Patchouli and Other EO Price Increases

[Guest guest]

Howdy Allana,

 

Hi All,

> Does anyone know why the price of patchouli has risen so much?

>

 

Yes ma'am .. Essential Oils must be viewed as we would any other

commodity, bulk prices are fixed and are driven by supply and demand.

Increase in demand can usually be calculated to a degree that producers

can forecast future needs .. but supply is driven by variables that can't be

controlled .. weather and other natural phenomena are in this category.

Floods, draught, wild fires, typhoons, increased transportation costs,

devaluation of the US Dollar and the general impact of climate change have

all had a negative impact on some aromatic and food crops during the 2007

crop year.

 

A while back I reported that prices on Patchouli had increased around 68%

and were still moving .. change that increase to 120% now .. but leave in

the " still moving " part. I reported that the price of Haitian Vetiver had

increased 78% .. change that to over 150% from last year .. and also still

moving.

 

These are not the only prices that have soared this year .. Rose Otto went

up around 90% due to a 35% reduction in crop yield in both Turkey and

Bulgaria and there is NONE to be purchased in Turkey now as it was all sold

to the highest bidders .. mostly to the European perfumeries. Corsican

Helichrysum italicum is up around 95% and that too is due to a shortage ..

Mysore Sandalwood up around 50% .. there are others that have increased

considerably. I wrote before that prices were still volatile and said that

it was my opinion that this was due to farmers and distillers holding back

some products .. and I believe I was right .. then. That is not the case

now .. products are out of their hands now .. the meagre supply of

these shortage products are in the hands of international brokers who are

grinning like Cheshire Cats while at the same time sad because they can't

get their hands on another 100 or 200 kilos of product.

 

Prices of some products that are not in short supply have also increased ..

Lavenders from France and Bulgaria are up around 20% .. even US Clary Sage

increased around 15%. I could go on but I'll stop there .. for now. ;-)

I keep a running record of what I have paid for EO since 1995 .. doing this

helps me to some degree in staying on top of international market trends ..

at least from a historical perspective. Watching the market is a time

consuming job .. almost as difficult as watching the stock market except we

can let our money ride if we're in a good mutual fund .. in time we will

make up our losses .. not true in the EO market. This year I have sold

pounds and kilos of various EO for X price and when I purchased more

within days of those sales I paid far more than I sold them for. A seller

of EO can normally do well by maintaining a low proft margin on a high

volume of sales .. but that is becoming difficult right now. If one

calculates the price of their EO sales based on their purchase price now

they are doomed to fail .. we must pay attention to our replacement costs

and that is sometimes a variable that is difficult to forecast. Who would

have thought that all of the Origanums would have gone up over 115% in the

last 3 months? I have sold hundreds of kilos for half of what it would cost

me to replace them now.

 

For end users .. in the midst all this bad news is some good news .. some EO

prices declined. But that good news has become problematic for those of us

who sell in bulk as well as in small retail sizes. A few weeks ago, I did

an exhaustive analysis of my prices .. I converted kilos to pounds to ounces

to milligrams to get as close to my costs as possible and I found that I

could drop prices on quite a few of the EO I offered .. the price

changes were posted to my web site. Today I find that there are at least a

dozen oil prices on that site that are BELOW my replacement costs .. the

market is still volatile. In my opinion .. this volatility is not all

based on supply and demand .. prices are increasing on some EO that I know

are not in short supply .. even considering the continued high costs of fuel

and weakening of the US Dollar overseas .. all of the increases can not be

justified .. so I am of the opinion that its gouging .. middle men are

following the trends that were established based on shortages of other

EO.

 

 

> I'm wondering if it is a short term change of if I am going to have to

> raise my product prices.

>

 

In the short term, if you are operating on a low profit margin .. as I am ..

you will have to do this. Don't count on a decline in prices of most EO

until late May or so .. and even then many prices will not go down because

all aromatics are not harvested and distilled in the summer. Prior to the

2008 harvest and distillation the brokers will be trying to forecast

conditions for the summer crops and if they look good .. they will get rid

of the products in their hands .. if conditions look bad .. they will

probably raise their prices .. if they are uncertain .. prices will remain

the same. Doing without an EO is a luxory that many end users can afford ..

folks like me can't afford to do this.

 

I'm not yet ready to put my updated web site on line .. and some of the

prices shown on my wholesale link are now less than my replacement costs ..

accordingly, I am not that interested in selling some oils in pounds or

kilos now .. in some cases I am refusing to do it. For some oils I barely

break even on an 8 oz sale and I am having to depend on sales of 4 oz sizes

or below to stay in business. ;-)

 

Folks who are serious about selling EO for a fair price and making a fair

profit have learned that this business is not one where you can get by

putting in a 40 hour week .. if you are spending less than 100 hours a week

on your business you will probably wind up with no more than an expensive

hobby. ;-)

 

Before folks start writing to me asking for entry into my wholesale site ..

you gotta be a seller of products to enter and purchase .. end users can not

purchase from that link. Its not necessary that you have a business

license, etc. That is between you and your state .. but you must be a

seller. If an order is to be shipped to an address in Maryland I would

need to record either a business license or tax ID number .. or charge the

6% Maryland Sales Tax. So if you write .. let me know your status and we

can preclude having to play ping pong with e-mails. ;-) Those who are not

sellers can purchase smaller amounts of oils from my retail link.

 

 

> Many thanks,

> Allana

> Sharing the joyfilled path

>

 

Welcome you are .. y'all keep smiling. :-)

 

Butch ... http://www.AV-AT.com <http://www.av-at.com/> ... Wholesale/Retail

GC Tested EO, Tested Hydrosols, Rose Products and other nice things shipped

from our store and warehouse in Downtown Friendsville, MD. Pop: 597