Shouldn't there be a glut of cartridges?

[Cosmicblue]

being a complete ignorant dinosaur on anything business, would it not be that two separate manufactures buy the exact same stuff roughly at the same sort of market value prices and produce similar products would have similar prices? put two firms in different countries and i would expect to see differences but two in the uk would be equally priced.

Kind of.....

Truthfully, whilst the raw material costs are known the selling price is largely determined by what the market will stand.  Those of us shooting budget cartridges like Jockers are unwilling to pay, say, Eley VIP prices, there will be a negligible difference in material costs however the Eley VIP customer sees greater perceived value and therefore the manufacturer can extract a greater profit from the sale.

In effect those people paying for premium priced cartridges are very likely subsidising the bottom end of the market. 

 

[Lloyd]

Take a look at the cartridge business for a moment from the information that can be readily found by an industry outsider within just a few minutes of google searching.
First of all, take the CoGS (Cost of goods sold) in other words, the cost of the materials.

1/ Lead. 2/ Case. 3/ “Brass” (or rather plated steel). 4/ Primer. 5/ Wad. 6/ Powder.

So, where can we source these components? 

Case, Brass, Wad, Powder, Primer from; Fiocchi, Cheddite, Maxam (Eley Parent company), Nobel Sport (Vectan)

Lead: Gamebore, Federal

Dont forget the cardboard box. I never cease to be amazed at the ridiculous cost of packaging.

With the exception of lead, these components are dirt, dirt, dirt, cheap and collectively account for way less than the lead.

Lead is currently priced at approximately $1.90 per kilo. Lead reached a five year low in May at the height of the covid pandemic of around $1.57 and reached a five year high of $2.62 in January/February 2018 from a previous low of $1.67 in May 2016. That’s a 60% swing!

So, on top of this we add repayments on capital equipment. I’ve no idea what this would cost, but £50k per machine would not be unreasonable. £100k wouldn’t be a shock and £200k hardly a surprise either. Add in supporting infrastructure of converts, forklifts, warehousing, building and maintenance, vehicles, office equipment... I wouldn’t like to guess and I can’t be ars... bothered to research it, but let’s just say... it’s a lot of money.

Then we add wages. Say for the CEO £1/4M? Maybe £1/2M? Plus bonuses taking it to  maybe £1M... this for someone who probably risked everything they had at one point to get the company to where it is. Or maybe they inherited the business or are a paid director with no shareholding. Anyway... then there are the senior management salaries, say £60k to £120k, not unreasonable. Then add in the rest of the staff at something like £30k to £40k a piece. 
Almost forget the inevitable money pit that is the marketing function, where nothing is ever really proved to work. Reminds me of that saying... “I know only half my marketing budget is working. The problem is I don’t know which half” (This is where people like @Cosmicblue come in handy)

Then depreciation has to be accounted for of course the taxes and insurances.

So you end up with a few quid left over for some dividends if you’re lucky.

So, you now need to stop this monstrously volatile business from claiming your £3M home and Bentley, so you hit on the bright idea to “innovate “

Ok... so it’s a plastic tube, with some other plastic bits in and a nibble of steel at one end.... the exact same as all your competitors. So what to do? Bit on Antimony? Hmm, so are everybody else. How about a copper coating? Meh. Oh, I got it. Let’s plate the steel with nickel eh? Pffft! Ok... looks like we’re fu... fumbling around for ideas here.

let's just market this sh...shells to folks like Lloyd who’ll swallow the Gordon recoil system makes it smoother and get another 5p per cartridge.

I tell ye... this would be a business of no interest to me unless I was an experienced and very savvy commodities trader

EDIT: Btw, forget the £1M salary for the CEO on a business with less than £10M turnover. £100M it would be doable, even £50M, or £25M if it were a big net margin Business, which this is not!

 

[El Spavo]

You think too much!

 

[Aris]

So, there can't be many people doing any shooting in the U.K. right now.

have the manufacturers stopped producing, or is there a huge stockpile of cartridges fitting in warehouses?

 

[ColinD]

Probably both

 

[Martinj]

I imagine that their warehouses are full and that they have ceased production, Mr. Gamebore et al are probably sweating over having all their cash tied up in stock.

 

[perazman]

I'd imagine the manufacturers biggest worry is the stockpile of game loads they'll be sitting on. Dearer to make (more lead) and much more margin on them.

They're stuck with them until orders come in next autumn.

Not that I will lose any sleep over it!

PM.

 

[schmokinn]

"Well, I would disagree with regard to Apple - their products are superior to anyone else." 

it took me at least 5 minutes to stop laughing at this.

i am sure you buy the most expensive shells because they make you shoot better

 

[Aris]

"Well, I would disagree with regard to Apple - their products are superior to anyone else." 

it took me at least 5 minutes to stop laughing at this.

i am sure you buy the most expensive shells because they make you shoot better

Plenty of non-apple phones just as expensive.  And even if Apple products were cheaper - they would still be superior.

 

[mpmilo]

Just seen, Cartridges going up 7 -12%  from 22 Feb according to Just Cartridges .

 

[Aris]

Just seen, Cartridges going up 7 -12%  from 22 Feb according to Just Cartridges .

Ha - on what grounds?  Lost profit?  Price of lead is less than it was in 2019.  I'm curious as to how all cartridge manufacturers (if this is indeed the case) can raise their prices of a similar amount and at the same time.  Cartel?

 

[mpmilo]

Current climate and brexit seem to be to blame according to JC.

 

[Aris]

Current climate and brexit seem to be to blame according to JC.

Convenient.  If anything, prices should be going down due to brexit.  I'm open to correction here - but ff there are imported components, they'd be paying the UK vat rate of 20% instead of the typically higher rate from whichever EU country we are importing from.  In other words the EU exporter would export exclusive of VAT (outside EU) and the UK VAT rate would be applied here.  There should be no duties if the product was manufactured in the EU.  If it was manufactured outside the EU and sold on via the EU - then there are duties to pay.  Again - I may be mistaken in my interpretation here.

Perhaps some enterprising person will start manufacturing all the components in the UK.

 

[El Spavo]

Just seen, Cartridges going up 7 -12%  from 22 Feb according to Just Cartridges .

Just cartridges aren't always cheap in the first place. Always gotten mine from local independent shops for less than they charge once you've bought less than 10,000 plus shipping. 

 

[Aris]

Sounds like a classic sales tactic- though in a true competitive market, it shouldn’t work.

 

[Garwood]

Depends on J C financial position I suppose,if you`re sat on a massive debt fed stock of cartridges you would want to sell off cheap to realise some cash but if not and they can afford to sit it out selling what must be very low volumes for a higher price may keep them going...not much of an inducement for anyone to buy if they don`t really need to tho`!!!!

 

[FESkent]

Convenient.  If anything, prices should be going down due to brexit.  I'm open to correction here - but ff there are imported components, they'd be paying the UK vat rate of 20% instead of the typically higher rate from whichever EU country we are importing from.  In other words the EU exporter would export exclusive of VAT (outside EU) and the UK VAT rate would be applied here.  There should be no duties if the product was manufactured in the EU.  If it was manufactured outside the EU and sold on via the EU - then there are duties to pay.  Again - I may be mistaken in my interpretation here.

Perhaps some enterprising person will start manufacturing all the components in the UK.

The U.K. cartridge manufacture are U.K. vat registered so they would have sent details of their U.K. vat registration to the EU component manufacture and then no vat would apply.  So they would not have been paying EU higher rate vat.
The U.K. vat would be added at the time the cartridge manufacture sells the cartridges to U.K. retailers. 
However new vat rules apply since 1st January but the end result is the same. 

Sadly your last paragraph is very much easier said than done.

 

[Will Hewland]

If prices go up immediately, then that’s the absolute proof that it’s all profiteering (or a blatant move to recover lost profit) as for the next few months we will be buying cartridges that are in stock and were made last year. 

 

[FESkent]

If prices go up immediately, then that’s the absolute proof that it’s all profiteering (or a blatant move to recover lost profit) as for the next few months we will be buying cartridges that are in stock and were made last year. 

Nice idea however that only works if the shop is closing down after selling them, but not if they want to restock them as the new price will then have to be paid by the shop, which if the cartridges go up 10% and the shop makes 5% means the shop now has sold at a loss or zero profit and now needs to find the extra money to replace the stock.

does a petrol station wait until they have sold all the petrol they have in stock before any price increase? No.

 

[Aris]

Funny, I didn't notice JC's prices go up as promised