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Exterior view of a CJ CheilJedang facility. (Photo courtesy of CJ) |
[Alpha Biz= Paul Lee] Shares of CJ CheilJedang fell on Tuesday amid heightened tension in the food industry after President Lee Jae-myung mentioned the possibility of imposing a levy on sugar, often referred to as a “sugar tax,” similar to charges imposed on tobacco.
On the KOSPI market, CJ CheilJedang closed at 212,500 won, down 0.93% from the previous session. While the KOSPI index surpassed 5,100 points to hit a record high, CJ CheilJedang extended its losses after 10 a.m., when President Lee’s remarks on a sugar tax were widely reported, and failed to rebound by the close.
Other sugar-related stocks showed mixed performance. Daehan Sugar, a peer sugar producer, fell 0.18% to 2,785 won, while Samyang Corp. gained 0.63% to 48,100 won.
Online investor communities reacted sharply, with some posts warning of declining sales and deteriorating prospects if a sugar tax were introduced, describing the development as a major negative factor for related stocks.
However, analysts note that sugar accounts for a relatively small portion of CJ CheilJedang’s overall revenue. In 2024, the company’s total food sales amounted to approximately 11.35 trillion won, with sugar-related sales estimated at around 500 billion won, or roughly 4.4% of the total.
As a result, the potential impact of a sugar tax on the company’s overall earnings is expected to be limited. Increased costs from taxation are also unlikely to significantly affect profitability, suggesting that the tax alone may have minimal long-term influence on the company’s stock performance.
CJ CheilJedang has long since evolved beyond being a traditional sugar producer into a global processed food company. Recent revenue growth has been driven primarily by overseas processed food products, such as dumplings and pizza sold in North America, rather than sugar.
Commodity-based food products like sugar and flour continue to serve as stable cash cows, generating more than 1 trillion won in steady cash flow that supports investment in growth brands such as Bibigo and Hetbahn, rather than acting as engines of rapid growth.
Separately, CJ CheilJedang is currently facing trial over alleged price-fixing in the sugar market, along with Daehan Sugar and Samyang Corp. Despite sugar’s relatively low contribution to revenue, CJ CheilJedang holds an estimated 50% market share, followed by Daehan Sugar at 30% and Samyang Corp. at 20%.
Prosecutors allege that the three companies colluded to coordinate the timing and magnitude of sugar price changes between February 2021 and April 2025, estimating the scale of the alleged cartel at 3.27 trillion won. Thirteen individuals, including CJ CheilJedang executives, were indicted in November last year, with some reportedly admitting to the charges.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
