Passing surfactant costs through to retailers difficult - Henkel

12 May 2011 22:37  [Source: ICIS news]

WEEHAWKEN, New Jersey (ICIS)--Passing along surfactant raw material cost increases to retailers is proving difficult, a senior executive from Germany-based chemical and consumer products firm Henkel said on Thursday.

“It is extremely difficult and challenging to pass through costs to retailers,” said Jochen Flucht, global purchasing manger at Henkel, at the 1st ICIS World Surfactants Conference in New Jersey.

"There are some that have said they will not accept any price increases,” he added.

Consumer products companies are meeting resistance from retailers, even as the former are experiencing higher costs for raw materials for surfactants, he said.

Henkel is a buyer of fatty acids, fatty alcohols, glycerine and soap noodles for its surfactants and consumer products. These materials have experienced significant price escalation in the past year.

About 20% of its €4bn ($5.7bn) in annual spending on raw materials is on the surfactants side, said Flucht.

“The world has changed. We are living in a turbulent environment of hyper volatility, short supply, and price inflation. We have to adjust,” he said.

Henkel will aim to eventually bring formula-based pricing to its customers, where prices are based on raw material costs.

“This is continuous work – we need to generate more awareness. We are sometimes asking purchasing managers to accompany sales and marketing in meetings with retailers,” said Flucht.

However, formula-based pricing will not come quickly, he noted.

“Today, the pressure from the markets is too high – it is not the right timing now. But one day, they will have to accept this,” Flucht said.

The 1st ICIS World Surfactants Conference started on 12 May and ends on 13 May.

By: Joseph Chang
+1 713 525 2653

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