RPC announces packaging price increases

By Simon Pitman

- Last updated on GMT

A leading European cosmetics packaging provider has announced price increases of up to 15 per cent as a result of continued pricing pressures.

The company said the increases will be implemented on selling prices with immediate effect and are the result of an 'unprecedented and continuing rise in input costs'.

The company highlighted the rising price of polymers, which are some of its primary packaging materials, together with increasing electricity and transportation costs.

Industry 'under pressure'

"The entire packaging industry is under acute pressure and we are not exempt from this,"​ said RPC chief executive Ron Marsh.

"We have to implement these rises to maintain the viability of the group and deliver a performance that is acceptable to our shareholders."

RPC has gone one step further than most price hike announcements by highlighting in more detail some of the increased manufacturing costs it is facing.

It said that electricity prices for its production facilities in the UK had increased 50 per cent since October 2005, while fuel prices had increased transport costs by 16 per cent since the beginning of 2008.

Unsustainable margins

"We are operating on margins which simply cannot sustain these sorts of increases and we therefore have to pass them on to our customers,"​ Marsh added.

RPC's announcement comes just a day after BASF announced that it was increasing the price of its Styrolux polymer for the second time in the space of one month.

News that the cost of packaging materials is on the rise is a double whammy for cosmetics manufacturers who have been hit by a series of increases for ingredients recently.

Following on from the big players

Big chemical and raw ingredients suppliers such as Dow, BASF and Sun Chemicals have implemented price increases that exceed the 10 per cent barrier in the past few months, impacting the price of both packaging and raw materials.

However, more recently those price increases are being passed further down the chain to major refined and active ingredients players like Symrise, which makes it likely that other players in this category will follow suit in the near future.

Key to manufacturing costs is the price of oil, which on July 11 peaked at $147 a barrel, more than double its price one year ago, but with prices of oil now falling manufacturers will be hoping for a reprise in the near future.

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