Tuesday, April 27, 2010

Food Packaging Prices Set to Soar

Food packaging prices set to soar, Linpac warns

Linpac Packaging has urged food manufactures to prepare for price increases for plastic food packaging in the coming year as firms in the sector seek to offset escalating raw material costs.
Linpac said it expects further crude oil and polymer price increases over the next 12 months and advised food producers to plan now for future price increases to avoid margins being squeezed.

Adam Barnett, Linpac Packaging vice president of marketing and innovations, said there had been a number of dramatic rises in the cost of basic feedstocks in the past few months.

"Linpac has had to absorb the recent cost increases to help our customers in this difficult economic climate however, we can no longer sustain this and maintain the level of quality, service and product range we currently offer," he said.

Barnett continued that the industry would resist the increases for as long as possible but said that once one firm increased its prices, others would follow, which would mean producers and retailers would not have the options of shopping around.

"We have already seen price increases announced by our competitors in the packaging sector including those who provide other materials like cardboard."
Linpac's statement comes just over a month after the Packaging and Films Association warned of "significant price increases" because firms had no option but to increase prices to offset cost increases.
Andrew Copson, deputy managing director at Sharp Interpack, said: "We've got to the place that we are going to have to discuss the sharing of the cost increases with our customers."
Barnett said that Linpac was working with customers to ensure they had the most cost-effective packaging but said there was "only so much we can do" to offset the escalation of our material costs by more than 33% in the last year.

"Food producers need to factor in these price increases before they take effect so they can respond to any changes in their price points fast. If they don't they could find their margins squeezed," said Barnett.