Aldi and Lidl pressure German chocolate firms to seek profits overseas

16-Jul-2013 - Last updated on 17-Jul-2013 at 09:58 GMT

German chocolatiers turn to exports amid private label competition

Pressure from discount retailers is compelling the German chocolate industry to explore export markets, according to the domestic confectionery association BDSI.

Torben Erbrath, managing director of the BDSI, told ConfectioneryNews that chocolate in Germany had become the cheapest in Europe due to discount retailers Aldi and Lidl.

“Their strength is growing. That’s why our companies are searching the export market.”

In 2012, Germany exported 40% of its chocolate production. Exports grew 2.2% compared to the prior year to 494.900 metric tons, representing a value of €2.4bn.

Exports are mainly to EU countries, but are growing quickly outside of Europe.

The UK is Germany’s largest export market for chocolate, but exports soared 30% in Russia and in the US, Germany’s largest market for chocolate exports outside Europe, exports grew 8%.

Cocoa grind: Poor indicator of domestic demand

While the export market thrives, the domestic landscape is somewhat steadier.

The cocoa grind in Germany, an indicator of domestic chocolate demand, fell 11% in the second quarter as grinds picked up 6% in Europe, figures released on Monday showed.

Erbrath said that Fuch & Hoffman had stopped reporting cocoa grind data in Q3 last year, making prior year comparisons almost impossible.

“The demand is still there in the German market. The domestic market is stable., but It’s a very competitive market,” he Erbrath, owing to competition from private label discounters.

Fuel station times harm impulse buys

An analyst from Euromonitor had suggested that obesity was a growing concern in Germany causing consumers to swap confectionery for ‘healthier’ snack bars. However, Erbrath said this was not a real threat to the industry.

“One thing that has changed is that we have a lot less impulse confectionery.”

Around five years ago fuel stations in Germany were only open until 7pm, but most in urban areas are now serving customers 24 hours a day with the exception of Sunday.

Erbrath said that confectionery sales at fuel stations were poorer than in supermarkets and with consumers enjoying the convenience of 24 hour fuel stations closer to their homes, impulse confectionery sales were suffering.

BDSI welcomes sugar quota compromise

One positive for the domestic market has been the compromise by European institutions to end sugar quotas in the EU by 2017 in Common Agricultural Policy (CAP) reforms.

BDSI had hoped quotas, which had put severe pressure on sugar confectioners, would end by 2015, but welcomed the compromise.