rate is applied for plastic bag coffee, KANU can be reduced by 3.6% (about KRW11) .
[Table 3] Appropriate price of KANU Americano (compared to Arabica 100)
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Before yield rate for coffee power is applied |
After yield rate for coffee power is applied |
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Reducible amount |
Ratio of reducible amount |
Appropriate price |
Reducible amount |
Ratio of reducible amount |
Appropriate price |
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47.68 |
15.14% |
267.32 |
11.45 |
3.64% |
303.55 |
The price can be lowered except cost increases for raw material. It was analyzed that the price of KANU Americano can be reduced by KRW11.45 judging by the price of Arabica 100 Black. KNCCO calls for the reduction in the price of KANU which added 5% of roasted coffee beans, and proposes the appropriate price of KANU be KRW304.
In addition, KNCCO will keep monitoring the prices of plastic bag coffee to stabilize consumer prices, and continue to demand correction for the companies which incite price raises under the pretext of upgrading quality.
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1) Analyzed KANU Mild Roast product
2) The price in the Lotte Mart Internet price. The ordinary coffees are packed in 20 pieces, and KANU is packed in 30 pieces.
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