Raw Material Prices Surge, Cosmetic Prices Predicted to Rise
Rising prices of imported raw materials, a weakening rupiah, and surges in plastic prices as packaging materials pose significant challenges to various industries, including the cosmetics sector.
General Chairman of the Indonesian Cosmetics Companies Association (Perkosmi), Sancoyo Antarikso, stated that the Indonesian cosmetics industry still relies heavily on imported raw materials, accounting for about 80% of supplies.
“So, whatever can be supplied domestically will certainly continue to be used. But for those that cannot yet be provided—due to technology, quality, and other factors—we are forced to import,” Sancoyo told the media at the Indonesia Cosmetic Ingredients (ICI) Expo held by Perkosmi at JIEXPO Kemayoran on Wednesday (6/5).
CEO of Martha Tilaar Group, Kilala Tilaar, who was also present at the event, highlighted the rising costs of raw materials and packaging affecting the cosmetics industry.
“Plastic prices rose by up to 200% last month. In the cosmetics pricing structure, 60% is packaging and 40% is ingredients. So, if the packaging multiplier factor rises by, say, 150-200%, prices inevitably have to increase,” Kilala said at the same event.
In addition to plastic posing a major challenge, Kilala noted that the rupiah’s weakening against the US dollar is adding further pressure. She mentioned the exchange rate reaching Rp17,400 per US dollar on Wednesday (6/5), making imported raw material costs even more expensive.
“This is 85% imported raw materials (for cosmetics). The dollar went from Rp16,500 to Rp17,400 today—that’s already up 4-5%, plus the plastic factor, so roughly an 8-11% increase,” she said.
Kilala added that this price hike in cosmetics is already evident and will be seen across various companies.
“Many companies have already raised prices gradually—we’ve asked our peers too,” she continued.
“Prices may rise in the third and fourth quarters,” she explained.
She added that the price increase does not yet account for the surging industrial energy costs. Many cosmetics factories still use industrial diesel for production needs.
“Boilers and heating use diesel. Industrial diesel has risen from Rp13,500 to Rp24,000,” Kilala continued.
“We have 33,000 medicinal, aromatic, and cosmetic plants that we haven’t utilised yet,” she concluded.
Kilala provided examples of local ingredients such as basil extract, mangosteen peel, Aceh patchouli, and phyllanthus emblica, which are seen to have great potential for the beauty industry. However, the biggest challenge for the local industry remains in the upstream sector, from farmer development to suboptimal standardisation of raw materials.
“So, the potential is immense. But the upstream hasn’t been shaped yet. Unfortunately, our nation finds it difficult to engage in upstream activities—only a few companies are willing to do so. Because upstream is tough; it requires pioneering,” Kilala emphasised.
Final answer
Relevant: true
Topic: Economy
Title: Raw Material Prices Surge, Cosmetic Prices Predicted to Rise
Summary: The Indonesian cosmetics industry is facing significant challenges due to rising import costs for raw materials, a weakening rupiah, and sharp increases in plastic packaging prices, which could drive up consumer prices by 8-11% in the coming quarters. Industry leaders highlight that 80-85% of ingredients are imported, exacerbating the impact of the exchange rate hitting Rp17,400 per US dollar, alongside surging industrial fuel costs. Despite abundant local resources like basil extract and patchouli, upstream development remains underdeveloped, limiting opportunities to reduce import dependency.
Body: Rising prices of imported raw materials, a weakening rupiah, and surges in plastic prices as packaging materials pose significant challenges to various industries, including the cosmetics sector.
General Chairman of the Indonesian Cosmetics Companies Association (Perkosmi), Sancoyo Antarikso, stated that the Indonesian cosmetics industry still relies heavily on imported raw materials, accounting for about 80% of supplies.
“So, whatever can be supplied domestically will certainly continue to be used. But for those that cannot yet be provided—due to technology, quality, and other factors—we are forced to import,” Sancoyo told the media at the Indonesia Cosmetic Ingredients (ICI) Expo held by Perkosmi at JIEXPO Kemayoran on Wednesday (6/5).
CEO of Martha Tilaar Group, Kilala Tilaar, who was also present at the event, highlighted the rising costs of raw materials and packaging affecting the cosmetics industry.
“Plastic prices rose by up to 200% last month. In the cosmetics pricing structure, 60% is packaging and 40% is ingredients. So, if the packaging multiplier factor rises by, say, 150-200%, prices inevitably have to increase,” Kilala said at the same event.
In addition to plastic posing a major challenge, Kilala noted that the rupiah’s weakening against the US dollar is adding further pressure. She mentioned the exchange rate reaching Rp17,400 per US dollar on Wednesday (6/5), making imported raw material costs even more expensive.
“This is 85% imported raw materials (for cosmetics). The dollar went from Rp16,500 to Rp17,400 today—that’s already up 4-5%, plus the plastic factor, so roughly an 8-11% increase,” she said.
Kilala added that this price hike in cosmetics is already evident and will be seen across various companies.
“Many companies have already raised prices gradually—we’ve asked our peers too,” she continued.
“Prices may rise in the third and fourth quarters,” she explained.
She added that the price increase does not yet account for the surging industrial energy costs. Many cosmetics factories still use industrial diesel for production needs.
“Boilers and heating use diesel. Industrial diesel has risen from Rp13,500 to Rp24,000,” Kilala continued.
“We have 33,000 medicinal, aromatic, and cosmetic plants that we haven’t utilised yet,” she concluded.
Kilala provided examples of local ingredients such as basil extract, mangosteen peel, Aceh patchouli, and phyllanthus emblica, which are seen to have great potential for the beauty industry. However, the biggest challenge for the local industry remains in the upstream sector, from farmer development to suboptimal standardisation of raw materials.
“So, the potential is immense. But the upstream hasn’t been shaped yet. Unfortunately, our nation finds it difficult to engage in upstream activities—only a few companies are willing to do so. Because upstream is tough; it requires pioneering,” Kilala emphasised.
{“name”:“process_article”,“args”:{“relevant”:true,“topic”:“Economy”,“title”:“Raw Material Prices Surge, Cosmetic Prices Predicted to Rise”,“summary”:“The Indonesian cosmetics industry is facing significant challenges due to rising import costs for raw materials, a weakening rupiah, and sharp increases in plastic packaging prices, which could drive up consumer prices by 8-11% in the coming quarters. Industry leaders highlight that 80-85% of ingredients are imported, exacerbating the impact of the exchange rate hitting Rp17,400 per US dollar, alongside surging industrial fuel costs. Despite abundant local resources like basil extract and patchouli, upstream development remains underdeveloped, limiting opportunities to reduce import dependency.”,“body”:“Rising prices of imported raw materials, a weakening rupiah, and surges in plastic prices as packaging materials pose significant challenges to various industries, including the cosmetics sector.
General Chairman of the Indonesian Cosmetics Companies Association (Perkosmi), Sancoyo Antarikso, stated that the Indonesian cosmetics industry still relies heavily on imported raw materials, accounting for about 80% of supplies.
"So, whatever can be supplied domestically will certainly continue to be used. But for those that cannot yet be provided—due to technology, quality, and other factors—we are forced to import," Sancoyo told the media at the Indonesia Cosmetic Ingredients (ICI) Expo held by Perkosmi at JIEXPO Kemayoran on Wednesday (6/5).
CEO of Martha Tilaar Group, Kilala Tilaar, who was also present at the event, highlighted the rising costs of raw materials and packaging affecting the cosmetics industry.
"Plastic prices rose by up to 200% last month. In the cosmetics pricing structure, 60% is packaging and 40% is ingredients. So, if the packaging multiplier factor rises by, say, 150-200%, prices inevitably have to increase," Kilala said at the same event.
In addition to plastic posing a major challenge, Kilala noted that the rupiah’s weakening against the US dollar is adding further pressure. She mentioned the exchange rate reaching Rp17,400 per US dollar on Wednesday (6/5), making imported raw material costs even more expensive.
"This is 85% imported raw materials (for cosmetics). The dollar went from Rp16,500 to Rp17,400 today—that’s already up 4-5%, plus the plastic factor, so roughly an 8-11% increase," she said.
Kilala added that this price hike in cosmetics is already evident and will be seen across various companies.
"Many companies have already raised prices gradually—we’ve asked our peers too," she continued.
"Prices may rise in the third and fourth quarters," she explained.
She added that the price increase does not yet account for the surging industrial energy costs. Many cosmetics factories still use industrial diesel for production needs.
"Boilers and heating use diesel. Industrial diesel has risen from Rp13,500 to Rp24,000," Kilala continued.
"We have 33,000 medicinal, aromatic, and cosmetic plants that we haven’t utilised yet," she concluded.
Kilala provided examples of local ingredients such as basil extract, mangosteen peel, Aceh patchouli, and phyllanthus emblica, which are seen to have great potential for the beauty industry. However, the biggest challenge for the local industry remains in the upstream sector, from farmer development to suboptimal standardisation of raw materials.
"So, the potential is immense. But the upstream hasn’t been shaped yet. Unfortunately, our nation finds it difficult to engage in upstream activities—only a few companies are willing to do so. Because upstream is tough; it requires pioneering," Kilala emphasised.”}}