Rising raw material price rises have contributed to a significant dip in first quarter profits for the Pepsi Bottling Group

Net income for the first quarter 2005 was $39 million, compared to 2004’s first quarter income of $50 million. This is the first time that quarterly profit has fallen in almost two years. Chief executive officer John Cahill said in December that $100 million in added costs for plastic resin, aluminium and sweeteners would cut profit in 2005. 

Net income for the first quarter 2005 was $39 million, compared to 2004’s first quarter income of $50 million. This is the first time that quarterly profit has fallen in almost two years. Chief executive officer John Cahill said in December that $100 million in added costs for plastic resin, aluminium and sweeteners would cut profit in 2005. Price increases the past two years by Pepsi Bottling and Coca-Cola bottlers have reduced consumer demand for soft drinks and spurred sales of store brands of sodas. The root of problem for many soft drink packaging firms has been the ever-increasing cost of raw materials. The cost of natural gas and petroleum, the starting point for the production of many types of packaging resins, has increased consistently over the past 12 months. Oil-based resin used in plastic packaging has increased in price by seven per cent over the past six months, suggesting that the price increase trend is far from abating.