From coffee to plastic, companies waited months for orders to arrive, then hit by massive price hikes
Importers and manufacturers are warning that while some price increases have so far been hidden from consumers, they cannot remain so, and the full impact will be felt in the new year.
Coffee importers G. Charalambous told the Sunday Mail this week that the price of Brazilian coffee has risen 130 percent in the past six months. This price increase and others have yet to be passed on to buyers, but it is only a matter of time, the company said.
Meanwhile, Papadopoulos Plastics Ltd, a manufacturer of plastic bags and food packaging, told the newspaper that its raw materials have doubled in price while its electricity bill for 2021 will be € 200,000 more than the last year.
Company director Christodoulos Papadopoulos said skyrocketing raw material and energy costs amid supply chain shortages and other issues that followed the pandemic, and left so many struggling companies will have a worse effect than the 2008 economic crisis that hit Cyprus so hard in 2013.
“I think this will be the final blow for many companies that survived in 2013 [when the haircut on deposits was imposed]”said Papadopoulos.
“How can a business survive these higher costs with depleted cash flow? “
Data from the statistical service showed that in September alone, prices for housing, water supply, electricity and gas rose by 14%, transport by 11.5%, and food and drink. non-alcoholic 1.47%.
Papadopoulos said that between January and September, its electricity costs increased by 56%, leading to a price increase of € 200,000 compared to last year.
But the shortage of raw materials is also a problem.
“It has become a question of whether we are going to find materials,” he told the Sunday Mail. “And if we do, it’s a matter of when they get there.”
He said he ordered an expedition last August. This has yet to happen due to logistical bottlenecks at most ports, including the lack of containers.
Experts say that during the pandemic, when demand for goods fell, cargo ships were skipping some ports and many empty containers were not being collected.
After the closures, demand increased again for many products and raw materials, while staff shortages and port congestion fueled the demand for shipping containers.
A letter sent to Papadopoulos from one of its German suppliers, explaining why they had to increase their prices, paints a grim picture.
“The increase in the cost of auxiliary and operating materials turned out to be much higher than expected. We are also facing significantly higher logistics costs for the year 2022. Energy costs have increased by 14.3%. Paper and cardboard as well as wood have become more than 40% more expensive, ”the letter said.
The situation is estimated to remain tense throughout 2022, the supplier said.
Papadopoulos said raw materials for his business doubled in price between October 2020 and last April.
Inevitably, he said, all of this would trickle down to the cost of the product, which his customers did not thrill about.
“But what can I do?” he asked, adding that it was not possible to sell below cost.
Regarding his products, depending on the materials, he said it would impact consumers by 20 to 40 percent.
Papadopoulos believes the situation will continue “well into the next year”.
For coffee roasters and importers of G. Charalambous nuts, the biggest problem has been the disruption of the supply chain.
“It affects many commodities, including coffee,” a company representative told the Sunday Mail. This, in tandem with expensive raw materials, the lack of ships and sea containers, has pushed prices even higher.
“We requested the shipment in October, we are told it can arrive in November, even December,” he said.
Companies, he added, are forced to keep raw materials in stock, but this also comes at a cost as they have to organize storage. Sometimes they are even told that there is no stock to buy.
Transit from the United States and Brazil is now 40 days, which means they must hold stocks for at least three months.
Shipping costs have also more than tripled.
For a 40-foot container, G. Charalambous paid around € 4,000, today the costs are between € 14,000 and € 18,000.
Adverse weather conditions, coupled with the pandemic, are also affecting coffee imports.
Earlier this year, the world’s largest exporter, Brazil, saw its crops affected by drought and frosts, causing prices to rise 130% in the past six months.
In addition, the strict lockdown in Vietnam, which is the world’s second largest exporter of coffee, has cut off supplies. Vietnam, a major producer of robusta used in instant coffee and some espresso blends, is currently trying to contain the spread of the Covid-19 Delta variant and has imposed strict travel restrictions.
Robusta bean wholesale prices have risen by around 50% so far this year, according to the BBC.
According to the representative of G. Charalambous, some of these price increases are transparent, but others are not. “I think in the case of Brazil, if the opportunity arises, some will raise their prices. “
The company also imports nuts. “Again, the prices are inexplicably, ridiculously expensive,” he said.
They import almonds mainly from the United States and other types of nuts from China, Russia, India and Europe.
“The peculiarity is that all the prices of raw materials have increased after Brazil has increased theirs,” he said.
He assessed that if the supply chain disruption is due to a staff shortage, it could take a few months for things to get back to normal, but if “this anomaly” persists, the problem will last longer.
The uncertainty is compounded because “no one can predict” what will happen.
He said the company is trying to maintain its prices.
“So far we haven’t increased them,” he said, but warned that the biggest wave of high prices would be felt early next year.
The increase in tourism could offset some of the problems for struggling businesses, but Papadopoulos has warned that this leads to another problem.
“We could have consumers willing to spend, but there aren’t enough products. “