GAPMMI says plastic price rise will drive up food and beverage product prices

This is indeed a rather complicated situation in the industry, particularly for food and beverages. Almost everything uses plastic, and we are also facing difficulties in obtaining (raw materials) from suppliers.

Jakarta (ANTARA) -

The Chairman of the Indonesian Food and Beverage Entrepreneurs Association (GAPMMI), Adhi S. Lukman, stated that the rise in plastic prices is directly affecting the increase in food and beverage (mamin) product prices in the market.

This is occurring because nearly all mamin products use plastic as packaging, while the supply of such materials is becoming limited.

“This is indeed a rather complicated situation in the industry, particularly for food and beverages. Almost everything uses plastic, and we are also facing difficulties in obtaining (raw materials) from suppliers,” he said after attending the Coordinating Meeting on the US Trade Investigation in Jakarta on Monday.

In addition to the soaring prices, the availability of plastic raw materials has also become a serious issue. Several suppliers have even informed of the potential exhaustion of packaging raw material stocks in the coming months.

Adhi provided further details, noting that the rise in plastic prices has been significant with quite a wide variation. The increases range from 30 percent to 100 percent, including for simple packaging such as plastic for bakso and frozen meat products.

“For example, the contribution of packaging to the cost of goods is around 25 percent only; if that rises by 100 percent, it means the impact on the cost of goods is very high, around 25 percent, and this will cause the industry to struggle to sell because the products will definitely be expensive, while consumer purchasing power is limited,” he explained.

In response, some industry players have begun adjusting their product selling prices in the market. In fact, price increases are already visible in several basic necessity commodities that use plastic packaging.

Furthermore, Adhi stated that the cost pressures are also eroding business margins.

“For instance, if the packaging contribution is 20 percent, and its price rises by 60 percent, that means around 12 percent increase in the cost of goods. If we can only raise the selling price by 5 percent, then the loss is already 7 percent,” he remarked.

To address the supply limitations, Adhi mentioned that industry players are pushing the government to open options for importing plastic raw materials from other alternative countries.