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Gulf war may push beverage prices up

Gulf war may push beverage prices up

Houston, 28 March (Argus) — Two of the world's largest beverage makers warn that higher costs to their operations from the war in the Mideast Gulf — including higher prices for polyethylene terephthalate (PET) bottles — may soon be passed onto consumers. Both PepsiCo and Coca-Cola in the past week warned in corporate filings that higher feedstock costs and freight rates stemming from curtailed vessel traffic through the strait of Hormuz could lead to higher prices for their customers. "Our operations … including the distribution of our products and the ingredients of other raw materials used in the production of our products, may be disrupted if such [geopolitical] events persist for a prolonged period of time," PepsiCo said in its 2025 Annual Report, released 27 March. These higher costs could be passed on to customers, reducing "volume, revenue, margins and operating results." Coca-Cola also noted similar sentiments in its 10K filings on 23 March. "Geopolitical instability has in the past led, and may in the future lead, to logistical, transportation and supply chain disruptions," the company said. Some suppliers are located in regions facing that instability, so sustained disruption to manufacturing or product sourcing "... could increase costs and interrupt product supply, which could adversely impact our business." Most bottled drinks are packaged in PET bottles. The PET resin spot price in Europe has climbed significantly since the war started, up by about 65pc since late February. During the week ended 27 March Argus assessed the price at €1,450-1,600/t delivered, up from €890-960/t delivered in late February. One US PET producer has nominated a 10¢/lb increase for March PET resin, up about 17pc from the February contract. PET producer Indorama also announced an additional 5¢/lb war surcharge to all PET resin grades effective immediately in a letter to customers. "Due to the ongoing conflict in the Middle East, there have been significant cost increases in the major and minor raw materials for PET resin, driven by a continuous increase in crude oil price and severe supply chain disruption," according to Indorama's letter. "In addition, there have also been increases in inbound and outbound freight and transportation costs." Container freight costs for PET have increased by 30pc from 27 February to 20 March, closing at $83-103/t from East Asia to the US West coast, according to Argus data. Prices for aluminum, which is also used widely for beverage containers, rose multi-year highs in the first weeks of the war, but they have since fallen due to an unclear global demand outlook and other factors. Packaging costs are generally higher than the liquids they hold for companies such as Coca-Cola and PepsiCo. But they remain a relatively small component in the final costs. Distribution and logistics costs are often higher than the manufacturing costs, which expose these companies to the higher fuel costs caused by the war. By Nicole Johnson Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.