India faces plastic packaging crunch: Crude oil prices and hoarding create scarcity for F&B firms

Bengaluru: A sharp rise in crude oil-linked raw material prices is unsettling India’s plastic packaging industry, but a bigger disruption is being caused by companies securing and stockpiling their supplies, tightening availability and pushing up prices.This is directly impacting packaged food and beverage companies that are preparing for peak summer demand. Most plastics are derived from crude oil and natural gas liquids that are refined to make the raw material for plastic.Prices of key inputs such as PET resin (used for plastic bottles) and polyolefins (used for bottle caps, labels and pouches) have surged by 40% to 80% in weeks, driven by the West Asia conflict that started on 28 February and subsequent global crude oil volatility.

Industry executives said the disruption is not just a result of rising costs, but in how supply has been affected.“Prices have gone up sharply, but availability has also become an issue,” said Thimmaiah Napanda, managing director and chief executive officer (CEO) of Alternicq Ltd (formerly Manjushree Technopack Ltd), which supplies companies in the food, beverages, liquor and pharmaceutical sectors. “Businesses are willing to pay more because they can’t afford to run out of packaging.”Companies in fast-moving categories such as food and beverages are now stretching procurement timelines to almost double their usual levels of 2-3 weeks as they build additional buffers, and this is tightening availability further.Makers of personal care products such as creams and shampoos typically have half-yearly or yearly sourcing cycles and are protected at the moment.