The Rising Costs of Ingredients and Packaging – How Food and Beverage Businesses Can Stay Ahead
The Australian food and beverage manufacturing industry is a cornerstone of our economy, supplying products to households, restaurants, and retailers nationwide. But while demand for locally made food and drink remains strong, manufacturers face an ongoing challenge that directly impacts profitability and growth: rising costs of ingredients and packaging.
For many producers, these cost increases aren’t just a minor inconvenience—they’re reshaping the way businesses operate. Add to that the long payment terms demanded by major retailers, and it becomes clear why so many manufacturers feel trapped between opportunity and financial strain.
In this blog, we’ll explore the key pressures driving cost increases, how they affect cash flow, and how solutions like invoice financing can help businesses stay competitive despite mounting challenges.
Why Costs Are Rising in Food and Drink Manufacturing
The industry has always been subject to fluctuations in input costs, but in recent years, the challenges have intensified. Some of the biggest contributors include:
- Global supply chain disruptions
Events like the pandemic, shipping bottlenecks, and geopolitical tensions have driven up the price of imported ingredients and packaging materials. Even locally sourced inputs are affected by global commodity price shifts. - Inflationary pressures
Everyday items like sugar, flour, dairy, and cooking oils have all risen in price. According to the Australian Bureau of Statistics, food and non-alcoholic beverage prices have been climbing steadily, adding strain to manufacturers who must absorb these increases before passing them on to retailers or consumers. - Packaging costs
Packaging isn’t just a box or a bottle—it’s a vital part of brand identity and compliance. Rising costs of glass, plastics, and sustainable packaging alternatives have hit producers hard, particularly those supplying supermarkets where presentation standards are non-negotiable. - Energy and transport costs
The fuel required to ship goods across the country and the energy to power production facilities add further expense. These costs are often volatile, creating uncertainty for planning.
The Cash Flow Crunch
Here’s the harsh reality: food and beverage manufacturers must pay upfront for ingredients, packaging, and production long before they see revenue from their sales.
Major retailers like Coles, Woolworths, and Aldi often operate on payment terms of 30 to 45 days—or even longer. That means while your invoices sit waiting for payment, you’re already paying suppliers, staff wages, and freight bills.
The result? Even businesses with healthy order books and strong sales pipelines can feel cash-poor. This creates a dangerous cycle where growth opportunities are missed because there isn’t enough working capital available to fund them.
The Impact on Growing Businesses
Rising costs and slow payments disproportionately affect small to medium-sized food and beverage manufacturers. Consider these common scenarios:
- A family-owned bakery sees raw material costs spike by 15% just as they secure a larger contract with a national retailer. Without immediate cash flow, they can’t afford the extra flour and packaging needed to fulfil the order.
- A boutique beverage company wants to launch a new flavour line, but higher costs for bottles and cans eat into the budget required for scaling up production.
- An organic food supplier finally lands shelf space in multiple supermarkets, but long payment cycles prevent them from paying farmers and logistics partners on time.
In each case, businesses are being held back—not because demand is lacking, but because cash is tied up in invoices.
Why Traditional Finance Often Isn’t the Answer
Bank loans or overdrafts might seem like a solution, but they come with challenges. Approval processes are lengthy, interest rates can be high, and many smaller businesses don’t meet the strict lending criteria.
On top of that, loans increase debt on the balance sheet, which can limit future borrowing capacity and add financial risk. For a business that just needs access to money it has already earned, this feels like an inefficient and restrictive option.
How Invoice Financing Provides Relief
This is where invoice financing can make all the difference for food and beverage manufacturers.
Instead of waiting 30 to 45 days to get paid by retailers, invoice financing allows businesses to access most of the invoice value almost immediately.
Here’s how it works:
- You deliver your goods and issue an invoice to the retailer.
- You submit the invoice to Selectpay.
- Within as little as 24–48 hours, you receive most of the invoice value.
- When the retailer pays, the balance is settled.
By unlocking funds tied up in unpaid invoices, manufacturers can cover rising ingredient and packaging costs without disruption.
The Benefits for Food and Beverage Manufacturers
Invoice financing isn’t just about bridging gaps—it provides several key advantages:
- Stability despite volatility – Whether sugar prices spike or packaging costs climb, you can manage expenses with consistent cash flow.
- Scalable with growth – As your sales and invoices increase, so does your financing capacity. It grows with your business rather than holding you back.
- Faster access than traditional finance – No lengthy bank approvals; your invoices become the security.
- No additional debt – It’s not a loan. You’re simply accessing money already owed to you.
For many Australian manufacturers, this flexibility is the difference between turning down new opportunities and confidently taking them on.
Staying Competitive in a Tough Market
Australian consumers expect quality, value, and innovation from the food and beverage products they buy. Meeting those expectations requires investment in better ingredients, sustainable packaging, and marketing—all of which cost money upfront.
By leveraging invoice financing, businesses can not only survive cost pressures but also reinvest in growth, innovation, and customer satisfaction. It’s a smarter way to compete in an industry where margins are tight and competition is fierce.
The rising costs of ingredients and packaging are a reality every food and beverage manufacturer must contend with. When combined with long payment terms from major retailers, these pressures can easily overwhelm cash flow.
But with tools like invoice financing, manufacturers don’t have to let these challenges hold them back. By unlocking the value of unpaid invoices, you can keep your production lines moving, your suppliers paid, and your growth plans on track.
If your food or beverage business is feeling the strain of rising costs and delayed payments, Selectpay can help. Click here to learn more about our invoice financing solutions.