Recently, a paper carton price hike notice has become an "internet sensation," widely shared on social media. What's going on?

Jieyang Jiedong Jialin Paper Products: Price increase starting at 17:00 on November 16 Taizhou Luqiao Guangming Cartons: From November 16, prices for corrugated sheets and box boards will increase by 0.1-0.4 yuan per square meter Jiashan Jiashun Packaging Materials Co., Ltd.: 20% increase from November 15 Guangzhou Jiateng Paper Products Co., Ltd.: 25% increase from November 16 Beijing Boxing Packaging Materials Co., Ltd.: 25% increase from November 16, with orders from customers with outstanding payments suspended ............

These past two days, such price hike notices have been flying around like snowflakes.

Carton Price Hikes Spread Nationwide, Exceeding 20%

Upstream paper mills have started raising prices frantically, causing distress for downstream packaging and printing industries. After absorbing several rounds of raw paper price surges, the packaging and printing industry can no longer hold on. Starting in October, prices have seen retaliatory increases, and a new wave of hikes has hit in November!

Regarding the carton packaging cost increases, our editor has communicated with several industry insiders. Mr. Yang from Guangdong Hechuang Packaging told us: "Paper mills change prices daily; even queuing up, you can't buy paper. We can only quote prices to corporate clients at the time of shipment. Packaging factories have no choice but to urge payment." Mr. Yang also noted that the raw paper price increase trend became apparent around the G20 summit in September, initially affecting low-end products, but now high-end products are also rising.

Based on price hike notices from carton packaging factories nationwide, by mid-November, increases are generally above 20%, with some regions reaching 30% or even higher.

Small and Medium Food Enterprises Hit Hard; Pressure Not Yet Passed to Distributors

So, what impact has the nationwide carton price surge had on the food industry, which is closely related?

In communication with Jianlibao's Sales Director Li Yuansheng, he indicated that carton price increases have already affected food companies. However, for Jianlibao, since they have annual agreements with suppliers that include price constraints, the current impact is not significant. But for some small and medium-sized enterprises with smaller order volumes, the impact is greater. Li Yuansheng said: "The current price increase is abnormal; it might be due to imbalanced demand at year-end. It's hard to say what next year will bring."

Meanwhile, our editor also called Mr. Li, the general manager of Hangzhou Xiaodao Dan Biotechnology Co., Ltd. He told us: "Because carton packaging factories can't get raw paper, they have already raised prices for food companies. Compared to the first half of this year, the increase has reached 30%. However, the price pressure has not yet been passed on to distributors, but some companies have experienced delayed shipments due to the significant carton price increases."

As Mr. Li from Xiaodao Dan mentioned, through our communication, we learned that in the industry, despite a new round of raw material price hikes, most large enterprises have not yet adjusted product prices. Distributor supply prices and terminal retail prices have not seen widespread fluctuations. These large companies may be protected by futures contracts or bulk purchasing advantages, so the risk of raw material price increases has not yet hit their fundamentals. But for small and medium-sized enterprises already struggling in the competitive market, this raw material price increase adds insult to injury.

Based on our research, with the New Year approaching, this carton price surge has a particularly significant impact on gift box products like nuts and roasted seeds. A person in charge from Three Squirrels admitted that the company has long-term strategic partners, but due to the price hike trend, carton prices vary by region and have increased. Mr. Hao from Hanxicao (Jiangsu) Food Co., Ltd. also stated that their carton packaging costs have risen by 20%-30%. Although there have been price increases before, this time the scope is broader and the momentum is stronger. Especially with the upcoming holidays, this is a considerable impact on nut and roasted seed companies, but currently, they are absorbing the costs internally. Additionally, besides carton price increases, the price of raw cashews has also risen from 74 yuan/kg to over 80 yuan/kg.

In our editor's social circle, a friend from a food company joked: "We survived the off-season, but we might die in the peak season."

Taking Proactive Measures: Wahaha, Yili, and Want Want Are Acting

With such a fierce price hike wave, how should food companies respond? Our editor learned that on November 22, Wahaha issued a notice: they will increase prices for carton suppliers. If suppliers can guarantee quality and quantity, the price increase could reach 30%! What's the specific policy? Let's take a look:

It is reported that the carton price adjustment will consist of two parts. The base price per square meter shows the benchmark adjustment, which is based on current paper market conditions. At the same time, considering the upcoming Spring Festival production surge, to motivate carton suppliers, Wahaha will reward suppliers who fulfill orders on time, in full, and with quality. The reward range is 3%-5%. Of course, any orders that fail to meet these requirements will have the reward deducted from the settlement price.

According to our editor, Wahaha has always been strict with suppliers. Since 2013, Wahaha has disqualified a total of 113 suppliers over two years, including some with previous cooperation volumes in the tens of millions.

On the same day, Inner Mongolia Yili Group was conducting bidding. Good news came from the scene: their maximum price limit will increase by 22-28% over this year's level. Additionally, according to surveys, at the beginning of this month, Want Want Group proactively raised prices for some high-quality carton suppliers by 18% to motivate carton factories and ensure normal shipments.

Besides Cartons, These Raw Materials Are Also Rising...

Regarding the reasons for the recent surge in raw material prices, opinions are divided: some say it's due to reduced import waste paper quotas, others blame the strictest environmental protection campaign causing widespread production halts, some attribute it to RMB depreciation raising import costs, others point to rising transportation costs, and some suspect paper mills are colluding to raise prices... But regardless, under the chaotic situation, the upward trend in paper prices is difficult to control in the short term.

In fact, it's not just cartons; various food industry raw materials are generally rising. After consulting with industry insiders, our editor obtained the following data: milk powder, an essential raw material for all dairy products, milk beverages, and some snack foods, has risen by 50%, mainly due to reduced exports from the EU and New Zealand; white sugar has risen by 30%, with an increase of 1,000 yuan per ton compared to before, and there's still an upward trend; palm oil has risen by 30%... Additionally, on September 21, the state issued the "strictest overloading ban," causing transportation costs to soar...

How should food companies respond to the price hike wave? New Distribution will continue to monitor.

Source: Food Business -END-

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