I have written in past blog entries of the inevitablitiy that the volatile fish oil market would see significant price increases in early 2008. Although, I hadn't envisioned that the increase would be THIS early and THIS significant. Ocean Omega was informed today ( as we actually were placing an order from our source supplier), that we have incurred a dramatic price increase.

EVERYTHING IS CONSTANTLY GOING UP IN PRICE
World fish oil manufacturing prices skyrocketed during the past three months and even reached an average record level in November. World production and supplies cannot keep pace with increasing fish oil requirements....

For Oct/Sept 2007/08 industry analysts estimate world fish oil production to virtually possibly stagnate to a very large degree. World production and supplies cannot keep pace with increasing fish oil requirements - both for food, human and pet nutrition, and aquaculture production. This will continue to keep fish oil prices well above average also in 2008. Manufacturers will charge significantly higher average prices throughout 2008.....

Customers are becoming conditioned to both the need to raise prices and the
reasons for raising them. Still, for distributors, it's a tough scenario.

So, what's to blame for today's price increases? According to economists and
consultants, they're attributable to a global economic "perfect storm" that's
not just affecting fish oil product prices. The rising cost of steel,
plastics (resins), fuel, and shipping trickle down and affect
the cost of Ocean Omega supplies. Similarly, the United States must contend with the increasing raw materials demand from other countries such as China,
which drives up those costs.

When raw materials prices shoot up, every industry's prices are affected

The typical price hike notification sparks a complicated chain of events for
distributors such as ourselves, who must update pricing schedules, deliver the
unwelcome news to customers, and often, rethink the way we MUST pass along
costs. If we were lucky, we would have received a month's notice from the manufacturer before the increase actually had already taken effect.

A price increase is handed down from manufacturer to distributor for a specific product, the end user must unfortunately pay more for that product.
The process itself can be a challenge.

Informing the customer of the increase is no easy task, either. While
occasional price increases are expected, nobody wants to pay more. Customers
Most customers realize [prices] are going to go up, but when they continually go up many times in a short period of time, everybody suffers.

Everything you use has incurred some form of inflationary pricing,
there is little distributors can do when the entire marketplace is
experiencing rapid price increases. While manufacturers may absorb a greater
portion than distributors may have guessed, distributors don't have much
choice but to accept what their manufacturers pass down in the way of
increases.

Shopping Around

One consequence of raising end users' prices can be increased instances of
price "shopping" to the competition. Though this can be nerve-wracking for
distributors who worry about their competitors undercutting their pricing,
in today's economy, end users are finding that similar price increases have
gone into effect for other distributors, as well.

They're running a business just like we are. Our competitors will be having the same price increases as we do, and they too will have to deal with them.

More so why we will have to enhance the opportunity to reiterate the value we bring to the customer versus our competitors. My position gets more challenging daily, as we now have to reassess programs that we just instituted to save our clients money. Our price increases will be going into effect VERY SOON more to come as to how I will continue to attempt to devise cost savings programs to try and abate these impending price increases of our fish oil!New Product diversification is high on our priority board.