Germany’s BDSI welcomes modest confectionery sales rise, despite ongoing major market challenges
Chemnitz, Germany - 16-10-2021: Entrance of the Hussel Confiserie, shop, supplier of sweets in Germany. Store of chocolate, truffles and pastries.
Germany’s sweets association, the BDSI, has welcomed a modest rise of 2.2% in overall national sales, and 1.1% uplift in production volumes, yet raises key concerns over increased raw materials, logistics and energy costs, reports Neill Barston.
According to the organisation, these additional market factors added to the already notable impacts of Covid-19 on the industry, which has resulted in renewed challenges for core retailing sectors as virus cases hit record level last week to 140,000 cases per day, with the peak not anticipated well into February, impacting on trading conditions.
As the BDSI noted, more than 200 industry producers has warned that they now face a ‘dramatic increase’ in operating costs, already hit by the pandemic, with its latest industry results achieved despite an uncertain economic climate.
Despite challenges posed by these combined factors, the ISM and ProSweets events beginning in Cologne at the weekend are still on track to be delivered under ‘3G’ rule of requiring covid vaccinations for entrance alongside increased hygiene measures, which is anticipated to offer a further boost to the sector as it seeks to recover from the pandemic.
“The market for important raw materials has been emptied, long-standing supply chains No longer work. This may also have consequences for the upcoming Easter sales, in terms of the ability to produce popular items like chocolate bunnies because the raw materials, packaging materials or freight capacities are not sufficiently available”, explains dr. Carsten Bernoth, General Manager of the BDSI.
“Manufacturers have, in particular felt, significant price increases and sometimes delivery problems when purchasing important agricultural commodities such as wheat, soybeans and sugar also with packaging materials.”
The price of wheat on the commodity futures market climbed by 50% within a year a new all-time high. The costs of milk powder, sugar, sunflower oil and soybean oil have also risen sharply. These movements were caused under among other things due to lower crop yields, lower imports from third countries, but also an increase in demand in Asia.
Furthermore, the cost of procuring packaging materials has also increased substantially, as well as in energy and logistics costs, with electricity prices for industrial customers also doubling within a year.
As the BDSI noted, there are major logistics issues facing the sector, with pressure on capacity for road, rail as well as container ships for transporting products around the world. This was reflected in freight prices rising from December 2020 from around $2,000 for a standard 40ft container from Shanghai to Rotterdam, they had rocketed to around $10,000 a year later.
“The limit has been reached. Politics is now required, in particular to assist medium-sized companies from further costs. Otherwise, in the medium term, there is a risk of losing the previously medium-sized economic structure in Germany that has proven to be robust,” added Bernoth of the situation.
Wider market challenges
Concern is also growing among manufacturers of sweets and snacks personnel bottlenecks in production, due to the rapidly spreading Omicron Covid variant, there is a risk of increasing sick leave and quarantine failures. In individual cases there are already temporary delivery issues due to corona outbreaks.
“In our industry, manufacturers and their employees make every organisational and financial effort to during
to remain able to deliver during the crisis”, added Bernoth.
As he adds, the confectionery industry is important in all regions of Germany as a stable employer making an important contribution, especially in rural areas. The country’s confectionery industry represented the fourth largest sector in the food industry in 2021, numbering around 50,000 employees.
One of the central challenges for almost all companies is in terms of recruitment of skilled workers, especially in production, but also in the
fields of logistics and sales. Also, looking for seasonal workers has been notably increasingly difficult for many companies amid a shortage of skilled workers for the sector.