If you are like most people, money is scarce and shopping in the organic / natural sections can be challenging. Products that are organic are more expensive! I wanted to take a second and explain why that is...
Building a food business is a delicate dance involving retailers, distributors, ingredient suppliers, and many others. A fantastic product starts with world-class ingredients, which come at a premium cost from suppliers across the world. If you are Hershey...you can order millions of pounds of an ingredient to save costs. If you are just starting out, you only need small quantities. That means you pay the highest price. So right off the bat, your input costs are higher than any of your competitors.
Once your product is made, someone has to take it to the stores! If your product is new and you're still building demand, it will be tough convincing a distributor to carry your products. Think of it like this....for every case of your product they put in their trucks that may sell, they could instead distribute a product they know will sell. Its a cart before the horse issue! Distributors want demand for your product in order to carry it, but many retailers will not carry a product without distribution. The solution is: fake it until you make it. Or self-distribute until you build sufficient demand, which is how Sweet Meat Jerky did it.
Now...the final part: the retailer. Just like everyone else, they need to make money. And they have a lot of overhead. If you're the maker of a product, this is the place where your SRP (suggested retail price) is going to spike. When you see a product on shelf for 8 or 9 dollars, it likely cost 1/4 of that to manufacturer. Our buddies over at Quinn did a great job a while back explaining this...if you're a numbers person, check it out here.
Next time you're in a store and see a high price for the organic equivalent of a product, remember that large companies cut corners somewhere to bring you that low price. More often than not, it's with crappy ingredients or by using their size to muscle around distributors, stores and partners. That's not how we do business.
From all of us in the natural foods industry, we appreciate your support! YOU are the reason we pinch pennies :)
Thinking of starting a food business? Lets talk!