Smaller food cos. get ready for a high-priced holiday season | Company


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NEW YORK — Holiday celebrants in Hilo, Hawaii, might notice something different about Short ‘N Sweet Bakery’s traditional Yule Log cake this year.

Maria Short usually makes her popular $35 yule log with two logs combined to look like a branch. This year, thanks to soaring prices for eggs, butter, and other items, she’s downsizing to a single yule log.

“It’s the same price, but smaller,” she said. “It reduces size and labor.”

Higher prices are hitting everyone this holiday, but food vendors are seeing some of the biggest increases.

Small businesses that rely on food-centric holidays like Thanksgiving and Christmas are preparing for a tough season.

At the wholesale level, egg prices more than tripled from a year ago, milk prices rose 34% and butter 70%, according to data from the US Department of Health. Agriculture. Companies are also paying more for everything from packages to labor.

Many owners raise prices to offset the higher costs. But raising prices too high also risks scaring away the crucial holiday shopper.

So companies are adapting: adapting the way they manufacture products, changing the components of gift baskets, and adding free gifts instead of giving discounts, among other measures.

Maria Short says that even for Hawaii, where the cost of living is among the highest of any US state, the price increases are “drastic”.

For example, she says, Short N Sweet Bakery is paying $123 for a case of eggs that cost $42 in October of last year. A crate of butter that cost $91 in October ago; it’s $138 this year.

Among the ways Short cuts costs, she will use a generic sticker-decorated box instead of using a custom box for her desserts. and she ordered a cookie printer rather than having bakers do the frosting by hand, to save on labor costs.

Sarah Pounders, co-owner of Made in TN, a locally made food and gift retailer in Nashville, says local vendors who make the items she sells face higher prices. The cost of butter needed to make cookies is five times higher than a year ago and cardboard packaging is double.

Made in TN has raised some prices and is selling other items at a lower profit. Customers are already paying more for things like gas, clothes, and cars, as well as services like dining out and travel, so they aren’t spending as quickly as they could have been the previous years. They notice the price increases, she says.

“If bread is up 50 cents, you’ll still be buying bread,” Pounders said. “But if it’s an impulse buy or a luxury specialty item — if the chocolate covered cookies are $1 — you might think twice.”

Price increases are not an option for his popular gift basket business.

Businesses often have a $50 cap and hotel events like weddings can have a $20 sweet spot. So Pounders made adjustments. In some cases, she replaced a $20 bag of coffee, which is $3 more, with less expensive hot chocolate. Or she puts one chocolate bar less in the basket.

She also buys more items that could sell year-round and less seasonal inventory like peppermint bark and hot chocolate on a stick.

“Every year is a guess, and the economy makes it even more volatile,” she said.

Eric Ludy, co-founder of Cheese Brothers, an online provider of cheese and gift baskets from Wisconsin, faces a tricky task this holiday season as he tries to offset higher packaging costs, labor and cheese. Half of its business comes in the weeks between Black Friday and Christmas.

Cheese Brothers has nominally raised the prices of its cheese – a block of cheddar will cost customers $7.50 instead of $7, for example. Ludy says he will also rely less on discounts this year and more on freebies and other freebies.

A bit of a gamble Ludy is taking is to increase the spending limit for free shipping to $70 from $59.

“People buy enough to get free shipping, that’s a huge motivation,” he said. He hopes the increased shipping price could push the average order up to $70. But it could also prevent people from clicking the “Buy” button.

“We might start to see people backing off and not buying as much,” he said. “It’s a delicate balance.”

Americans eat about 40 million turkeys during the holidays, according to industry group The National Turkey Federation. But turkey suppliers face a double whammy this Thanksgiving: higher prices and an outbreak of bird flu that is shaping up to be one of the worst in history.

Kevin Smith, owner of Beast and Cleaver, a butcher shop in Seattle, Washington, gets his turkeys from small local farms. He says he’s paying $6 a pound for turkey this year, up from $3.80 to $4.20 last year. In addition, he expects to sell only 150 turkeys this year, compared to 250 last year, due to shortages caused by the avian flu.

Still, Smith doesn’t plan to charge more for the turkey than he did last year: $9 a pound. He says he has a “strong customer base” willing to pay for more local and sustainable turkeys, but there’s a limit.

“We don’t want people to have to pay $12 a pound for turkey,” he said.

It raises the price of other items, such as ground sausages and pates, to offset higher poultry costs. and although the panic buying rush during the pandemic has died down, he still expects a good holiday season.

“We are still very busy,” he said. “It’s just a busier stable.”

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