Beekeeping Boom/Bust Cycles

General Discussion of Diary Posts and Questions on Beekeeping Matters
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Countryboy
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 30th, 2016, 1:23 pm

Mann Lake had their Black Friday sale that is past weekend.

On Monday, they announced they were extending the Black Friday sale an additional 2 days. (weak sales?)

I placed an order Thursday or Friday. When I ordered, they had a message that said to expect 4-5 days before orders were shipped due to high volumes of orders.

My order was delivered today.

Are they on the ball getting orders shipped fast, or are sales weak and not shipping as much, so they are able to get stuff out faster?

Are bigger beekeepers not buying as much due to low honey prices? (I'm assuming big beekeepers like saving 11% on items as much as hobbyists do.)
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 30th, 2016, 6:18 pm

I have now received 17 emails from Mann Lake from Nov 24 through today for the Black Friday Sale. (including 3 emails today telling me it is my last chance to save)

You would think that after a person just put in a $2000 order, they would stop harassing me with emails about the sale.
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Re: Beekeeping Boom/Bust Cycles

Unread post by BadBeeKeeper » December 1st, 2016, 6:42 am

Yeah, they do get a little excessive. I kind of started ignoring the machine that checks the account those go to, when it goes 'ding'.

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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 14th, 2018, 4:31 pm

The Australian guys with the FlowHive contracted with a company in Oregon to build woodenware for them. That company borrowed about a half million dollars to expand in anticipation of the flood of FlowHive orders. (which never materialized.) Needless to say, that company went bankrupt a few months back.

Brushy Mountain has just went out of business. They were a decent sized bee supply business from what I understand, although not on the scale of Mann Lake. (I don't know how they compared to Dadant or Kelley.) I never bought anything from Brushy Mountain. I believe their products were always a little pricier, and sometimes focusing on gadgets for the novelty hobbyist crowd.

Are we seeing hobbyists step back from beekeeping? These are normally the beekeepers who get into beekeeping because it feels good, and they are not so worried about profitability.

I sell honey at a gift shop store in the Easton shopping center in Columbus. They only sell Ohio made products. Easton is a higher priced shopping destination for the affluent urban crowd. My honey sales there this year are about 60% of what they were a couple years ago.

I only did one farmers market this year, at an affluent farmers market in Columbus. My honey sales have remained fairly consistent there with years past.

Are we finally seeing a retraction in the hobbyist side of beekeeping?
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick » November 14th, 2018, 7:29 pm

Surprised that Brushy Mountain went down. Just the same, the business is cyclical and I have seen this before.

I hired some guys to build boxes since I had built up with whatever cheap stuff |i could find and nothing matched. They extrapolated my order over the entire Alberta industry, got one guy's dad to invest his retirement, built a beehive factory and wanted my order. They were not even doing a quality job for me and I was a captive buyer, paying them wages up that point and they had no orders beyond mine.

I warned them that beekeepers are cheap, cheap, cheap and if the business was viable, I'd have been in it and not bees. But they did not believe me.

Needless to say, the poor dad lost his retirement money and was still working a decade later -- as a financial adviser, believe it or not.

They hired me to sell off the assets.
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Countryboy
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 14th, 2018, 8:34 pm

I've heard that if you want a successful business today, it doesn't matter so much what your product or service is. The most important factor that determines if your business is a success or a failure is the management decisions.

I heard Brushy Mountain got bought out by a private equity company in 2014. Sometimes that goes good, and sometimes they just try to pull what money they can out of a business and put it into other businesses, and then bankrupt the business they stripped.

There are a ton of people trying to get into selling bee supplies now too. It may have been that we hit a point of oversupply.
Needless to say, the poor dad lost his retirement money and was still working a decade later -- as a financial adviser, believe it or not.
It makes you wonder if he disclosed his personal history to his clients. I'm sure he was a big advocate of telling them that past performance was not a guarantee of future performance.
They hired me to sell off the assets.
Did you buy the equipment and show them how to run the business profitably? LOL
You have to buy out someone who went bankrupt so you can get stuff for pennies on the dollar...
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick » November 15th, 2018, 7:22 am

No. I did not want to make any more boxes. I just sold it for them.

The buyer made out okay. The the rule is that you don't make your money selling; you make it buying.

If you paid too much in the first place it is hard to ever recover from that mistake at the time of sale.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 15th, 2018, 10:41 am

the rule is that you don't make your money selling; you make it buying.

If you paid too much in the first place it is hard to ever recover from that mistake at the time of sale.
I think that depends. Sometimes, stuff pays for itself while you have it. At the time of the sale, you have already made your money on it, and what you get out of it is less important.

And it depends on what you're buying. I was also taught that when buying things like land, if you want it, you just pay what they want, even if it is more than you want to pay. You won't regret buying it if you wanted it, and you will always regret it if you don't buy it. Also with land, you may never have another opportunity to buy that land again.

There's another saying too, which aligns to your rule of making money when you buy something. Something bought right is already half sold.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick » November 15th, 2018, 10:46 am

I don't think that we're in disagreement.

There are plenty of good reasons for paying too much but the chances of making a capital gain at time of sale diminish as the purchase price increases.

Of course not all things are bought for resale.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 15th, 2018, 2:03 pm

I agree. There is a big difference in buying something with intentions of reselling it later, and buying something to use. You can afford to pay a little more for something you are going to use.
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 16th, 2018, 6:52 am

From what I understand, the management of Mann Lake was bought out by a private equity company, Grey Mountain Partners a few months ago. I do not know how this impacts the employee owned shares of Mann Lake. (The guy who founded Mann Lake died not too long ago.)

News is just coming out that Mann Lake and Grey Mountain have just bought out Kelley Bees.
https://www.businesswire.com/news/home/ ... jgyhHPBxXQ

Will Dadant get swallowed up next?

If Grey Mountain bought in at the market peak, and now we are seeing bee equipment suppliers going under or selling out (due to declining hobbyist demand?) how long will Grey Mountain want to stay in the game? Will they do their best to strip Mann Lake of assets and bankrupt the rest?
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Re: Beekeeping Boom/Bust Cycles

Unread post by Countryboy » November 16th, 2018, 7:05 am

I just checked Kelley Bees website.

To better serve our customers, in late 2016, we opened our brand-new, 82,000 square-foot facility, which houses a large warehouse, offices, our woodworking department, a brand new retail store and honey house.
https://www.kelleybees.com/who-we-are.html

I wonder how much the sale to Mann Lake was influenced by the bank payments they had to make on this new 2 acre building? I'm not sure how much time elapsed between when they got a loan approved and time for construction before the building was ready to open in late 2016. It easily could have been back in 2012 or 2013 when they got financing. (assuming they got financing, rather than paying out of pocket.) Market conditions can change a lot in 5 years.

This may very well have been a short sale, with Mann Lake picking up assets for pennies on the dollar. (and might explain why Mann Lake purchased Kelley, but not Brushy Mountain.)
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Re: Beekeeping Boom/Bust Cycles

Unread post by Allen Dick » November 16th, 2018, 9:13 am

Interesting perspective. In my opinion, beekeeping been in a bit of a bubble due to the flurry of media articles about CCD.

As with anything like this the buzz eventually wears off. We see overexpansion and then we see the contraction that follows.

People never learn.
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