While global challenges continue to cause fluctuations in commodity prices and increases in the cost of doing business, the team at Honest to Goodness has been working diligently to adapt and minimise these effects for our customers.
Commitment & Transparency
While we strive to absorb cost increases as much as possible, some adjustments are unavoidable. Our core values prioritise offering accessible and high-quality health foods to all our customers, and we remain dedicated to avoiding unnecessary price increases and passing on savings whenever we can. We want to assure you our commitment to supporting healthy living at fair prices remains unwavering. This process is ongoing, and we will continue to work tirelessly to provide you with the best products and services while navigating the evolving global landscape.
Cost of Living
Right now, more than ever, everyone is feeling pressure from increased cost of living prices, so we thought it essential to explain some of the price movements that we as a business have witnessed in the past 18 months that has affected food prices. The below list is just a snapshot of the many fluctuations we have witnessed in recent times, and we trust our transparency will give you a greater understanding of these fluctuations.
International Logistics
While sea freight costs are not at the COVID levels where some rates increased 200%+, they are higher than historic levels. The higher rates are largely due to:
(a) Attacks on vessels in the Red Sea area has reduced traffic through the Suez Canal. Several shipping companies have diverted their ships around the Cape of Good Hope which has increased shipping line costs due to the added distance.
(b) The Panama Canal drought has reduced daily traffic through the narrow corridor by 40 percent compared to last year. Several ships have already diverted to longer ocean routes, which has increased costs and delivery time.
Domestic Transport
Due to the shortage of drivers and increases in maintenance costs, fuel and insurance, Australian Carriers have increased their rates and added new fees. A similar scenario has been witnessed with insurance premiums, largely due to ongoing flood and bush fire events over the past two years, increasing costs.
Raw Materials/Commodities
Depending on crop yield, crop availability and global demand, the cost of raw materials has seen many fluctuations, both up and down. Honest To Goodness’s strategy is to source commodities from different regions, when possible, to help minimise price increases without compromising quality. Below are just a few examples of products which have seen price fluctuations:
Organic Cacao & Cocoa
Prices have had the biggest hit in the past 12 months due to several plant diseases ruining crops on a vast scale in West Africa. Organic cocoa and cacao prices have more than doubled over the last year and supply is becoming limited with no signs of a price reduction in the medium term. It is possible, the cocoa market could experience another shortage next season due to the severity of cocoa disease. The supply-demand mismatch will leave the market with an estimated deficit of 374,000 tons this season, up from 74,000 tons last season, according to the ICCO (International Cocoa Organisation). The ICCO expects global cocoa stocks to fall to their lowest in 40 years by the season's end. Honest to Goodness did invest in significant organic cacao stocks to help reduce the impact of price increases. However, due to best before date management, all new stocks will be impacted by the higher prices until raw material prices stabilise. The products affected by this include all products derived from cocoa & cacao including the nibs, powder, butter and anything made from these products.
Organic Olive Oil
A combination of initial shortages of staff during COVID and bad weather conditions after COVID, drastically affected organic olive oil supply in key producing regions. As a result, limited supplies have driven prices skywards, with a 115 percent increase in Spain and a 50 percent price increase in Greece between 2022 and 2023. Honest to Goodness was able to change its sourcing strategy to secure Australian Olive Oil where possible and hold more stock to help limit cost increases to customers.
Organic Psyllium Husks
Organic Psyllium Husks prices doubled in 2023 due to heavy rain in India that significantly reduced supply. The crop for 2024 is looking healthier and we are expecting a price decrease coming through in the second half of the year.
Organic Sunflower Oil
Organic Sunflower Oil prices increased more than 25% in 2022-23 with the start of the Russia-Ukraine war, which saw a lot of uncertainty in supply. Since then, the market has adjusted for the new supply cycle and prices have dropped to normal levels. Honest to Goodness adjusted its prices late in 2023 to align with the price fall.
Organic Cashews
Prices for Organic Cashews are at historic low levels, driven by the reduction in global demand and a considerable increase in supply. Even-though the market is estimating an increase late 2024, we expect prices will continue to plateau due to the supply-demand balance.
Organic Olives
Organic olive growers, manufacturers and exporters of the Greek table olive varieties ‘Halkidiki’ in the producing areas of Halkidiki Peninsula, Kavala and Magnesia, and ‘Amfisa’ organic olives (grown in the regions of Etoloakarnania, Magnesia, Fokida, Arta, Larissa), are currently facing severe crop decline, due to unprecedented fruitlessness of their olive trees. The phenomenon of fruitlessness in these regions (in the Halkidiki Peninsula alone, there are 14.000 olive farms) is expected to affect 90% of olive farmers, and in turn will see increases in olive prices across the board.
