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It seems the recent hurricanes are driving up prices in yet another area -- beverages.
The Roanoke Times reported consumers will likely pay more for beverages consumed from plastic bottles since the Gulf Coast is home to the major suppliers of raw materials needed for the specialized plastic -- PET bottle resin -- used by bottlers.
PET stands for "polyethylene terephthalate" and refineries affected by the hurricanes provide key components for that formula. Without new stocks of PET resin, prices have spiked for existing supplies, leading beverage prices to also rise.
Both Pepsi and Coke have increased prices since Labor Day, said Tim Plogger, assistant grocer merchandiser for Kroger Mid-Atlantic. Kroger operates 791 c-stores, either directly or through subsidiaries, franchise agreements or operating agreements.
"We have seen some larger increases this year," said Plogger, who cited as a key factor the hurricanes' effects on PET plastic production.
DAK Americas, a major manufacturer of PET resin headquartered in Charlotte, N.C., reduced production after the hurricanes because of supply chain challenges. In a Sept. 30 alert to customers, DAK Americas declared a "force majeure," citing hurricanes Katrina and Rita as causes of unavoidable delays or failures to meet contract obligations.
Hector Camberos, president and chief executive officer, wrote, "Effective October 1, 2005, and continuing until these disruptions subside, we may be forced to allocate our diminished supply of products and to pass on the price increases we are experiencing. We are working to respond to the difficulties imposed by Hurricane Rita in a fair and reasonable manner."
Lauren Steele, a spokesman for Charlotte-based Coca-Cola Bottling Co. Consolidated, said the company like many others, has been forced to pass along some of its rising costs.
"We have had some extraordinary price increases this year that we have had to pass along, reluctantly, to our customers," Steele said.
Costs have jumped, he said, for raw materials, packaging and fuel. Although the company had anticipated PET plastic costs might increase, "this has been far beyond anything we were anticipating."