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Espresso Equipment Price Rises vs Australian Economy

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  • Espresso Equipment Price Rises vs Australian Economy

    I wrote a thread the other day commenting on the La Marzocco price rise, and just saw another sponsor thread mentioning 5% increases across some big brands like Rocket and Profitec.

    I will put it out there that there are some pretty harsh realities in terms of how an increasing number of Aussies are doing financially as 2019 chugs along and I think some of these brands are going to find that they have unfortunately misread the market and many people just aren’t buying at current pricing without even dealing with a 5% jump.....

  • #2
    Respectfully, I don’t think it’s a matter of importers misreading the market. It’s about dealing with a declining $A , increasing freight costs , power and the general costs of doing business.
    As an importer a 5% increase is not even covering these factors over the last 12 months.
    Unfortunately this is the current condition of almost every business in Australia right now.

    Antony
    Www.casaespresso.com.au

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    • #3
      As a business owner, I can second Antony’s comments. It is not a case of misreading the market. I believe our sponsors do understand the current financial pressures their customers are facing. It is reflected in weakening sales. However, as prudent businesses they need to produce a profit, otherwise they will go out of business, which certainly is not in their customers interests.

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      • #4
        Even on currency fluctuation alone the $A was at a twelve month high of .65 euro.
        Close today ... .607

        Most importers and businesses absorb as much as they can, but eventually adjustments are required.

        Antony
        Www.casaespresso.com.au

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        • #5
          There has been near enough to a 5% drop against the US in the last three months.


          Melbroaster I think you are correct about many clients not able to justify a new machine, but 5% may not the decider about a $5k, frankly luxury purchase. Though I think that 5% may be the amount to allow an importer to enter a transaction with the intent of making a profit. Onseller rebates or retail discounts may erode that. Most importers wear a couple of hats, my guess if sales are or become sluggish (I have no idea if they are) the nest step will be the importers/retailers pulling their own belts in whatever that may entail. My guess is 5% isn't the full cost increase of the last 12 months, i know in my business it has been greater.
          Last edited by 338; 28 August 2019, 11:14 PM. Reason: ps

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          • #6
            Respectfully disagree as nobody I know has had a pay rise this year , so 5% seems like these businesses are out of touch with their consumers. Telling us how hard you are doing it does not help. We are all doing it tuff right now.

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            • #7
              Ardent understand your point, but over the last year our dollar has declined 9% against the US, plus plenty of other rises like freight. One way of looking at it is the retailer is passing 5% on and taking a 4% cut on their margin.

              In the GFC the A$ suffered a quick and very steep slide. Our business sold products for less than our landed cost for the new stock arriving and did so for three months rather fire staff and in the hope of a change. As a whole we were losing money every month, we couldn't have afforded to continue for 11 months like that, we would have had to close.

              Philosophically, I don’t mind hearing about someone's problems or financial concerns. I was at Agquip last week and heard many tough stories about the seven years of drought. I actually do care that the people I am selling to and the people I am buying from are both making an ok living, I want them both to be there next year and I believe it is better for society as a whole. Just a personal opinion, but I think there is greater emphasis on "what's in it for me" in society at the moment and not much concern for others you interact with (it is hard to show compassion for a website!). I genuinely don't want to buy something from someone at less than their cost price.

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              • #8
                Originally posted by Ardent View Post
                Respectfully disagree as nobody I know has had a pay rise this year , so 5% seems like these businesses are out of touch with their consumers.
                And yet your utility bills, health insurance, fuel and a whole heap of other costs have increased. In general, European espresso equipment is purchased in Euro and manufacturers don't care whether you managed to negotiate a pay rise or not. Their costs increase too.

                If your employer was to dictate that you take a 10% pay cut, you'd be ropable and yet you're happy to expect that importers and resellers do just that? I can assure you that they have and are pulling their belts in.

                Fact is cost of manufacturing and importing this gear has increased and importers can only wear that for so long.

                For most Italian gear, you might have to save for another couple of weeks to afford it. The good thing is that it will last for a long, long time with a little care and if you provide your place of purchase with fair margin, they will also be there to support you when you require service, parts or advice.

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                • #9
                  Originally posted by Casa Espresso View Post
                  Even on currency fluctuation alone the $A was at a twelve month high of .65 euro.
                  Close today ... .607

                  Most importers and businesses absorb as much as they can, but eventually adjustments are required.

                  Antony
                  Www.casaespresso.com.au
                  To further stress this point
                  Click image for larger version

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                  The graph above is the currency over (AUD/EURO) which has slumped around 6.4% in the last 9 months, meaning goods from Europe where most machines are built cost 6.4% more on currency alone.

                  Shipping rates over the same time have also increased.
                  Click image for larger version

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                  The above graph is what's known as the Dry Balatic Index, which is a proxy for how shipping rates internationally are changing. In the same 9 months it has increased by 61.6%. It does not necessarily mean rates have gone up 61.6%, but it does indicate freight now costs more to ship goods from Europe to Australia.

                  So all in all a 5% increase in prices seems to me like the importers are absorbing some of the cost. Seems fair to me. But does suck when you could have bought your machine 12 months ago and saved the 5%. But hey, that's capitalism and the free market system

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