Plastic bottles, caps, packaging price to hike as West Asia conflict nears week 2, rates likely to go up by 10%

The $5 billion packaged water industry in India is feeling the heat of rising production costs as supply disruptions linked to the Iran conflict affect key packaging materials, according to news agency Reuters. As the war in Iran shored up global oil prices, including Brent crude, the cost of plastic bottles, caps, labels, and packaging materials has also surged.

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While retail prices have yet to reflect these hikes, distributors are already facing higher costs. Given the escalating situation in West Asia, smaller manufacturers have started to pass on the price hikes to resellers.

How has the West Asia crisis impacted the industry? 

Polymer, a key ingredient in the production of plastic bottles, has risen by 50%, while the price of caps has more than doubled. Packaging materials such as corrugated boxes and adhesive tape are also becoming more expensive.

The Federation of All India Packaged Drinking Water Manufacturers’ Association (FAIPDWMA) said that around 2,000 smaller producers have already raised prices by Re 1 per bottle – a 5% increase to absorb higher production costs.

These hikes are expected to continue, with further increases of up to 10% anticipated in the coming days.

Apurva Doshi, Secretary-General of FAIPDWMA, warned that consumer prices could soon rise. “There is chaos, and within the next 4-5 days, this will start impacting customer prices,” he said. Consumers in India usually pay less than Rs 20 for a one-litre bottle of water, though these costs are expected to increase as prices rise.

Larger companies like Bisleri, Coca-Cola’s Kinley, and Pepsi’s Aquafina have, however, not yet raised their retail prices. 

Aava Mineral Water, which sells premium bottled water, has already increased its prices for resellers by 18%. CEO Shiroy Mehta said, “Most manufacturers are absorbing 40-50% of the cost to ensure that they don’t lose clients. It’s a poor situation for the beverage industry ahead of the summer season.”

The premium water segment in India has grown rapidly, accounting for 8% of the market last year, compared to just 1% in 2021. However, the mass market for bottled water, particularly 1-litre bottles, remains dominated by larger players.

Clear Premium Water, another brand in the high-end market, sent a notice to its distributors stating that the “unprecedented and continuous surge” in raw material costs had made it impossible to maintain current prices.