As plastic packaging prices surge due to the spread of war in the Middle East, expense pressures are growing for the cafe industry.
To review the on-site impact, the Ministry of SMEs and Startups held a roundtable with the National Cafe Owners Cooperative on the 21st in Yeongdeungpo District, Seoul. At the meeting, on-site feedback said that rising prices and supply instability for packaging such as plastic cups and vinyl are spreading across the industry.
The Ministry of SMEs and Startups (MSS) and the industry discussed response measures to rising packaging prices, support for switching to alternative materials, and ways to ease expense burdens. Earlier, at a roundtable with the Korea Foodservice Industry Association, the MSS conveyed the issue of plastic container supply instability to relevant ministries and asked for coordinated action.
According to the industry, as prolonged instability in the Middle East shakes petrochemical raw material supplies, prices of polypropylene (PP) and polyethylene terephthalate (PET), representative packaging feedstocks, rose from about 1,400 won per kg in February this year to 2,200 won last month. With talks between Iran and the United States stalled, further increases are being flagged.
Another key cost for the cafe industry, green coffee prices, is also on the rise. According to the Korea Agro-Fisheries & Food Trade Corporation (aT) food industry statistics, the price of arabica green coffee traded last month closed at $6,768.12 per ton, 9.19% higher than the average transaction price in February.
On top of that, the burden from a rising exchange rate continues. Over the past nine months, the won-dollar rate has climbed about 7%, nearing the 1,500-won level.
The Korea Federation of Micro Enterprise (KFME) earlier said in a statement, "On the ground, there are repeated complaints that packaging container prices have risen by more than 40%," adding that in sectors with a high share of deliveries, such as food service and cafes, it is difficult to secure packaging containers at all. It noted that it is hard to pass the expense on to selling prices, increasing management burdens for small microbusiness owners.
Lee Byeong-gweon, second vice minister at the Ministry of SMEs and Startups (MSS), said, "After visiting the field, the impact of the Middle East war feels larger than expected," and added, "If supply instability for packaging containers occurs, we will respond with relevant ministries, including by additionally designating related items."
Since the 15th, the government has been enforcing the "Regulation on the prohibition of hoarding raw materials for petrochemical products and emergency supply adjustments." Currently, basic feedstocks such as ethylene and propylene are subject to crackdowns, and if supply instability expands, oversight could extend to intermediates such as PE and PP and even to finished products like packaging containers.