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2018 Raw Material Supply Concerns

Citus Raw Material Supply

Raw material supply is always a consideration in the beverage world.  Shifts can occur due to consumer demand, trade regulations, harvest quality, or the weather. These issues impacted 2017 supply and are present for 2018. Here are several materials to watch and plan for:

Citrus Fruit & Juices

  • Due to Hurricane Irma, there is a shortage of citrus fruit in Florida. This could lower the box count of picked citrus solids.
  • Continued greening issues in Florida and Brazil are resulting in juice low in acid, brix, and sugar.
  • Costs are predicted to increase 22-25%.

Sugar

  • There is currently a lack of confidence in sugar imports from Mexico, which can be stemming from ongoing NAFTA negotiations.
  • There are no signs of the corn and sugar turbulence subsiding, and a ripple effect resulting in higher costs should be expected throughout 2018.
  • There is an 80% chance that a La Niña will develop this year. This will result in drier conditions in the South and Southeast, impacting commodity crop production.
    • Experts don’t anticipate the crop damage to be as large as that from the 2012 La Niña where the cost per corn bushel rose to $8 (current market is $3.30-$3.70/bushel).

Aluminum Cans

  • Experts are predicting aluminum can prices to increase an additional 8-10% this year.
  • Increases between $1-2/M are likely for cans and ends with BPANI liners for compliance with California’s Proposition 65.

Have questions or worried about how these factors could affect your beverage business? Contact BevSource today.