We’re putting the prices up on a few items

April 21, 2022

Well, we did say that we liked transparency.

But don’t fret, your Asphalte favourites aren’t budging. That means the same gravity-defying pricing for your Ultimate T-Shirt, Perfect Jumper, Ultimate Jeans and Solid Sneakers.

As you can imagine, we’d rather be sharing stories about how you can rely on our T-Shirts year after year, or how our Summer Shirt never looks out of place by the pool. But you know us, we’d rather give it to you straight. So here’s what’s going on.

HOW DID WE GET HERE?

A perfect storm composed of the rising price of raw materials, operating cost increases and geopolitics.

1- So first of all: the raw materials

Over the past year :
- price of cotton: + 45%
- price of Indian organic cotton: + 90%

There’s not much we can do about this, and one of the few things that we can’t do without is cotton. So why has the price of cotton shot off the chart?

- The old COVID chestnut again :

Basically, the textile industry was put on ice for about a year and when the clouds finally parted it gave way to a cotton buying frenzy. Unsurprisingly, cotton quickly became hard to come by and whatever you could get your hands on cost a fortune.

- Uyghur human rights abuses:

Many brands chose to boycott Chinese cotton and naturally turned to India for their supplies. At the same time, the whole industry seemingly woke up to the importance of using organic cotton, something that we’ve been championing all along. So, the supplies of organic Indian cotton we normally rely on became scarce and by now you probably know what that means for the price!

- Organic cotton scams:

GOTS is the leading global association that checks how cotton is produced and certifies whether it’s organic or not. Whilst all the other chaos was going on they realised that some producers were claiming that their cotton was organic when in fact it wasn’t.

So once again, this further reduced the amount of certified organic cotton on the market and before long economic forces did the rest.

2- Now onto the operating costs.

Our partners, the people that make our clothing, are mainly based in Italy and Portugal (79% in 2022). There are many reasons why this is relevant to pricing changes, here are a few:

- Wage increases in Portugal :
Great news, the people we work with do a great job and it’s much deserved. +6% between 2021 and 2022.

- Gas price hikes:
In Europe, gas prices have quadrupled over the last six months pushing all our energy bills up by 35%. We’ve all felt the impact in our homes, and we’ve also felt it in the factories that make our clothes.

- The war in Ukraine :
Economic sanctions against Russia have added further to the gas price crisis, as Italy and Portugal are both very reliant on Russian gas imports.

WHERE DOES THIS LEAVE ASPHALTE ?

Sitting neatly between raw materials and operating costs going through the roof, which is not an easy spot to be in. We’ve been trying to wait this out but the cold reality of unit economics means that if we don’t act now, however uncomfortable that makes us, we would be putting Asphalte’s existence at risk.

In other words, if we don’t increase our prices, our reduced margins wouldn’t allow us to make enough money to cover our operating costs as we would be selling at a loss.

SO WHAT ARE THE OPTIONS?

There are three scenarios that could allow us to avoid increasing the prices of every item we produce. Here they are:

1 - Further reduce our margins
Our existing margins are already half those of our competitors as we make quality clothes available for the lowest price possible. We ran the numbers and if we reduced these further we’d run Asphalte into a wall.

2 - Reduce our buying costs
This can only be achieved by cutting corners in production, compromising on the quality of the materials we use, increasing our environmental impact or exploiting the people who make our garments. All of these would fly in the face of what Asphalte is trying to achieve, this option can be quickly rejected.

3 - Price increases on selected items
Unfortunately, this is the only viable option as we see it.
We have managed to avoid blanket price increases and have instead opted to carefully manage these item by item and only when necessary.

This also means that we can hold the prices on the four most popular Asphalte items:

As usual, please share your thoughts with us on this. You can rest assured that if/when the costs we face go down so will the price of any item affected.

If you have any alternative ideas or miracle solutions drop us a comment below.

Thanks,

The Asphalte Team

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