Korea Filled with Bread Lovers... "Highest Bread Prices Among Major Countries"

Domestic Bakery Market Surpasses 13 Trillion Won, But Growth Slows
Bread Prices in Korea Rising Faster Than in the US, Japan, and France
"Qualitative Advancement and Overseas Expansion Needed for the Domestic Market"

# The specialty raw bread brand Easy White Bread has reportedly been receiving a steady stream of franchise inquiries since it opened its first directly operated store this January. As of May, three stores have opened, and an additional six stores are set to open in Seoul, Gyeonggi, and Chungcheong provinces by next month. After June, a total of 13 new stores are confirmed to open within the year, not only in the Seoul metropolitan area but also in Busan and the Gyeongnam region. In addition, discussions are ongoing for opening stores in 15 other commercial districts within the year. A representative from BonIF explained, "Bakeries are an industry with high consumer demand, and since small stores can be established with an initial investment in the low 100 million won range, we are continuously receiving inquiries about starting a business."

The domestic bakery market continues to expand, centered around trends such as 'Bread Pilgrimage' (a portmanteau of bread and pilgrimage) and 'bread festivals.' As the market gradually approaches saturation and growth slows, major franchise bakeries are targeting overseas markets such as the United States. Due to rapidly rising bread prices—a phenomenon dubbed 'breadflation'—the price of bread in Korea is now higher than in other major countries.

At Seongsimdang, which has become a representative attraction in Daejeon, customers are choosing bread. Photo by Hur Younghan

According to the report 'The Next Axis of K-Food, K-Bakery: Beyond the Limits of the Domestic Market,' released by Samil PwC Management Research Institute on May 30, the domestic bakery market reached 13.623 trillion won last year. Over the past five years, the average annual market growth rate has been 8%. The bakery market, which was less than 10 trillion won in 2020, has grown to over 13 trillion won, driven by the simultaneous growth of mid- to low-priced mass-produced products and premium offerings from specialty stores. The Korean bakery market is divided into three sectors: mass-produced bread such as SPC Samlip, franchises like Paris Baguette and Tous les Jours, and individual or local heritage bakeries such as Seongsimdang. The market share is approximately 35% for mass-produced bread, 35% for individual and local bakeries, and 30% for franchises.

The number of bakery specialty stores—excluding mass-produced bread—such as franchises and individual/local bakeries, increased from 21,500 in 2019 to 26,700 in 2021, and has remained around 28,000 stores for the past three years since 2022. While the number of franchise stores continues to grow, the rate of increase has slowed, and the number of non-franchise stores has been on the decline since peaking in 2022. Oh Seonju, Senior Research Fellow at Samil PwC Management Research Institute, analyzed, "In Korea, there are 54 bakery specialty stores per 100,000 people, which is more than five times higher than Japan (10 stores), indicating a much higher market saturation."

As the industry has expanded, bread consumption has also increased. Per capita daily bread consumption rose from 17.5g in 2010 to over 20g for the first time in 2014, fluctuated, and then reached 23g last year. Simultaneously, since the mid-2010s, the culture of seeking out famous bakeries nationwide and sampling their signature products, known as 'Bread Pilgrimage,' has spread and become a cultural phenomenon and travel trend. On this foundation, bread festivals have been held in cities such as Daejeon, Cheonan, and Gangneung, attracting hundreds of thousands of visitors and drawing significant attention.

The problem is that the pace of bread price increases in Korea is notably higher than in other major countries. Using 2020 prices as a baseline index of 100, Korea's bakery price index reached 138 last year, surpassing not only the United States and Japan (both at 126) but also France (120), known as the "country of baguettes," by a significant margin. In terms of bread prices, last year, the price of 100g of bread in Korea was 785 won, more than 200 won higher than the United States (584 won), and considerably higher than France (599 won), Japan (468 won), and the United Kingdom (307 won) as of 2024. These factors are fueling concerns over 'breadflation.'

The sharp rise in bread prices has been attributed to the structural increase in the prices of key ingredients such as flour, sugar, milk, and cheese. Another explanation points to the structural differences in the bakery industry, as bread in Korea is generally perceived as a special treat rather than a staple food, unlike in the United States and Japan. Per capita annual bread consumption in Korea was 7.8kg in 2023, whereas in Japan the average was 20kg from 2012 to 2022—more than double. While bread is seen in Korea as a dessert or experiential purchase, in Japan it is regarded as a meal substitute, leading to differences in the proportion of mass-produced bread and the main distribution channels.

Senior Research Fellow Oh commented, "The growth potential of the domestic bakery industry is showing increasing signs of limitation. Store density has reached a high level, and the burden of fixed costs such as labor and rent continues to rise." He added, "With ingredient price increases and consumer price resistance, it has become difficult to secure both profitability and growth through simple price hikes alone."

He further suggested, "Although K-Bakery has achieved results in terms of products and operations, it now faces stagnant domestic market growth due to population decline, aging, and intensified competition. Rather than merely increasing the number of stores, the industry must pursue qualitative advancement in the domestic market through improved operational efficiency and a more sophisticated product portfolio, while also expanding its growth base by entering overseas markets."

This content was produced with the assistance of AI translation services.