As a company that sells shelf-stable food products, we divide our assortment into two major areas: Raw materials and our own developments. In addition, there is the ever-growing accessories area.
We work with different suppliers around the world to purchase raw materials and then have them delivered to our warehouse. The decisive factor here is a combination of different factors that we use as a basis for evaluating our supplier: Quality and residue control, along with a good purchase price, form the basis for a positive decision so that the article finds a place in our range.
While quality and residue control are factors where the highest standards are applied, purchase prices can fluctuate greatly. Purchase prices can be affected by local weather conditions, rising labor or transportation costs, or a general market price increase.
We take care to keep the supply chain as simple as possible, i.e. to coordinate with suppliers as efficiently as possible. After all, the less effort required on both sides, the better the purchase price is for us in most cases, and thus the cost savings for our customers.
The Corona pandemic and its effects
The Corona pandemic has had an impact on our supply chains: Sourcing products has become much more difficult than it was before the pandemic. Hamster buying has completely emptied the market of some products, making purchase prices of some products, especially raw materials, significantly more expensive.
The increased demand in the online segment thus led to more supplier orders, which meant that suppliers had to provide significantly more products in a short period of time or, depending on the degree of processing, produce correspondingly more.
This also had an impact on transport routes: Particularly in Asia, where we source our accessories, among other things, not only were the purchase prices of the products themselves increased, but also the transport costs. The reason for this is that at times containers to transport the products from overseas to Germany were simply not available.
We are also affected by these increases and therefore cannot maintain the current product prices.
Here is a recent example: for the product ice cream machine, our purchase price has increased by 8% and the transportation cost for a 20 foot container has increased by $1700.
Short-term price increase and outlook
Therefore, we have decided to increase our product prices accordingly in the short term. We are working on several strategies to bring prices back down in the long term.
We can take advantage of economies of scale that result from purchasing certain products. If offtake increases, the percentage purchase price falls again.
In addition, we can contractually secure the purchase of top sellers and thus achieve a price lock-in via long-term contracts in order to avoid fluctuations.
We are confident that we will be able to lower our prices again in the long term and are working very hard on this.
We thank you for your support and ask for your understanding.
Kind regards Kosta, Piran and Florian
Management of KoRo