German confectioners report grim prospects as EU sugar prices soar

07-Jun-2012 - Last updated on 08-Jun-2012 at 15:52 GMT

German confectioners are uneasy about their prospects in 2012 as EU sugar prices threaten financial results, according to a survey from German confectionery association BDSI.

BDSI’s Spring survey on the economic situation in 2012 asked 62 small, medium and large companies in the German confectionery sector how sales were developing in 2012 to give a general picture of the market.

Bleak picture

Two-thirds of companies said that sales had either declined or remained constant, while the final third reported growth.

Although many reported a stronger Easter season than 2011, almost half of survey participants said the overall business environment was less favourable compared to last year.

In figures released in the past week by BDSI, total confectionery production in 2011 was up 2.2%, while the value of the German confectionery market had remained constant at €12.6bn.

BDSI said that results had been put back into perspective following the first quarter of the year after raw material prices had put pressure on margins.

Sugar market complaints

A third of companies surveyed reported pressures from high raw material prices mainly due to the bargaining power of sugar traders.

Karsten Daum, assistant manager at BDSI told ConfectioneryNews.com that the biggest problem for the German confectionery industry was the EU sugar market.

BDSI has called on the EU to abolish sugar quotas by 2015 and demands a reduction of what it calls “extremely high trade barriers”.

In a position paper supported by BDSI, it said that there was a sugar shortage despite record crops as an “oligopolistic” EU sugar industry and import quotas had kept prices high.

It calls on the EU to switch to imports from supplying third countries in times when the world market price rockets and a sugar shortage occurs within the EU.

The European Commission has released an additional 250,000 tonnes of non-quota domestic sugar to combat rising prices following calls from industry bodies such as CAOBISCO.

Reforms on sugar quotas are expected in the EU’s update of its common agricultural policy (CAP), which is expected by the end of 2013.

Export boom

One positive for German confectioners was a booming export market. Around 40% of companies surveyed by BDSI reported sales and turnover increases in export markets.

The top five export markets for German confectioners are France, UK, Netherlands, Austria and Italy, respectively.