August Market Update
Hey Everyone,
I hope you all are having a great summer and staying safe out there through these times.
While each of us have a variety of avenues that keep us informed of the market such as sales reports, peers in the industry, and many other ways, we all find a way to keep our fingers on the pulse. At this point, it is not a secret that there is more supply available in the state than the market will bear. There is still a lot of 2020 material in the OLCC licensed space while 2021 material is in the beginning processes of hitting the market. We all know this will make the 2020 product less desirable and continue to drive the price down even further.
We here at The Dub are seeing and feeling the shrink in the market as well. We are doing our best to stay in front of the market and capitalize on the best sales opportunities available. We are seeing two main reasons for the market challenges happening:
The obvious oversupply caused by growers enlarging their canopies, the OLCC approval of many additional licenses, and numerous growers finally seeing the need to hold back product but not seeing the full picture of what that would do.
Inflation has hit our state as it has the entire country. With the rising fuel costs, evictions happening and unemployment incentives going away, consumers are not spending as they have over the last two years. Therefore, we are now seeing a reduction in open to buy as sales are no longer there to support revenue generation on a store level.
By the middle of July, we saw sales on track to match 2020, however, the last two weeks we experienced prices and sales taking a dive. Based on our intel with other brands, wholesalers, and dispensaries, this trend has been experienced across the state and validated by Mary through her national connections. Coming out of last week, our sales teams were told budgets would be opening up on August 1st so we were hopeful of seeing movement, however, while it is only the 4th, the feedback currently is that shops/processors are still full and not purchasing at the volumes they anticipated based on lack of inventory movement.
I know this downward and oversupply trend affects Sun Grown/Seasonal Producers the most, particularly with price volatility, however we have seen the slow down across the board from Indoor to Packaged Goods. This has been verified via our delivery partners as well as strong relationships with consistent and long-term producers within Oregon who operate via other wholesalers or independently.
I am writing this with the primary message of support and transparency. We are in this together. As we share and partner in successes, we also are there in leaner times to work through the tough times together. It's all shared. Secondly, we are without question at a point this year where strong/tough decisions are going to need to be made over the next 2 months (ideally within 2 weeks), specifically around outstanding 2020 material and more. At this point in time in the 2021 season, we are advising to work with us on finding the best price point to move your 2020 product as fast as possible.
To rephrase plainly: Let’s connect soon about dropping your price to a point where product moves as fast as possible, before the 2021 crop dictates the price for you and forces us all into a place where what’s coming in is below your cost. I am open to additional pathways to manage inventory so let’s connect and discuss. Let’s work together to find solutions 😊 We can do this.
I apologize for the bluntness, but honestly, we are at a point in time where we need to communicate clearly to be able to move forward in a quick and concise manner. Please connect with me individually and let’s run folks!
-Andy @ The Dub