Confectionery hit by soaring palm oil costs |
The Grocer 28 November 2009 In: Industry news
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Confectioners are facing still higher costs as the price of yet another key commodity palm oil rockets.
The UK's confectionery makers have already been battling soaring cocoa and sugar prices, but in recent weeks speculators and supply warnings have sent palm oil costs soaring 45% year-on-year. The oil, controversial due to its link with deforestation, is used by the three major UK confectioners. One grower, Genting Plantations, this week warned supply would be lower over the next few months.
The rising cost of palm oil comes as a blow to green groups trying to encourage fmcg companies to source palm oil sustainably, as the certified oil is more expensive than conventional supplies. Last month Nestlé committed to source all its palm oil sustainably by 2015, while this week Premier Foods said it would use only sustainable palm oil by next January.
Pricing pressures from other key commodities in confectionery have continued to intensify. Raw sugar is now 68.3% more expensive than this time last year, according to Mintec, because of drought damage to India's crop. Cocoa remains 53.5% pricier than 2008 due to poor weather, ageing crops and political instability in the Ivory Coast and Ghana.