German confectionery companies experienced major first quarter market pressures, says BDSI
Trade visitors to this year's ISM event in Germany attended a number of key industry sessions. Pic: ISM
German confectionery manufacturing businesses remain under significant market pressure, with the country’s BDSI trade body revealing a third of medium-sized companies reported financial downturns in the first quarter of 2023, reports Neill Barston.
The key industry group described the first few months of this year for the segment as being characterised by ‘great economic and political uncertainties’ for more 200 companies operating with the country’s market.
Moreover, the BDSI noted that raw material and energy costs, which have risen sharply since the start of the Ukraine war, were continuing to have a particularly negative impact on the industry.
Indeed, it was concerns expressed within the sector that led to the delay of this year’s ISM event, until is eventual staging last month (see our ISM event conclusion video interview here), which demonstrated companies were determined to continue with latest innovations, despite market challenges.
However, according to findings from the BDSI, earnings for many confectionery companies in Germany were reported to have deteriorated within 31% of businesses, while 76% of the companies named the high inflation and the resulting reduced purchasing power within the country as the main reasons for the decline in sales of confectionery on its domestic market. Furthermore, a total of 39% name challenges in the supply chains and the resulting reduced production possibilities.
These are the most important results of the BDSI survey among its members on economic development in the first quarter of 2023.The biggest cost drivers from the point of view of the companies are increased costs for raw materials (95%), followed by rising energy costs (84%), personnel costs (79%) and logistics costs (56%). A total of 34% of the companies see the international competitiveness of their company at risk against the background of the current challenges. 67% see the attractiveness of Germany as a location weakened in the long term.
Political challenges also contribute to this. Different labeling regulations within the EU (88%), rising gas and electricity prices (86%), the requirements of the supply chain law (83%), the plastics discussion, in particular packaging changeover/packaging tax (83%) and the discussion about a switch to other energy sources (82%).
“The federal government must give top priority to consistently strengthening the domestic economy, because only then can jobs, investments and added value in Germany be secured in the long term,” says Bastian Fassin, Chairman of the BDSI. “Especially the small and medium-sized companies in the German confectionery industry are no longer able to cope with new regulatory requirements, especially in times of these enormous economic challenges.”