The Breakfast of Champions

We are going to be making difficult decisions on slow selling SKUs in the coming year, unfortunately. This is not limited to nobiletin power. We have over 600 SKUs right now, which is insane for a company our size. The slow selling SKUs bog our entire production system down and take up room on our shelves; which is becoming scarce. We have plans for a bunch of really cool new products in the coming year, but we have to be realistic with our slow sellers. I have held my team off for a long time on many of them, but reality is reality. If we are selling less than 20 units of something a month, the market is just telling us they don't want that product. We have over 1,000 ingredients. Just think of the overhead and costs that go into that. Each ingredient goes through at least 4-5 analytical tests every single batch, with more testing being done for stability on them over the years. If something sells less than 20 units a month, we are losing money on that product. This means that the top of our catalog is subsidizing the bottom. This means we have less flexibility on price for our good sellers, and less capital to deploy for R&D, new product development, and lab expansions. We are at a pretty critical scaling juncture of our operation where market realities are going to have to dictate some decisions. That market reality is unfortunately showing us that most consumers are not interested in buying powders of more esoteric things.

On the nobiletin powder front, we always have some units held back. The way our inventory system works, or actually the way Bigcommerce works with inventory, is imperfect. It means that if you don't build in a buffer, and constantly manually update counts, you can oversell. This means we always have more units on the shelf than are on the site. However, we have to wait for orders to go out and things to normalize before we update cycle counts. What likely happened with you is that we went out of stock on the site, but still had some units held back as buffer. Then our team cycle counted them, and put some units back up on the site after that count. The bad news is that there is no world where we continue to stock nobiletin in powder form. It is one of our slowest sellers, and it is not sustainable to continue. Capsules are selling fine, so those will stay. However, the powders will go.

The increased costs from tariffs and the Iran war are strangling the economy right now. What many people don't realize is that these costs are not born in isolation. Sure, an individual tariff on a raw material going up makes that raw material cost go up. However, what you don't realize is the knock-on effects for all the other inputs. Across the board tariffs for every country mean input costs go up across the board, which compound on themselves. Even if something is made here in the US, it likely has multiple imported inputs that are getting tariffed. In addition, the falling USD value means that our currency buys less than it did before, so the actual pre-import costs go up as well. So you have increased costs from falling USD values, with tariffs added on top of those increased costs, then the margins for the company importing go on top of that. Remember, profit margins are percentages of cost, not fixed dollar amounts. This means each increase in raw material cost, whether through an increase in cost from the supplier, lowering of the USD value, increased tariffs, or all the above, results in the total dollar amount of the markup going up as well. That's to say nothing of entrenched entities in the supply chain taking advantage of the supply crunch to increase their profits. So things were looking really really bad till recently. Now with the Iran war? We are literally headed for one of the biggest economic crashes in modern history. 40% of the Middle Eastern energy infrastructure has been taken out already. That is going to take years to recover from. This means that even if we stop everything right this moment, and open back up the straights of Hormuz, the increased costs on oil and natural gas will stay around for a while. Every increase in oil means an increase in price along the supply chain. The biggest and quickest to move is shipping and freight. Getting the thousands of ingredients we use in from all over the world requires a lot of shipping. Some things we have to air ship as well, because we need to ensure they stay stable in transit, and sea shipping is not controlled enough to do that. Air shipping is also needed for ingredients that don't sell well, as we can't fill up 40ft shipping containers full of the raw materials. This means oil prices going up have an immediate and direct effect on raw material costs. Oil prices have doubled, which means bad things are on the horizon for the entire supply chain. That's to say nothing of the total breakdowns of supply in certain things, like saffron.

90% of the world's saffron is grown in Iran. Because of this war, most shipping carriers have ceased service to not just Iran, but the neighboring countries as well. This means one of the biggest supply shocks in history for saffron is happening as we speak. Our saffron is not grown in Iran. It's grown in Spain. However, that doesn't really matter in a global economy. When everyone else that was buying from Iran has to shift elsewhere, the existing supply chains in those other areas can't keep up, so they raise prices. Our partner in Spain is about to raise the price on us 78%... They even raised the price of production batches that we had already sent POs for that were in transit to us. This means that saffron prices are going to blow up soon. That's just one ingredient, and the one that is reacting the quickest. What is going on right now is going to affect A LOT of ingredients soon. Just like with COVID, where we saw the writing on the wall early and took efforts to stock up to try and weather the storm to prevent too many price increases, we have been doing that here as well. However, we cannot do that for all 600 SKUs. We have to concentrate on the products that are actually moving, because we have to prepare for hard times again. That's exactly what we are doing. We are preparing for another COVID style supply chain breakdown that is going to rock the world economy very soon. This also unfortunately means we have to accelerate difficult decisions with our offerings.

As for the InfiniFiber sales, it's probably multi-fold. For one, fiber is something most people at least somewhat understand. It's not a brand new novel nootropic plant that some average consumers would find scary. It's something everyone has been told for a long time they need more of, so it being more approachable means a broader customer base interested in it. Also, InfiniFiber is genuinely the most well-thought-out and advanced fiber supplement on the market. We not only made something extremely novel, but the way we looked at fiber as a whole was novel. I think many people are recognizing that. For sure our efforts to market and explain that difference is part of that, so our nice landing page that walks consumers through InfiniFiber is playing a role. However, that only works if the product and the information are actually interesting. Not to toot our own horns, but I think we made fiber interesting in a way many people just hadn't thought about before. I think most people just thought fiber was fiber. However, you can see it is much more complex than that, and nobody had really explained that well to people beforehand. Also, the recent high profile deaths from colon/rectal cancer, like James Van Der Beek, have made a lot of people realize they need to take this shit seriously. I know it did with me, which is why we developed InfiniFiber to begin with. James Van Der Beek is only the most recent high profile death. I've been watching it happen for a couple years, which lit a fire under my ass to take my own fiber intake seriously. So I think it is the perfect storm of events all coming together. I also think that most people here recognize that we do things very differently. I think everyone is starting to realize that fiber is the next big thing in supplements, and many brands are going to start jumping on that hype train. However, I think it is very apparent to everyone that we get into things for the right reasons, and we build things that are actually novel and interesting, not just bring out a supplement to profit off a hype cycle. We literally developed InfiniFiber to be the best fiber supplement on the market because I wanted to take it. Even if it didn't sell well for us, we still would have made it this way, because I needed a good fiber supplement. That is not just rare in this industry. It's unheard of. I think more and more people are starting to realize just who we are and what we do, which is great!