State of Business and First Price increase in 5 Years

Did it cost you more to fill up your car’s tank this week or last week?  We all know the answer.  It has just become part of “Life 2021” that anything we bought last week looks like a bargain compared to what it would cost now.

While there is light at the end of the tunnel, it’s going to get worse before it gets better. In a webinar that I attended yesterday I learned that the upward movement of raw materials is going to continue at $0.05/lb. per month through June, and even those experts did not dare take a shot at any precise estimate beyond that.  They were all in agreement, though, that there will not be any relief until late 2021 at the earliest.  It is just a question of “How much more?”

The labor shortage has also wreaked havoc on our operations team as well as that of our suppliers’ teams.  As demand soars and supplies remain tight, we are doing our best to keep our products flowing in the most cost-effective way possible, without compromising on the highest quality products that you have grown accustomed to!

The Cause and Effects

If you don’t care about “why,” you can stop reading now.  It is not the goal here to put you to sleep.  If you do care, you may find this interesting.

When the pandemic hit last year, producers of raw materials universally estimated declined demand, and they reduced capacity to match those forecasts.  The reverse happened as demand exploded beyond anyone’s wildest expectations, and they have been playing catch up ever since.  For us and our suppliers to keep up with demand we all needed to add extra help at much higher labor costs (if we can find and train people to work) and that doesn’t result in a quick recovery of that much loss. Demand remains incredibly high, thus the “December at the earliest” projections for relief.

In case you’re feeling sympathetic to the raw materials producers’ plight, these manufacturers and shippers never let an opportunity to charge more get away, and you can rest assured that they are milking this shortage for all that it’s worth.  When you see our own price increases, you may be surprised to learn that our increase calculations are less than the actual increase in cost to us.

It’s not just plastic and glass but also labor, glue, office supplies, labels, energy, fuel, shipping supplies…  Anything that it takes to get your products ready, costs a lot more than it did a year ago (or perhaps even a week ago), so we find ourselves in this unwanted position of being the bearer of bad news.

Even China – the previously reputed supplier of all things cheap – has experienced labor cost increases along with all the other shortage-driven increases.  Getting a container from East to West has become much more expensive and takes much longer, making imports increasingly less desirable. We always strive to buy the most local products that are available So even if we did decide to go abroad to cure these issues it isn’t always working now.  We are simply in a tough time, folks.

The Conclusion

If you would like to complain about this, I’ll be happy to listen.  There’s not anything that I can do beyond offer empathy, but I’m all yours on a first-come, first-served basis.  You would be proud of my ability to refrain from cussing as the bad-news-ticker spits out more unwanted reading each day, but I do fight for you alongside of our entire team here at Lip SMAKin’ Good Farmers Market Honey!

We appreciate you as the best customers in the world and thank you for your continued support of our small family business!

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