Seagate developed its own niche in the health food industry many years ago, producing its own raw materials that are processed in its own factory. Seagate operates its own farms and fishing boats which supply everything from seaweed and sardines to olives and broccoli. This type of integration has both advantages and disadvantages. Either way, it costs a lot of money to maintain.
Several major advantages are absolute quality control and the benefits of economies of scale. For example, producing more acres of tomatoes just adds some more gasoline for the pumps and some more work for our farm hands. So overall, we can increase production without a major change in operating costs. This has helped us keep our pricing steady for the past 30 years. Some products, such as shark cartilage, have never had a single price increase during the last 30 years. Products involving our olive leaf extract have even had major reductions in pricing, with their buy 1 get 1 frees continuing for 20 years. Most of our other products have only had a single price increase during this period of time.
However, there are also some disadvantages in having this sort of fully-integrated operation. We have a large investment in people and machinery. Machines need maintenance and repair. People need to be paid a good living wage. This includes changes to their costs of living. Up until this point, Seagate has been absorbing these cost increases with higher production. However, we are now experiencing “the perfect storm’ of inflation. Everything is going up at an accelerated pace due to COVID, shortages, hoarding etc. etc. Our people still have to buy cars, pay for housing and food, and put their kids through school. We have never had to lay-off anyone in this company. Production costs for everything from packaging, spare parts, transportation of products, and rent for 3rd-party warehouses continue to climb. Most of these costs have increased over 10% so far this year, despite the federal government telling us otherwise.
Therefore, Seagate will be raising prices by 10% effective December 31st in order to cover this spiraling inflation. Should the inflation continue next year, pricing will be adjusted as required.