Price rises will be instrumental in the bid to counter the current drop in market demand

A year on, it’s price rise time again. Smurfit Kappa has led the pack, saying it will impose a €60/tonne increase on corrugated board from the start of September. Other international groups including Pregis, Sonoco-Alcore, M-real and others have followed suit, as we report in this issue (page 2). And others who may not have announced price increases yet have said the industry needs them.

This time, though, the main reason for the price rises is not input costs going up, but the state of the market going down. Smurfit Kappa talked of a “progressively deteriorating” market for corrugated board, while M-real blamed the weakness of the pound against the euro for an £80/tonne rise from 1 October.

The big question now is where the squeeze will come. Converters this month told Packaging News it was tough for them to go back to their customers asking for higher prices.

Yet it may be some comfort to know that while the packaging industry is seeking price rises, brand owners are too. Both Unilever and Premier Foods last month went to retailers asking them to pay higher prices to cover input costs. This could put the packaging supply in a stronger position.

Meanwhile, consolidation will also give the manufacturing supply chain a stronger claim to push through price rises. Long-term, Alcan and Amcor’s long-awaited deal this month may help in that cause – even if the likely restructuring of the group once the deal is complete is sure to lead to some bruising clashes with staff representatives and the unions.

Whatever happens, the twists of this recession are far from over.

Josh Brooks is editor of Packaging News

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