Inflation 'unprecedented' says Britvic

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The Independent Online

The chief executive of the drinks group Britvic added to the increasing concern about rising prices last night when he said that he had never before seen such big increases in the cost of raw materials in such a short period of time.

The company, whose portfolio of brands includes Robinsons and Tango, said the pace of price rises in recent weeks had been "unprecedented", so much so that has now almost doubled its estimate of input-cost inflation for the UK and Ireland to 9-11 per cent, against 5-6 per cent previously.

Its chief executive, Paul Moody, said that the price for PET, the synthetic material that is derived from oil and is used to make plastic bottles, had jumped 20 per cent "in the last month alone" owing to a shortage of supply.

"Since our last update to the market we have witnessed a rapid and unprecedented uplift in the cost of key raw materials," he said.

The warning coincides with sharp rises in the cost of key commodities such as oil and sugar. Oil in particular has touched highs of nearly $120 a barrel owing to the turmoil in Libya.

Britvic said the rising prices would affect its half and full-year results, and were so serious that, excluding the impact of its French business, it no longer expects improvements in operating profit margins in 2011.

Despite the pressures, the company still expects this year's operating profits to come in ahead of last year's results, he added.

The news triggered a sharp sell-off in Britvic's shares, which fell by 49p to 369p, down more than 11 per cent, by the close.