Beverage Manufacturer: Energy Prices Are the Biggest Issue

High energy prices are making it harder for Australian beverage companies to remain competitive, a parliamentary committee has been told.
At an inquiry hearing on Aug. 14, George Kotses, Group Operations Manager of Bickford’s Australia highlighted energy prices as the most significant issue facing the 150-year-old cordials and soft drinks manufacturer.
“In the month of June, our energy bill was $82,000 (US$54,300),” he told the Standing Committee on Industry, Science and Resources.
“In July, it was $132,000. Now that’s a significant impost in how we operate.”
While Kotses acknowledged his company was a major electricity user due to automation, he said there had been a period of record price hikes in the last couple of months.
“We know it’s just not our industry, it’s across all industries,” he said.
“We couldn’t influence it [and] we could only slightly turn the dial.
“Our input costs have gone up. So it’s making it difficult for us to be competitive, not only on the domestic front, but also on the international front.”
This followed an 18 percent jump in the previous year.
Queensland saw the highest increase in electricity prices for small businesses at 24 percent, followed by South Australia at 23 percent, and Victoria at 14 percent.
In contrast, the largest price drop was recorded in the Australian Capital City (13 percent).
“In recent years, they have just exploded out of control,” he said, noting that suppliers no longer covered those costs like they used to.
“Now everything is just getting passed through.”
The director gave the example that the cost of glass bottles used in Cooks Soft Drinks’s products soared by 38 percent in the past two years, but his company had to absorb the entire increase.
In addition, Cavanagh said fluctuating fuel prices made it hard for his company to quote prices for customers.
“You can have a quote for transport, but then it changes day to day based on their fuel levies,” he said.
“You can quote someone a price, and then fuel levy jumps 10 percent within a few days, and then the customer won’t [accept that].”
Ian Turner, Managing Director of Saxbys Soft Drinks, echoed these concerns, saying transport costs accounted for 8 to 10 percent of his company’s cost of goods.
Turner also pointed out that labour shortages were an issue for beverage businesses.
“Labour skills are getting harder and harder to find in regional areas … whether it’s TAFE or universities, aren’t nearby,” he said.