To ensure survival, European flexible makers to pass price hikes to food processors

25-Jul-08

In the current scenario of rising oil and feedstock prices, the growth of the European flexible packaging industry seems threatened. Recently, the flexible packaging and multilayer film sector has been trying to offset growing raw material, energy, transport and labour costs through innovations like down gauging and consumer convenient packaging options. Raw material prices represent 60% of the total cost of flexible packaging. But faced with persistently rising costs, many packaging firms are suffering financially due to not passing their costs on to customers. The sector is under threat and requires supply chain optimisation to lessen the impact of future increases. The squeeze in margins can no longer be balanced by productivity efficiency within the sector. This has coerced the industry to arrive at a decision to hike product prices and down to food processors, to ensure its existence. Flexible packaging and multilayer film have many applications for food producers particularly for frozen, dry and fresh foods, as well as liquids. The Flexible Packaging Europe (FPE) will require food manufacturers to work with the sector to "create solutions to what is becoming an untenable position." In a bid to cope with rising feedstock prices, packaging manufacturers are faced with a slow down in supply, leading to delay in delivery times to food manufacturers.