AG Barr, the drinks maker behind Irn-Bru and Rubicon, made a very interesting comment in its trading update to the City this week.
It said the following:
“Margins are in line with expectations with continued high levels of input costs, especially in PET and energy, being offset by price increases and further management action to reduce operating costs.”
Packaging manufacturers have been talking about successfully passing on their cost increases to customers for some months. And brand owners have often mentioned the rising cost of materials in their financial updates of late. But, to my knowledge, this is the first time that a brand owner has explicitly said that they too are succeeding in passing on price rises.
This is, I suspect, good news for the industry. It suggests that AG Barr, at least, has accepted that the current high prices are not a flash in the pan and must be passed on. A few months ago there was an element of scepticism among some brand owners I spoke to as to whether the rising price of, say, plastics or cartonboard was really justified. AG Barr’s statement suggests that this scepticism may be waning.
So who are prices being passed on to? Presumably, retailers and other wholesalers of AG Barr’s products. My question is, are those prices then being passed on to consumers? We have all been reading about rising food prices and high inflation recently. And I’m sure that most of our weekly shopping bills are noticeably higher than, say, a year ago.
I’d love to know how much of that is down to packaging costs and how much is down to other costs. If you have any insights, do let me know.
Josh Brooks is editor of Packaging News. Contact him at email@example.com
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