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Granarolo strategy against price increases, agreed with utilities on bills

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The rise in prices? It is not just an Italian phenomenon. Granarolo, a dairy giant of 1.28 billion euros and production plants in France, Germany, Great Britain and Brazil, is well aware of this. “In France, the price increases on widely consumed products such as Emmental, Gouda or sliced ​​mozzarella already reach 40-50%, and all European producers are already transferring the increase in costs to the price lists”, says Filippo Marchi , general manager of Granarolo. In some countries the impact of energy increases is lower than in Italy but the cost of raw materials, from the cost of milk to that of paper and plastic, is felt everywhere. «Managing the increase in costs only through the optimization of internal production processes is now impossible – admits Marchi – a part of the increases must necessarily be discharged downstream, on prices to consumers. We have already made price increases before January ».

In short, Granarolo joins the chorus of food entrepreneurs who are convinced that we cannot go on like this, and that we will end up producing at a loss. To demonstrate this, Marchi points out a fact, above all: in the Granarolo financial statements the costs are now equal to the EBITDA margin. «In the budget for 2022 – he says – we hypothesized an inflation derived from electricity and gas equal to 60% of the total cost of the energy bill. In short, an anti-expensive-energy treasure. But the situation has already worsened, and what we had already foreseen is not enough ». For Granarolo, the most disruptive increase in costs is therefore that of energy: «A year and a half ago – says Marchi – we covered ourselves with a fixed-price contract that guarantees 50% of our consumption for the whole of 2022. But a consistent slice of our needs remained out, and in the last six months we have not found anyone willing to apply this type of formula ». Thus, Granarolo is forced to make contracts from month to month: “We used to spend 24 euros / MWh, the offers for next month are between 70 and 75. Without forgetting that at Christmas the prices have reached over 160 euros. / MWh. We are disoriented to be in the hands of situations not managed by the government. At the moment there is no decree that says that in a month from 70 euros we will return to pay 50. The uncertainty is high ».

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For Italy, the energy dossier is particularly critical, but it is not the only source of costs that puts food producers in difficulty. «Inflation on raw materials ranges from 18 to 25% – says Marchi – starting with the price of milk: since world production is decreasing, its price has increased by 20-25% in Europe. In Italy, fortunately, the increase was lower and milk is now quoted at around 45 euros per quintal ». How is it possible then that the farmers have requested an urgent milk table that would guarantee them a remuneration of at least 41 cents per liter? “Who today has a long-term milk supply contract already pays it between 41 and 42 cents per liter – explains Marchi – then there is a weekly spot price of milk at 45 cents, and finally there are producers who make spot agreements. limiting, below average. The milk table is essential because there are some entrepreneurs who pay less and thus compete on price, even with us at Granarolo. But if we go on like this, with the increase in the cost of raw materials, the 41 cents reached with the agreement will not be enough for the farmers ».

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