The boss of confectionary giant Nestle has warned of bad news for choccy fans in Australia if conflict in the Middle East continues to rumble on.
Andrew Lawrey, general manager for the brand’s Oceania operation, has warned a prolonged conflict between Iran and the US could have a major impact on its soft plastics supply – which it relies on to wrap the majority of its products.
The multinational firm, which was founded in Switzerland, is responsible for some of Australia’s most popular sweet products, including Allen’s lollies, Kit Kats and Nescafe coffee.
And while Mr Lawrey said its packaging supply is currently healthy, he warned that a prolonged conflict would cause major issues.
He told The Australian: “The Middle East is creating disruption all across all supply chains and some resins that are used to manufacture soft plastics, particularly food grade plastic, are going to be heavily impacted in the coming months.
“This really highlights the need for Australia to have a circular economy on soft plastics.
“I think the reality is we have the technology, we have the abundance of the soft plastic resource, and if we get industry and government working together, there is an opportunity for a truly circular recycling system that would absolutely and fundamentally change our reliance on our net import situation.”
With Mr Lawrey warning of a supply squeeze of wrappers, it will likely mean the cost of confectionary products swelling.
He added: “Plastic packaging is as substantial enough as an input that if we see the order of magnitude like we have in fuel where it has gone up 15 or 20 per cent, we start to see soft plastic and resins start to go up that magnitude it will flow through for some suppliers in terms of cost increases.
“Price increases are our last resort. We will do our very best to absorb those costs in the near term, [but] it is more of a case of how long will this situation in the Middle East prevail.”
