Upsurge in costs threatens German confectionery companies

By Anthony Myers

- Last updated on GMT

Germany's medium-sized confectionery companies are feeling the pressure most. Pic: ISM
Germany's medium-sized confectionery companies are feeling the pressure most. Pic: ISM

Related tags BDSI Confectionery

Unprecedented price hikes in energy, agricultural raw materials, packaging, along with transport/logistics, are hitting Germany’s predominantly medium-sized confectionery manufacturers.

The Federal Association of the German Confectionery Industry (BDSI) said the crisis is becoming so acute that it threatens the very existence of some companies.

Compared to the same month last year (August 2021), the prices for electricity and gas on the exchange have increased tenfold. The procurement prices of companies for vegetable oils and fats, for butter, sugar or glucose have more than doubled. The prices of other domestic raw materials have also risen sharply, for example, whole milk powder (+59%) or wheat (+36%). In addition, there are availability problems, which complicate the upcoming production planning, the BDSI said in a statement.

Due to the explosion in costs, companies are being deprived of the liquidity and earnings that are indispensable for securing jobs and making the necessary investments. Therefore, politicians must take all measures to relieve the markets for energy and agricultural commodities and actively reduce costs​," said Bastian Fassin, Chairman of BDSI).

"We very much welcome the fact that the federal government has also taken on the question of energy costs for companies in the third relief package​."

Relief measures

From the point of view of the industry, it is now necessary the announced measures actually lead to relief for companies, not just for the energy-intensive ones, the BDSI explained.

The federal government must not only refer to Brussels. A first step at national level can be taken, for example, by a significant reduction in the state price components for electricity and gas and the abolition of price coupling, as well as at the European level by lowering import duties on raw materials for which a shortage is foreseeable in the European Union​.” Fassin said.

Germany’s confectionery companies are also struggling to cope with price increases in logistics, cell-based raw materials and plastic raw materials.

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