After weak consumer confidence and a poor summer depressed soft drinks sales in 2012, brand owners are now seeing their packaging costs rise. But where will they go from here?

Typically, the biggest commodity costs a soft drinks manufacturer faces are PET for plastic bottles and aluminium for cans.

PET prices in the UK have risen 20% since July last year and now stand at £1,216 a tonne, while aluminium alloy prices on the London Metal Exchange have also risen just under 10% over the same time period to £1,215.5 a tonne [Mintec].

The main reason for the increases is higher energy and oil prices. Aluminium and PET prices are both closely linked to the energy markets aluminium because its production is highly energy-intensive and PET because it is petrochemical-based.

Commodity prices 16 March 2013: climbers and fallers

Cold weather means higher demand for energy - and higher prices. After a winter in the UK that was over a degree cooler on average than last year, the price of electricity has shot up 26.1% year-on-year to £59.50/MWh. The unseasonal cold snap this week is only likely to push prices up further.

Basmati rice prices are also continuing to rise, pushed up by poor harvests in 2012 and fears that production is unlikely to rebound enough this year. Prices are up 8% on last month and 43.5% on last year.

Moving down in price are both cocoa butter and powder. After a year when cocoa butter prices shot up 54.6% to return to more normal levels, chocolatiers will be relieved to see them easing again.

However, PET has risen faster than aluminium because of the combined impact of the rising cost of the PET feedstock PX and higher demand for man-made fibres for textiles in China.

The good news for brands is that the trend is expected to be short-lived. The oil price fell sharply in February and demand from China is falling off. “There is still a lot of uncertainty, but market sentiment is for prices to settle down,” says independent plastics consultant David Platt.

Prices are also some way off the peaks reached in early 2011. PET is about 25% below its high of over £1,600 a tonne in spring 2011, which was reached after prices doubled over two years. Aluminium prices are also about 20% below their 2011 peak, although they are still 50% more expensive than at the start of 2009.

“The commodity situation has eased somewhat for all soft drinks businesses. It is a relief after years of increases,” says Brendan Hynes, chief executive of Vimto brand owner Nichols.