In The News
Pricing and Status Update – July 20, 2021
As with all businesses we are living through challenges that we generally have not experienced in the last 30 years. Our experience in the tea trade for the last 40+ years though, has given us the ability to strategically maneuver through the global ‘potholes’ ensuring that we continue to be a trustworthy and reliable supplier for the next 40 years!
Currently a review of the pricing on all items is underway. Here is what we are doing (listed below under CHALLENGES….are the factors we are considering):
- The pricing change will be activated on our website starting 12:01am Tuesday, September 7th.
- Any orders received prior to that date will be price protected until December 31, 2021, meaning you can place forward orders before Sept. 7 with a shipping time that you determine. Shipping must take place before Dec. 31, 2021.
- Phone orders for forward shipping will be guaranteed pricing up to Wednesday, September 1. Following that, whilst we will
do our best to input them into the system, there is no guarantee we can process them all, as generally there is a high order volume and we run out of time to manually input them into the computer. (FYI – the web ordering portal holds the prices until midnight Sept 6 and these orders get downloaded into our servers at the prices as confirmed on the web. Orders from 12:01 am
Sept. 7 will have the new prices.)
- Clients whom have custom products with us: The review for these items will occur between September 7 and December 31, 2021 with the view that pricing may/will change on January 1, 2022.
- Expectation of increases:
- Generally we are expecting an increase between 4-8%.
- Some origins may increase significantly more – particularly items that are very light weight but take up a lot of space.
- Our prices changes will be fair – they always have been and we will not deviate from that ethos
CHALLENGES, FACTS and EVENTS being Considered During the Price Review
Global Shipping and Logistics
Freight rates from Asia (Japan, China, Thailand, Taiwan etc.) have nearly quadrupled in the last 6 months. Unfortunately, there is chatter those increases will continue. Why?
- Covid protocol at the loading ports (not enough port staff)
- Empty container availability
- Amazon, Walmart and Apple are ‘inhaling’ container capacity
2020 saw shipping companies mothball ships due to lack of business, now there is a shortage of ship space and coupled with excessive demand.
Climate Change has Caused Crop Shortages
- Assam suffered drought during May and June (normally it rains heavily at this time).
- South Eastern Europe has had massive heat waves reducing crop and yield
- North Western USA has reduced cropping on account of the heat dome
Thankfully we forecasted during November/December 2020 that the Covid issues would cause downstream problems so we booked large quantities and told growers ship ASAP.
- On account of our prescience, we have managed to overcome the majority of the problems. We still have a few headaches (particularly from China) but we seem to be OK at this point and will do whatever is necessary to overcome these headaches.
- Our supply and raw material inventory are in good shape, despite all the hurdles
- Overall, demand for luxury tea is high, but you can continue to rely on us because of our actions in late 2020 (and ongoing during 2021 as we navigate the supply slalom course)
Grower Cash Flow
Many of our smaller growers have experienced cash flow issues. They are important to us and you, so we made the decision of helping them by prepaying for our purchases even if they will not be shipped for 6 or 7 months from order date.
- The result: Our orders have moved to the front of the queue and they are giving us priority both quality and volume wise
We are anticipating heavy demand as the economy opens up and Covid restrictions relax, somewhat allowing ‘in-person’ shopping.
- Our inventory of packed products is very good so we expect that our usual ‘FAST’ turnaround time will continue unabated.
Metro’s Covid Update
95% of our staff are double vaccinated. Despite this we continue with our rigorous office and factory protocols:
- N95 masking at all times
- Temperature and oxygen checks on arrival and departure from work
- Constant hand sanitization
- Social distancing and constant air circulation through HEPA filters
- As the fall and winter approaches, we will most likely continue with this protocol until at least May 2022
We are in excellent shape and anticipate meeting expected demand with our usual reliability.
Our clients and growers are very important. Covid has been exceptionally trying for all and now we are all dealing with its fallout. Thank you in advance for your future understanding and business
May 12, 2021 – COVID Update:
As with all businesses at this point, we face challenges that are new compared to previously accepted norms. Our farmers in the tea producing countries are also facing large challenges but in our opinion, they, along with the team at Metropolitan Tea, have met the challenges head on and risen to each and every issue.
i) Global shipping. Getting containers and space on ships in a timely manner. (time for leading and vessel departure increased from 2 to 8 weeks.)
ii) Growers were experiencing covid related cash flow issues. (We began pre-paying growers to ensure our contracts moved to the front of the line.)
iii) Covid related labor and logistics problems (everywhere but especially in India).
iv) Climate change is causing crop shortages in Darjeeling and Assam. (We began buying new season teas about 6-8 weeks earlier than normal as we saw that the seasonal quality period started much earlier despite decreased crop volume.)
v) The Suez Canal problem with the MSC Evergiven. (We moved shipments forward and managed to have our containers on ships that were ahead of the stricken vessel.)
vi) Demand from our clients has been exceptionally strong since October. (Our large inventories allowed us to meet the demand without ‘hiccups’.)
vii) Prices are expected to be increasing. (This is due to ocean freight rates and excessive global demand that is pushing some items through the roof. For example, 9 months ago, a 40’er from China was USD 4,000. Today, it is anywhere between USD 8,000 – 13,000...but our large inventory coupled with forward buying is protecting us somewhat.)
OUR SUPPLY CHAIN:
About 5 months ago we began taking decisive action that has improved our supply chain despite the global upheaval. By moving our crop contracts forward we have managed to skirt the biggest problems.
India (Assam and Darjeeling): Most of our contracts are containerized and on their way to us.
India (Nilgiri, Travencore, and Gujarat): No major hiccups. Everything has been shipped.
Sri Lanka: No major hiccups. Everything has been shipped.
South East Asia: No major hiccups. Everything has been shipped.
Kenya: Purchased early and aggressively, we have everything afloat and on their way.
China: Container booking and space allocations is challenging but our long associations with growers are paying dividends and raw materials are starting to move.
Japan: Their season in only beginning and by shipping time we feel the majority of the problems will have passed.
Mediterranean area: The season is just starting. Shipping occurs from September-November and we anticipate problems will subside by then. In any event, we have large stocks and we have pre-paid contracts.
North Africa: No major hiccups. Everything has been shipped.
South Africa: No major hiccups. Everything has been shipped.
South America: No major hiccups. Everything in course of shipping
COVID IN INDIA
Our growers are having to navigate uncharted waters. So far everything is good. We are couriering mask supplies to growers, hopefully assisting them in their efforts so they and their staff remain safer.
Traditional weather patterns including temperature and rainfall are changing very quickly.
We keep in direct phone contact with our growers and have been making our raw material purchasing decisions seemingly well, despite all the changes.
We have experienced quite significant demand, the most we have seen in the last 20 years. Whilst we are keeping good inventory levels, we recommend a bit more forward planning on your part to cover anticipated needs. It is a prudent thing to do right now. (Remember, all our tea is in vacuum so the shelf life is very long with no deterioration in quality)
Thank you – Stay Safe – Wear a mask in public spaces – Sanitize
January 16, 2021 – COVID Update:
Covid continues to be a challenge. Most recently the Province of Ontario (where our main production facility is created) has issued a ‘Stay at Home’ order. Since we are a Food Manufacturing facility, we are allowed to remain open.
For us the result is we continue to work 2 shifts (production) and 1 shift on the office. Work stations are more than the prescribed social distance, we have a mandatory mask policy, 2 daily facility sterilizations of touch points, temperature take on arrival (over 37.7 ‘C, immediately leave and get tested), oximeter testing (95 or under immediately leave and get tested). In addition, we have had 7 company mandated tests since December 1 (the clinic comes to Metro Tea) and will have private tests the moment we feel there is a need.
Throughout the upheaval and anxious moments, we have not missed a beat on production, shipping fulfillment and sales.
Traditionally, January and February are our slower months (note we used the term ‘Traditionally). In spite of this tradition, we are seeing demand similar to pre-Christmas – clearly very good tea and the health aspects of really good tea, is resonating with our clients’ customers.
Shipping and Order Fulfillment
Depending upon the day, we are experiencing normal order preparation times. Nothing that we can’t handle. Despite serious ongoing issues throughout the USA, orders are flowing well.
On April 1st we need to institute an interim price increase – likely in the range of 1.75 to 2.25%. We are experiencing a general increase in raw material costs from virtually all growing countries and general operational costs. Perhaps the craziest increase has to do with ocean shipping. As an example – The shipping cost from China to Toronto is normally $3500-$4200 per 40’er. Due to the wild demand from on line retailers and PPE, we are seeing prices range between $8,800 and $14,500. There are insufficient empty containers at the origins shipping points, container terminals are severely backed-up due to covid protocol, and North America is not exporting at the same rate it is importing. Additionally, UPS passed on a price increase to us about 3 months ago.
We will be doing an in-depth pricing review during July/August and will adjust prices accordingly. We hope by then some of this current madness will have simmered down and a modicum of normalcy has returned giving us predictable cost stability.
Global Supply Chain
Our supply chain remains strong. We have experienced some delays (generally covid related in source countries) but our large raw material safety stock levels ‘carried us across the threshold’ so to speak.
Within the last 2-8 weeks we have pre-booked crop contracts (for 2021 crop year) with most growers, paid deposits (many require the money to buy seeds for the spring planting). We can expect to see these raw materials arriving at our main facility between August 2021 to March 2022 (Yes! We do have to think that far ahead!!)
Please help us with planning: Whilst we have been aggressive in our forecasting (due to the high demand since end September and not seeing the traditional ‘January let-up’ – if you foresee significant demand on a narrow range of items, we would appreciate a ‘heads-up’. Your demand could cause an ‘outlier’ in our demand forecasting algorithms.
One of our clients has been using our DIY CATALOG feature very successfully with their on-line fulfillment. Every day they have been changing the featured tea, printing a DIY mini announcement and including it with orders. They are totally thrilled with the response from their customers – well worth the 5 minutes it takes to create an ‘insert flyer’.
If you would like help to understand this feature on our website, call our office and speak to one of our tea masters. They will create an immediate ‘GoTo Meeting’ with you (Zoom-like) and show you where the feature is and how to use it.
Thank you – Stay Safe - Wear a mask in public places, Sanitize, Make social distance the norm.