Cafe owners warn of breaking point as plastic costs climb and officials forecast relief by June
As plastic packaging prices surge due to tensions in the Middle East and a naphtha supply disruption, increasing the burden on the cafe industry, a meeting was held on the 21st in Yeongdeungpo-gu, Seoul, among the Ministry of SMEs and Startups, the National Cafe Owners Cooperative, and the Korea Federation of Micro Enterprise (KFME). On the ground, there were urgent voices saying they had reached the limit, while the government put more weight on the possibility of supply-demand improvement, revealing a gap between the two sides.
Ko Jang-su, chair of the National Cafe Owners Cooperative, said, "Prices of sub-materials such as disposable cups, straws, and takeout containers have risen from 20% to as much as 50%," adding, "Because it is difficult to secure volume, more owners are making advance purchases for six months, or even up to a year, on the judgment that 'buying now is the cheapest.'" With the naphtha supply disruption compounded by increases in coffee bean and logistics costs, it has reached the point where people say "the more you sell, the more you lose."
Not only delivery containers but also the labels attached to containers have become unstable in supply and demand, and some suppliers were reported to be limiting purchase quantities per person.
The difficulties of owners on site were more concrete. A cafe owner in the eighth year of business said, "What used to arrive the day after ordering now takes several days, and quantities are fixed," adding, "Because the shop lacks space, we are stacking materials at home, in cars, and even at family members' homes."
The owner added, "When a customer asks for a few more straws, we should give them, but that is all an expense," and said, "We looked into alternatives such as paper cups, but their prices have also risen just the same." There was also concern that the use of sub-materials will increase further ahead of the summer surge in demand for iced drinks.
Another cafe owner said, "As requests for small dessert packaging increase, the use of materials is rising in tandem," adding, "It's a situation where the tail is wagging the dog."
Lee Byeong-gweon, Second Vice Minister of the Ministry of SMEs and Startups (MSS), said, "As a result of consultations with raw material companies, it will be somewhat difficult through May, but from June the supply-demand situation will be resolved to some extent," adding, "We do not expect it to be prolonged." "The government will do its utmost to smooth out supply and demand," Lee said, adding, "Please trust us and wait."
However, regarding the spread of advance purchases, Lee said, "The act of piling up in warehouses itself fuels price increases," adding, "In a national crisis, sharing economic hardship is the way to minimize everyone's pain." The point is that on-the-ground struggles for survival can act as a factor disrupting the market.
Industry representatives also proposed imposing an additional expense of 100–200 won on consumers when packaging leftover food. Chair Ko said, "We also suggested this to the Ministry of Climate, Energy and Environment, and the response was positive." However, the Vice Minister said, "There are similar cases overseas, but in Korea we need to consider consumer perceptions," taking a cautious stance.
On the ground, there was also concern that while cafes are currently absorbing higher expenses and refraining from raising prices, if the situation drags on it could lead to higher beverage prices and delivery fees. Chair Ko emphasized, "Institutional support and stable supply-demand management are needed so that the cafe industry, the root of neighborhood commercial districts, does not collapse."
Meanwhile, the Ministry of SMEs and Startups (MSS) said it reflected related support funds through a supplementary budget to support microbusiness owners experiencing management difficulties due to external variables such as the current instability in the Middle East. It allocated 170 billion won for microbusiness policy funds and 50 billion won in grants for the Korea Credit Guarantee Fund (KODIT).
The Ministry of SMEs and Startups (MSS) said, "We also reflected 40 billion won for the lifestyle and culture innovation support program as a new project so that microbusiness owners can increase added value by improving their products and services," adding, "This program is designed to support new menu development and service advancement."