The cost of packaging

[Lesgold]

Hi Folks

Just thought I?d open a can of worms and see what people think in various parts of the world. The cost of packaging honey and honey products really concerns me and tends to get me quite cranky for some apparent reason. Can?t quite get my head around it but I?ll try to unpack it and see if there is some justifiable reason for the frustration that I feel. We live in a modern world where rules and regulations seem to control us and govern what we can and can?t do. I understand this but my frustration stems from the fact that there is a cost for conforming. In my part of the country, the cost of packaging (which includes the honey container and the mandatory labelling, adds up to about 20% to the cost of the product. How does this sit with you guys? Do you pass all of this cost onto the consumer or take part of the hit yourself? I just don?t feel comfortable knowing that a consumer of my product will pay extra money to place what is left over into a recycling bin. Something is not quite right here. Please tell us all your thoughts.

Cheers

Les

[BeeMaster2]

Les,
All businesses have to pass the cost of getting the product to the customer in order to succeed. This is why conservatives get upset every time politicians act like it is perfectly okay to raise taxes on businesses. Businesses only pass the taxes on to the consumer. Same thing every time politicians create stupid regulations that only increase the cost of making a product but do nothing to improve it. As an engineer I had to spend hours and hours adding things to my designs just to justify why I designed it the way I did to prove to government auditors that I was justified in doing it. Usually this caused us to put minimal sized copper/fiber cables out for miles and miles only to have to do the same job twice at more than double the cost of doing it right the first time.
By all means pass the cost on to the customer otherwise don?t bother wasting your time and money producing it.
Jim Altmiller
Do

[Michael Bush]

You can sell honey in a lot of ways.  One is to fill the customer's container directly.

[Oldbeavo]

Les
What sort of packaging are you using?
Our cost vary with container size but range from 5 to 8% of the retail price. we print our own labels, Avery brand from Office Works with a $79 Australia Post Cannon printer, cartridges are refilled by Karen.
Containers are plastic 500g, 1kg, 1.5kg and 3kg, all purchased from Clayton Plastics in Epping, Melbourne.

[Lesgold]

I understand what you guys are saying but I?m just making the point that it is an unfortunate reality that we are all paying so much for something that is generally only used once and then thrown away or recycled. It is a fee that we all pay for in many things that are purchased. I encourage people to return containers for refilling and this eliminates some of the costs involved. I will be making all of my own labels as soon as my current stock runs out. Oldbeavo, I currently use Cospak for container purchases.  I want to be able to provide my customers with a good product at a fair price without undermining the value of honey.

[max2]

I'm not sure if this is going to make any sense...

I value our honey in the bucket at $ 7.50 /kg. This has to pay for the upkeep of all the gear ( Hives, losses, queens, new frames, foundation, extractor...) and our labour.

I then have to bottle this honey and label it.
At this point I value the honey in jars at $ 11.50 /kg in a glass jar on the shelve. The $4 from the honey in the bucket to the honey in a jar has to pay for the jar and labels...and my labour. The cost for the jar and the labels ( as required by law) cost us a little less than $ 2. A big part of the cost is transport. We are in a rural environment and transport has gone through the roof.
To have 1 1/2 pallets of jars and lids delivered to us costs now just under $ 300. To have the labels posted to us costs about $ 20
We buy Australian made " Flint" jars. I belive they are from recycled materials.

We sell our honey for $11.50 to retailers. They will add about 50% but are a great way for us to shift quite a lot of honey.

We sell our honey for $ 15/kg at the markets.

The difference between the $ 11.50 and the $ 15 has to pay for travel cost and time at the markets, time getting the load ready and unpacking after the market.
At the retail level our packaging costs are thus  13.3%. At the wholesale level 20%

Our " competion" is still selling for $ 10 in a plastic kg pail.

We take returned jars and pay a dollar.

We then need to take the labels off and sterilise the jars. It is a unpleasant task. Most people bring back lovely ,clean jars but there are some pigs in this world.

The big plus here is that people just about always buy more honey.

At our stall we also sell Comb Honey,Chunk Honey, Candles, Tealights and wax plus a few other, minor itens like butterknives made from recicled supers ( Hoop Pine). We also use the opportunity to fundraise for the work I have been doing in Cambodia for many years. Often people donate the money for the jars for this purpose.

I also advertise our sales of bees ( nuc's) and workshops at the markets.

In season we sell Pecan Nuts at the stall ( have you tried Pecan Nuts with honey? DIVINE!)

Our stall is right next door to a couple who sell vegetable and flower seedlings ( we started this business 15 years ago and sold it) and I help out - we get free seedlings and they pay for our stall fee.

We value the friendships we have made via the market. For a deaf, old bloke like me it is one of the main social outlets. There is more to it then money!

Please keep this information confidential - I don't want the competition get wind of it

[Ben Framed]

Thanks Max made plenty good sense to me.

Phillip

[Lesgold]

Good stuff Max. You have broken down the costs and explained them in detail. You must scratch your head from time to time wondering how someone else can sell their honey so cheap. They obviously don?t carefully consider their time, costs involved or the value of the product.

[TheHoneyPump]

Max2 set it out well.
All input costs need to be known. There are costs that are 1) out of your control (aka fixed costs), and 2) within your control (aka variable costs). The fixed costs that are out of your direct control (labour, materials, admin, stationary, hardware, meds, fuel, etc) have to be passed through to the shelf price put in front of the customer(s). When any of the fixed input costs go up (or down), the end price has to go up (or down) to account for the change. The variable costs that you can control are internal, such as choice of equipment you use, the efficiency of how you do things, and the target margin that is needed to continue to operate.  The difference in shelf price from one producer to another is merely in how they each have handled their internal variable costs and target margins.
You can run your internal variable costs as a charity, non-profit, or labour of love ;  but no matter how your set your goals at the end of the ledger the fixed costs have to flow through to the sales till, or you will certainly not be doing this for long.
The end result is the shelf price for your product(s). Customers have to buckup or buckout. If your stuff is priced such that there are too few customers to support it, or your neighbour is selling much cheaper, then you need to go back and check what and how you are doing things to decide whether to change something or tuck and turn to go do something else that you can be more successful at.

There is also the underlying irk expressed above; that about waste, recycling, one time use, etc.  That is a much bigger sandbox than us lowly beekeepers can play in.  The entire mindset of consumerism would have to be changed, and is being changed in some places.  All we can do is encourage our customers to keep the containers, bring those back cleaned and disinfected ready for use for refills, and offer subsequent price discount by saving the cost of the container.  When a customer brings me back containers that are not ready for use (need to be cleaned), I refuse to take them an they get new.  If they cannot be bothered to put the time/labour in, I certainly cannot afford the time to, and they payup for the new.

Hope that helps!

[yes2matt]

THP  I don't quite agree with your statement about the size of the sandbox and as to whether my lowliness can play in it.  Here's why, and maybe it's particular to my situation.

I live and sell in a banking town.  I try and get out a few times a year to do a school event or a conservation fair or whatnot.  Sometimes I sell honey, sometimes I just bring the observation hive and some seed packets and talk to people about bees for four hours.. It's a hell of a lot of fun, I'm always completely exhausted at the end of the day.  but here's the thing: I don't know who I'm talking to, who I'm selling to.  I don't know if it's a schoolteacher, a congressman, president of a bank, bus driver, janitor.   When it's kids, I REALLY don't know who I'm talking to. Is it a future president? a deliquent? Same person? I have no idea.

So I think Les's point is that we can speak differently about our craft, and associated (agriculture, ecology, botany, environmental) concerns differently, and we can show a better way to do things.  I like the idea of a metered spigot or a pay-by-weight system to encourage folks to bring their own container. I haven't done it yet, but it's a good idea. Because it gets the KIDS SEEING a different way of doing things, and if mom lets them hold the jar, they get to feel the better way and taste the little dribble down the side. And when they become "large and in charge," that impression will remain impressed, maybe inform national/multinational policies. 

[Lesgold]

You are pretty well on the money Honeypump. What you presented is the reality of the situation and the world that we live in. In a large operation, the ability to change from the current way of doing things would be a real challenge and quite risky. As a hobby beekeeper, there is possibly a bit more scope as I don?t have to rely on income generated from bees. To a large extent our hands are still bound by regulation and compliance. I like the idea of refilling jars at the markets. People bringing back their own containers and getting a top up for a reduced price is quite appealing. Not sure how that sits with the current regulations and requirements. I would be interested in comments on this. Perhaps supplying a new label at the time would help.

[Oldbeavo]

Refilling is dependant on the health regulations of where you live.
Our local shire requires all product to be in tamper proof packaging. Also to have a product traceable batch code.
At the cost of $7.50 kg in the container is relatively high. Commercial bulk honey producers are only being paid $5-6 kg and they need to make a profit out of that.
There is economies of scale but sometimes you need to assess what is your hive group size that is most efficient for you. Ours is 50 hives per group.

[beehappy1950]

We sell our honey in quart or pint jars. That way the customer get a brand new canning jar and lid. Costs us about 10 percent of the price of the honey. Not bad. Huh ?