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On 22/05/2020 at 3:03 PM, Ted said:

Yes exactly - that’s why I was questioning James as to how he had arrived at $8 as the minimum price he would accept for his white honey.

How did we arrive at the $8.00/kg is very simple.  Very basic accounting.   I figured out what it cost me to run a hive in the way of wages, trucks, varroa treatment, RMP costs, accidentals and incidentals ,  and then I put in a number that reflected my time that went into the business, and then another figure that represented the time my wife puts into the business.

The numbers add up quite quickly .

And eight bucks a kilo is actually quite cheap !

 

The question I would throw back at @Ted is that  if every beekeeper in the country held out for $8.00 .... would that achieve the goal .... of raising the price ?

 

Don't get me wrong .... in the present environment  I appreciate it may seem like the Holy Grail ..... but I also have to sit down and work out if it's economic to produce the stuff for less.

And by economic I mean ..... at the end of the day do we have to bite the bullet and give the  Bee crew  the Heave Ho  .....  A'Dios.

And then what happens to my Kiwi Saver ?

 

It's a supply and demand situation, and sometimes the answer is very simple.  

Perhaps we raise our 'Wanted ' price a dollar , get the word out that Honey needs to be in every school kid's lunch sandwich as it's better for you than sugar  and hey presto ...... JimmyC's missus has a smile on her face, the Main Man's  missus can relax, the casual boy's are not so casual ..... and we all get back to doing what we all love .... which is cracking lids, poking in hives, getting the rush as Big Stella's Jake Brakes echo  through the mountains, and smelling the sweet smell of new honey in the hive on a mid summer eve. 

The Dream we live for ..... Living the Dream.  

 

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2 minutes ago, jamesc said:

The question I would throw back at @Ted is that  if every beekeeper in the country held out for $8.00 .... would that achieve the goal .... of raising the price ?

Answer is yes for domestic consumption but would make no difference whatsoever to the export price.  As we all know the only reason beekeepers have enjoyed historically high prices for non Manuka honey was because of the practice of blending with Manuka.  If there had been no blending the price for non Manuka honey would have remained low as dictated by the world market.

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Aah So ..... you fail to take into account   inflation  .... but anyway ....  seeing as you have vast experience and are not a stalker ..... where to from here .... should we go, or should we stay ?

 

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5 minutes ago, jamesc said:

Aah So ..... you fail to take into account   inflation  .... but anyway ....  seeing as you have vast experience and are not a stalker ..... where to from here .... should we go, or should we stay ?

 

No easy answer obviously and I’m sure you have considered all options.  The way I see it is if you can’t make a profit at the price that the market is willing to pay - you have some hard decisions to make.

 

 

 

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1 hour ago, jamesc said:

How did we arrive at the $8.00/kg is very simple.  Very basic accounting.   I figured out what it cost me to run a hive in the way of wages, trucks, varroa treatment, RMP costs, accidentals and incidentals ,  and then I put in a number that reflected my time that went into the business, and then another figure that represented the time my wife puts into the business.

The numbers add up quite quickly .

And eight bucks a kilo is actually quite cheap !

 

The question I would throw back at @Ted is that  if every beekeeper in the country held out for $8.00 .... would that achieve the goal .... of raising the price ?

 

Don't get me wrong .... in the present environment  I appreciate it may seem like the Holy Grail ..... but I also have to sit down and work out if it's economic to produce the stuff for less.

And by economic I mean ..... at the end of the day do we have to bite the bullet and give the  Bee crew  the Heave Ho  .....  A'Dios.

And then what happens to my Kiwi Saver ?

 

It's a supply and demand situation, and sometimes the answer is very simple.  

Perhaps we raise our 'Wanted ' price a dollar , get the word out that Honey needs to be in every school kid's lunch sandwich as it's better for you than sugar  and hey presto ...... JimmyC's missus has a smile on her face, the Main Man's  missus can relax, the casual boy's are not so casual ..... and we all get back to doing what we all love .... which is cracking lids, poking in hives, getting the rush as Big Stella's Jake Brakes echo  through the mountains, and smelling the sweet smell of new honey in the hive on a mid summer eve. 

The Dream we live for ..... Living the Dream.  

 

 

An interesting way to calculate your sale price, maybe even a little Irish. 🙂

For me at least I decided to operate any hives left in bush / multi-floral under a very very very light management regime this year ie low cost.  And while I took some kanuka honey off, because I really like kanuka, I couldn't be bothered with the rest.

This coming season I'll have none of those sites left, all hives moved out.  We'll have hives in sites for one specialty monofloral honey we have a market for,  manuka sites, and some remaining historical urban sites that used to be honey monsters, but that we can pull nucs out of to make up numbers.

Sink or swim, we're swimming but hopefully not gonna end up resembling a submarine...

 

 

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3 minutes ago, CraBee said:

An interesting way to calculate your sale price, maybe even a little Irish. 

I thought it about the only way  a desired selling price could be calculated.  How would you calculate yours ?

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4 minutes ago, CraBee said:

 

An interesting way to calculate your sale price, maybe even a little Irish. 🙂

For me at least I decided to operate any hives left in bush / multi-floral under a very very very light management regime this year ie low cost.  And while I took some kanuka honey off, because I really like kanuka, I couldn't be bothered with the rest.

This coming season I'll have none of those sites left, all hives moved out.  We'll have hives in sites for one specialty monofloral honey we have a market for,  manuka sites, and some remaining historical urban sites that used to be honey monsters, but that we can pull nucs out of to make up numbers.

Sink or swim, we're swimming but hopefully not gonna end up resembling a submarine...

 

 

Yes agree.  In my amateur accountants mind we should be saying what is the market prepared to pay for the product I am going to produce.  After taking out the cost of production is there still sufficient margin to make the effort worthwhile.  If not - why would I produce it.  

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Just now, yesbut said:

I thought it about the only way  a desired selling price could be calculated.  How would you calculate yours ?

 

I could ask $8 but they would be short conversations, when buyers could get the same product for $4-.

The price has to be the price that the market is prepared to pay for it.

We can't just price with a cost plus % mentality.  And that works both ways, if my cost price is $ x to produce manuka, then I don't just 

add  % to it.  I try and find the market price and sell it for that.

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Just now, Ted said:

Yes agree.  In my amateur accountants mind we should be saying what is the market prepared to pay for the product I am going to produce.  After taking out the cost of production is there still sufficient margin to make the effort worthwhile.  If not - why would I produce it.  

Remembering of course we are commodity producers and therefore price takers not setters.

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Posted (edited)

James  is not talking about the market. He's talking what he wants/needs.  That is essential knowledge when looking at the market. Working backwards from the market is a waste of time if you don't already know your "James figure"

 

But as a hobbyist & superannuitant I'd better pull my head  back in.

Edited by yesbut
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25 minutes ago, yesbut said:

Working backwards from the market is a waste of time if you don't already know your "James figure"

I would say working backwards from your “James figure” is a waste of time because it is roughly twice what the market is telling us it is actually worth.  I totally understand his stance but sometimes we have to put our big boy undies on and face the realities of our situation - after all we are a very small fish in a very large pond.  As my old late father used to say “if you can’t p*ss get off the pot”.

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Posted (edited)
22 minutes ago, Ted said:

I would say working backwards from your “James figure” is a waste of time because it is roughly twice what the market is telling us it is actually worth.

Exactly my point. Which is why James knows  where he stands.  We have finally  established the "James figure" is not necesarily the market value. 

What I still don't know is how @CraBee would establish the "Crabee Figure" if he didn't at some point use James' s interesting (irish?) methodology ? Surely the "Crabee Figure" is a prerequisite to knowing if he can sell into the market or not ?

 

 

Edited by yesbut
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What I don't understand...

That honey at the supermarket is 14 a kilo.

And it's bought from us Jokers for 4.

 

Now, who knows Egmont honey? We sold our pasture to them last season.

Last year they managed to put their Waimete Clover honey in 900 Woolworths in Australia, with much fan fare.

This morning it's unavailable. A small jar of low M was at discounted price.

I want to call and ask.... what's going on? Probably issues around covid freight availability. Or a buy local resurgence.

 

Is it possible that exporters are still trying to find large margins in all nz honey sold? Which means no traction in those markets? No demand.. 

 

Today the cheapest honey at Woolworths, 10 bucks a kilo, by far the lowest. Rest sat around 14>17. 

Capilano dominated spaces. Probably a bit of kiwi honey I there....

 

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9 hours ago, Ted said:

Remembering of course we are commodity producers and therefore price takers not setters.

And herein , dare I say it , lies the problem in the industry. We need to move on from our  mindset of pricetakers.discard the Huggies and  pull on this Tradies.

Following on from @Ted's business model .....   

I have this great idea.

I'm gonna get some BeeHives and make honey, as everyone I know tells me they love honey, so it should be really easy to sell ..... and the price I see it selling for in the shops makes my eyes water.

So  I do some research, give away a few test pots and my potential customers come back for more. They bring their own pots to my back door and I fill them and charge them $10/kg.

They go away happy because they say that is cheap.

 

And here is where my business model gets a little cloudy. Because my customers tell me my honey is cheap  I build more beehives to make more honey, but I only have four customers in the Valley. So I decide to  sell the surplus  to a company who already has the customers, the distribution and packing side of things sorted.

But they only want to give me $3/kg .... begrudingly.

 

So I'm scratching my head.  I know I can get $10bucks at the back door, and I can sort of get $3 bucks if the Honey Company are feeling nice.

 

So I go and seek counsel from my Doctor who suggests  The Honey Company can go shove the the price into their Huggies ..... I'd be better off to set up my own marketing company and become a price setter .....and if I need more honey I'll go and buy it for less than the production cost.

 

And so it rolls on, because then my neighbouring Beekeeper decides to do the  same, and all of a sudden we are competing for the same customers.

So we have a big Huie and decide to join forces and set up a cooperate to give us the economies of scale and the buying and marketing power that comes with that .....

 

And all of a sudden.... 

 

The life of a BeeKeeper has the potential to be quite sweet, but not simple.

 

And in the early dawn the rooster crowed on his cellphone and the sweet sound of the rain eased on the tin roof of the Beekeeper's Whare.

The night turned to day and the Beekeeper came to with the realisation that it was all just a warm dream. 

 

 

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Posted (edited)
9 hours ago, yesbut said:

Exactly my point. Which is why James knows  where he stands.  We have finally  established the "James figure" is not necesarily the market value. 

What I still don't know is how @CraBee would establish the "Crabee Figure" if he didn't at some point use James' s interesting (irish?) methodology ? Surely the "Crabee Figure" is a prerequisite to knowing if he can sell into the market or not ?

 

 

 

James figures seem to be the cost of producing the product.  It is useful to know your costs 🙂  

My figure is whatever the market is prepared to pay.

 

If your costs for more than a year or two are consistently higher than the price you are being paid then eventually you have to

stop producing the product.

 

Note:  I didn't mean to be inflammatory with my earlier comments...

 

Edited by CraBee
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In my local area more than one beekeeper is selling their honey retail for $16/kg and the facebook group New Zealand Made Products is awash with honey, first one I saw was  $14 for 500g. 

 

If the supermarket price is $14-$17 /kg and the wholesale price is $4/kg then it seems crazy to be charging $16 to $28/kg when competing against supermarkets who are much more convenient; since you are pushing your trolley past this stuff regardless and it takes 20 seconds to select something nice. 

 

If this honey was being sold by beekeepers at $12/kg it would undercut supermarkets and give the consumer a bargain; buying from the 'cellar door'. At the same time, if you deemed that your honey 'cost' $8/kg it would give you a $4/kg overhead for packing and labelling. It may not be the path to riches, however fancy wording in your facebook post is not going to validate charging $28/kg. I'm sure that the honey is selling at $14 per 500g, however, it isn't going to be a significant quantity and it is hardly competition the local supermarket will even notice. So, to me that just seems silly and self-defeating.

 

I think beekeepers really need to look from the customer's point of view and choices available. People really really want to support small business during this strange time, it is a golden opportunity that doesn't come along all that often, everyone should be making the most of this chance to embed themselves in the retail supply chain.

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13 hours ago, jamesc said:

Perhaps we raise our 'Wanted ' price a dollar , get the word out that Honey needs to be in every school kid's lunch sandwich as it's better for you than sugar  and hey presto ...... JimmyC's missus has a smile on her face, the Main Man's  missus can relax, the casual boy's are not so casual ..... and we all get back to doing what we all love .... which is cracking lids, poking in hives, getting the rush as Big Stella's Jake Brakes echo  through the mountains, and smelling the sweet smell of new honey in the hive on a mid summer eve. 

The Dream we live for ..... Living the Dream.  

 

Years ago, back when domestic consumption was est. 2/3 of production, there was some interesting marketing research.  It was trying to establish how honey was positioned in the minds of families, esp.  At that time, even with no honey being imported, the domestic returns were seen to be tied to export returns.  This marketing guy seemed to take a different tack - asking what motivated the purchases of honey.  Remember, most honeys were being treated strictly as a commodity back then...

 

The shoppers were asked "If the price of honey were to be cut in half, would you buy more?"  Responses back could be summarised as "No, we like to have a container of honey in the cupboard, and don't usually buy more until it is near gone.  Even if the price were half, I probably wouldn't buy more."

 

Then, "If the price of honey was doubled, would you buy any less."  And the answer was the same - the shopper wouldn't buy more.

 

Pretty much whatever the price, consumers at that time would buy pretty much the same volume.

 

I believe the words to describe it was that honey was price insensitive.  If beekeepers were to agree to add another dollar as @jamesc suggests - hardly anything would happen, apart from more money for the beekeeper.  Oh, yes, and various charges related to price fixing and collusion. 

 

The 'value' placed on honey by consumers is massively different from back then (this research was in the middle 1970s).  Overall, the industry has done very well in that time to remain profitable and raise prices generally, apart from these last few years of aberration.

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54 minutes ago, NickWallingford said:

Years ago, back when domestic consumption was est. 2/3 of production, there was some interesting marketing research.  It was trying to establish how honey was positioned in the minds of families, esp.  At that time, even with no honey being imported, the domestic returns were seen to be tied to export returns.  This marketing guy seemed to take a different tack - asking what motivated the purchases of honey.  Remember, most honeys were being treated strictly as a commodity back then...

 

The shoppers were asked "If the price of honey were to be cut in half, would you buy more?"  Responses back could be summarised as "No, we like to have a container of honey in the cupboard, and don't usually buy more until it is near gone.  Even if the price were half, I probably wouldn't buy more."

 

Then, "If the price of honey was doubled, would you buy any less."  And the answer was the same - the shopper wouldn't buy more.

 

Pretty much whatever the price, consumers at that time would buy pretty much the same volume.

 

I believe the words to describe it was that honey was price insensitive.  If beekeepers were to agree to add another dollar as @jamesc suggests - hardly anything would happen, apart from more money for the beekeeper.  Oh, yes, and various charges related to price fixing and collusion. 

 

The 'value' placed on honey by consumers is massively different from back then (this research was in the middle 1970s).  Overall, the industry has done very well in that time to remain profitable and raise prices generally, apart from these last few years of aberration.

Ok, years ago honey was probably viewed as good value. No matter if it went up or down. It's relative. 

I believe honey has become poor value. 

What's going on, on the shelf at 14 and bought for 4?? 

Do you believe then that even if it became cheaper people will buy the same? 

I chuckle tho, relatively folks buy take out coffee at 5, lasts 10min. Value per 100gm similar or more... Ted you're probably right

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13 hours ago, Ted said:

Remembering of course we are commodity producers and therefore price takers not setters.

That statement is true for wholesale supply of honey as a commodity and probably most honey has to go that way, because nothing will change overnight.

However, for retail selling of honey, beekeepers have to set a price and their success will depend on getting it right.

The Daigou trade will find a way through these strange times and someone will do it. Thinking about malt whisky distillery tours and such, I imagine daigou buyers will much prefer a genuine and exclusive purchase from a beekeeper to get a deal than going to the supermarket with a trolley; as most cruise ship passengers had to do in the short time available in each port.

 

In some ways the low price of wholesale honey and the relatively high price in the supermarket has to be a reflection of competition, supply and demand. It might indicate how some beekeepers have been snoozing relying on others and how much effort beekeepers have made to market their product.

I feel sure the supermarkets know how much to sell honey for. So their price and convenience is a line no beekeeper can afford to cross.

Questions are can you undercut them a dollar on 500g, provide a nicer experience and build long term loyalty? Many people on this forum have always done this and they've done it online to minimise the time it takes.

 

If Beekeepers sold more, more competitively I can't imagine supermarkets will ever lower their prices because of it, instead they would reduce the number of shelves devoted to honey; they have plenty else more important to do. So, I think supermarket prices will remain a stable retail price indicator that anyone can latch on to if you visit your local supermarket every couple of weeks / monthly to keep yourself in the game without visions of grandeur. 

 

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1 hour ago, Gino de Graaf said:

Do you believe then that even if it became cheaper people will buy the same?

 

I'm not suggesting that the market is the same today.  But at that time, yes - based on that evidence people would not buy more if it was cheaper.

 

I don't think honey has become poor value.  Back then, when people mostly bought it on the basis of "do I already have a container in the cupboard?", it didn't have an especial 'value' - it was just a spread, and one of the more expensive of those available.  Over the last 25 years, NZ consumers have learned (IMHO) to appreciate honey more, providing opportunities of all sorts to create something that is more than just another spread.

 

A further bit of that research was to determine brand loyalty, identifying aspects of pricing and branding.  Participants were given a list of well known honey packs.  But there were also a few red herrings - fictional brands - in the lists.  From what I remember, one of these fictional brands scored very well as a brand that people trusted, and would select by choice...

 

I would venture to say that today's consumers are incredibly more astute as buyers, and that we have moved honey out of that totally commodity driven position. 

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57 minutes ago, ChrisM said:

 

 

If Beekeepers sold more, more competitively I can't imagine supermarkets will ever lower their prices because of it, instead they would reduce the number of shelves devoted to honey; they have plenty else more important to do. So, I think supermarket prices will remain a stable retail price indicator that anyone can latch on to if you visit your local supermarket every couple of weeks / monthly to keep yourself in the game without visions of grandeur. 

 


Until the craziness of high prices, that were obviously unsustainable, long term, there used to be a whole bay dedicated to honey in most of the big supermarkets. Currently at my local supermarket honey is now below eye level and less than half a bay. Consumers are either choosing to buy local at farmers markets or not as much through supermarkets and as a result honey has lost premium location and shelf space.

 

Theres also less choice and variety.

 

A group of beekeepers with different options could garner a market with wider choice, tastings and native varietals, once the world comes back if we make it through the dark tunnel.

 

 

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4 hours ago, Bron said:

Until the craziness of high prices, that were obviously unsustainable, long term, there used to be a whole bay dedicated to honey in most of the big supermarkets. Currently at my local supermarket honey is now below eye level and less than half a bay. Consumers are either choosing to buy local at farmers markets or not as much through supermarkets and as a result honey has lost premium location and shelf space.

 

A group of beekeepers with different options could garner a market with wider choice, tastings and native varietals, once the world comes back if we make it through the dark tunnel.

 

 

from what I can see during recent times supermarkets have lowered their prices to more of a common sense level at what they think the market can stand. But the damage has been done by inflated/blending prices that was forcing everyone including supermarkets to charge more, killing the local market and shelf space. Similarly beekeepers still asking $28/kg aren't helping.

I am doubtful that consumers were buying at farmers markets because generally the price there wasn't any cheaper than supermarkets. So, I think high prices did kill sales, I think the shelf space was reduced because supermarket margins and volumes got squeezed. Jam on the otherhand is a lot cheaper and tastes nice. It will take a long time to repair that damage.

Underpinning the high domestic price, I think 2/3 of retail honey was going overseas through daigou trade, because the per capita consumption figures for tonnes of honey and size of  NZ population were/are completely at odds with other western nations. So, we were either eating huge amounts of honey or it was going onboard ocean liners and passenger planes. The reality was that the high prices were still cheaper for Daigou buyers than in their home country, so they were probably laughing at those prices as too cheap. Now that ocean liners and planes are few and the resident local population largely ceased to buy over-priced honey, beekeepers are in a precarious position. 

 

Wine clubs are not really clubs, more of a business actually, they are more like the group of beekeepers you mention. They sell wine in competition to supermarkets and those issues of price, shopping experience and loyalty are the 3 issues discussed above. So, in terms of your idea, that's a YES from me.

Right now you can google search Trader Joe's and find products that are five or six small containers of various honey. A gift pack of 4 jars of different honey each at 250g could be a great offering to sell. Then be ready with 500g containers when they come back to order what they liked. You can put a QR code on the pot that sends them straight to a 500g buy-now. 

Clover, Beech Dew, multifloral, and finally a monofloral that can be Kamahi, Tawari, Rewa, Kanuka or what have you. 

A real pain in the neck to do those four at 250g in a cardboard box, but maybe someone has a better idea...

 

Maybe a second prong could be sending honey in small parcels to consumers in China directly in a reverse version of aliexpress [ that Grant will soon install :) ] using China Post and empty car carriers. 

 

Edited by Mummzie
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