Price adjustment - February 2023

The year 2022 has brought new challenges for many people – and also for us as a company. But our main objective still remains: we want to offer our customers the best value for money possible. Thanks to an increase in our volume, which brings lower average prices, existing contracts with our suppliers which shielded us from price increases, as well as internal cost optimisations, prices for KoRo Ireland have not risen since launching in 2021. We are happy to be able to protect our customers from the large price increases we have witnessed elsewhere. For comparison: the average inflation for food products in the Republic of Ireland was a record high at 14.7% in December 2022.

We are currently observing even bigger increases in our suppliers’ purchasing costs, rising prices among our competitors and a sharp increase in our energy and logistics costs. Unfortunately, this forced us to adjust the prices of some of our products this month (February 2023). On average, our prices will have to increase by 10% to allow us to keep offering you products of the highest quality. Here is an explanation as to why prices of different products will change in different ways:

How do we calculate our prices?

Our prices are calculated from several factors, such as our purchasing cost for the products and our competitors’ prices, among others. If you have not read our article on price calculation , you can find it here. In it, we explain in detail how we get to the prices we charge for our products.

A decisive factor for our current price increases are increases in our suppliers’ purchase costs, as well as increases in our competitors’ prices. But now there is another big factor which has an indirect influence on our purchase prices, on our competitors and on the financial situation of the company overall: inflation. Inflation is harder to price than these other factors. This means that we have to opt for an overall increase in prices.

How do we implement an overall price increase?

Why not simply increase every price by 10%? Unfortunately, it is not that simple, because many of our products would lose their competitiveness. We prefer to go a different way and increase our minimum margins. The advantage of using this strategy is that products which already have a very low price suffer bigger increases. Since they were exceptionally cheap to begin with, they usually keep a fair price even after the increase, maintaining their good value for money and their competitiveness. If the difference between our price and our closest competitor’s price is small, our price increase will also be small.

To decide on the correct price increase, we usually look at three scenarios and try to figure out in which of them we can keep the best value for money for our customers.

This could be one example:

What do we adjust in our calculations?

We had to adjust our original calculation of the minimum margin as a result of inflation, because we came upon two problems with the amount of different products in the shop:

Products with no margin

With some products, the quality advantage over our competitors is small or negligible, meaning consumers simply buy the cheapest alternative. Classic examples are flour or coconut milk. We can not apply our “normal” minimum margin calculations to these products, because otherwise the prices would be too high and customers would purchase them elsewhere. We use separate margin calculations for these products because these are products where we essentially make no profit. But why would we even sell products that we only break even on and make no money? We want to have a wide selection of products for you. We don’t mind offering some products on which we don’t profit if that means you are able to enjoy the products you like.

Premium products

The second group of products which need different calculations are those in which we clearly offer better quality than our competition or when we have a unique product which can’t be compared to others. These products are always more expensive for us to purchase. Good examples from our online shop are the pistachio butter or the date and hazelnut spread. With the normal calculations, we would adjust our date and hazelnut spread’s price in the same way we would adjust a normal nougat spread. This would mean that we would stop making any money on the date and hazelnut spread, because production has become significantly more expensive. We are convinced that this product is of above-average quality, that our customers are aware of this and that they will understand the price increase and be willing to spend more on this product than on a conventional nougat spread. All this explains why we also have a separate way of calculating price changes for our premium products. This example shows the different calculations for different products:

Based on these two calculations, we have adjusted our prices according to the current situation. But as you already know: KoRo prices are not set in stone and we hope to be able to inform you about a price reduction soon.