Price war with US companies
There are gaps in confectionery shelves at Rewe
By Christina Lohner
May 3, 2024, 12:34 p.m
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In supermarkets, customers are once again feeling the consequences of price wars between retailers and manufacturers. This time it hits lovers of Milka chocolate and other sweets. Weather extremes are to blame.
There are currently gaps in the Rewe shelves for sweets and snacks, as the “Lebensmittel Zeitung” reports. Brands such as Milka, Oreo and Tuc in particular are becoming scarce. The reason is therefore a price war between the supermarket chain and the US food company Mondelez. He has apparently imposed a delivery stop because Rewe does not accept his price demands.
As a result, particularly popular products such as the 100 gram bar of the Milka Alpenmilch variety are in short supply in Rewe stores in different regions, as “Chip” reports, citing the trade journal. Retailers are annoyed by the price war. The companies themselves did not want to comment on the dispute.
According to the report, the sharp rise in cocoa prices is behind the dispute. Raw cocoa cost more than twice as much in February as in the same month last year and a fifth more than in January. “The reasons for this were weather-related crop failures and increasing demand,” explained the Federal Statistical Office at the beginning of April. Longer periods of drought, heavy rain, floods and plant diseases have recently led to significantly lower yields or even complete crop failures in cocoa-growing countries such as Ivory Coast and Ghana. When it comes to consumer goods, cocoa butter, cocoa fat and cocoa oil in particular had to be paid almost twice as much as in the same month last year.
Deceptive calm after a historic price war
Consumers therefore have to prepare for more expensive chocolate. Lindt announced at the beginning of March that the increased cocoa price would result in price increases this year and next. A spokesman for Ritter Sport explained two months ago: “A kilo of cocoa is almost three euros more expensive than it was a year ago. What this means for the production costs of a 100 gram chocolate bar, which contains between 35 and 70 percent cocoa, is anyone’s guess Everyone calculates for themselves.” The US confectionery manufacturer Hershey and the food giant Nestlé also did not rule out further price increases. The high food inflation had recently eased.
A year ago, the price war between food retailers and producers had reached a quasi-historical level: 17 companies no longer supplied Germany’s largest food retailer, Edeka. The industry has now largely calmed down. But it’s not just for confectionery that this won’t last long. “I suspect that the price wars will flare up again in the next round of negotiations,” said trading expert Stephan Rüschen ntv.de a month ago. “Because the development of energy and personnel costs is open.”
According to the professor of food retail at the Baden-Württemberg Cooperative State University, some of the recent price jumps in food were exaggerated. Rüschen estimates that five percentage points of the price increase since the start of the Ukraine war was unreasonable, as he calculated in an interview with ntv.de.
However, the expected increase in chocolate prices is probably less about this “greed inflation”. Niklas Höhne, founder of the New Climate Institute think tank, assumes that the rising cocoa prices will actually be passed on to consumers. “But you can never completely rule out the possibility that companies will add something extra because it just seems possible to increase prices,” Höhne told ntv.de.