“We see that money is not so loose anymore”
establishments
“We see that money is not so loose anymore”
A baker makes dough for pumpkin seed rolls at a Brandenburg bakery in the morning.
photo: Soren Stach / DPA
The bakery and butcher recovered relatively well from the Corona crisis. The economic consequences of the Ukraine war are now a cause for concern, and not just because of high energy prices.
Updated: 07/17/2022 06:37
Frankfurt/Main. Costs are rising and many consumers are turning to the euro twice in view of record-breaking inflation rates: Bakers and butchers are also feeling the effects.
“We see that money is no longer that easy,” says Daniel Schneider, general manager of the Central Association of German Bakers. “Consumers are currently holding back, especially when it comes to small luxuries like cake.” Butchers also report that customers buy slightly less and a little cheaper.
According to a survey conducted by the German Retail Association (HDE), more than a quarter of the population (27 percent) are now very afraid of not getting money. As a result, the buying behavior of many consumers has changed significantly in recent months. “Rising inflation is reducing customers’ purchasing power in a big way,” said HDE CEO Stephen Genth recently.
Flour up to 70 percent costlier
At the same time, booming energy prices and other increased costs are burdening the two major branches of the German food trade. According to Schneider’s report, flour has become up to 70 percent more expensive in some cases. Overall, production costs have increased by an average of 30 percent compared to the pre-war period of the Russian invasion of Ukraine. “At present it is calculated with a very sharp pen. Due to the diminishing purchasing power of the consumers, bakeries cannot pass on the rise in prices entirely to the customers.”
The gas crisis caused by the Ukraine war has further burdened many companies. It is estimated that more than half of the ovens in bakeries run on gas. “Switching to electricity means significant additional costs, but can keep the system running in the event of a gas shortage,” says Schneider.
black eye in corona pandemic
Is the bakery dying now? Schneider doesn’t think so. Many companies that operate cafes and have suffered losses due to previous corona restrictions have little financial buffer. “However, many companies are well positioned and will also master the current energy crisis,” he is confident.
According to him, the bakery business “came out of the corona crisis with black eyes, that too thanks to the state’s assistance”. Total sales rose slightly to 14.89 billion euros last year after 14.45 billion in 2020. In the pre-crisis year of 2019, however, it was still 15.22 billion euros.
Butchers also report that customers buy slightly less and a little cheaper. “Although our business is strongly characterized by regular customers, we do not feel any migration to the discounter,” says Reinhard von Stautz, from the management of the German Butchers Association. According to him, butcher shop operation is particularly energy-intensive due to the large cooling and heating systems.
It is estimated that on average about two thirds of electricity is used, one third is gas and oil. “The whole range of increased costs has reached us now, from higher prices for spices, for example, to energy,” Stoutz says. This has to be included in the enumeration of companies.
Food was particularly affected
Last year, total sales in the butcher’s trade fell to 17.06 billion euros from 17.57 billion a year earlier. However, given the continued decline in the number of operations, it remained about the same per butcher shop.
Catering in particular had to face the cancellation of festivals and events due to the pandemic. After the end of the Corona restrictions, this business again gained momentum. Problem: There is a shortage of workers. “The catering is very personnel-intensive, so there are some problems at the moment.” Stautz expects the shortage of skilled workers to worsen, “it’s already headed for the first branch closure”.
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