Packaging price hikes adding to food sector pressures

By Jane Byrne

- Last updated on GMT

Related tags Cost

Food manufacturers are facing additional cost pressures due to the recent hikes in packaging materials, with Nampak the latest in a series of packaging firms to raise prices.

Paper and plastic packaging supplier, Nampak Europe, this week announced a ‘double digit’ price increase to offset what it calls unparalleled input costs.

The company said it was committed to a programme of growth and reinvestment but to ensure its long term survival had to pass on increases to its customers, with immediate effect.

The company highlighted the rising price of polymers together with increasing electricity and transportation costs as the reasons for the escalation.

Nampak provides packaging for a range of food products including dairy, juice, sauces, pickles, dressings, cooking oils and dried fried foods.

Market-wide increases

Meanwhile, Alcan Packaging, a supplier of flexible packaging for the food and beverage market, last month announced a five per cent price increase on all its products and up to 15 per cent price increase on resin-based packaging products in Europe, effective on all deliveries from 1 August, 2008.

"These increases are due to unprecedented energy cost levels and high inflation rates on all input costs. As we have done in the past, we will be working with our customers to minimise the impact of these significant increases," ​said Thibault Laumonier, sales and marketing vice president of Alcan Packaging Food Europe.

And Sonoco also said that, despite its energy conservation and productivity initiatives throughout its paper mill system, it has not been able to offset the high energy prices of the first six months of 2008, which are being passed on to its North America customer base.

The company recently announced a $40 per tonne average energy surcharge for its uncoated recycled paperboard products, effective from 14 July.

Polymer costs

BASF increased the price of its Styrolux polymer last month by €150 a tonne. This hike was on top of those announced at the end of June, when the polymer supplier said it was raising the price of Styrolux by €100 a tonne.

The company also announced in mid-June that it was increasing it price of paper and cardboard by up to 20 per cent also citing rising energy and transport costs.

Lower oil prices

However, oil prices have pulled back in the past couple of weeks, providing a glimmer of hope for manufacturers.

Yesterday, the price of US crude oil - a barometer to global oil prices - closed trading at just over $119 a barrel on the New York Mercantile Exchange.

The reduction in oil prices, which have fallen nearly 20 per cent in under a month, has encouraged hope that the crisis in the commodities markets may have eased.

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