Energy spending nearly triples as German bakeries face existential crisis

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German bakeries face existential crisis as energy spending nearly triples

Affected by soaring energy and raw material prices, German bakeries have come up with all kinds of ways to make ends meet, but operators still worry that if the environment does not change, the industry will face an existential crisis.

For some time, due to factors such as the escalation of the conflict between Russia and Ukraine, energy prices in Europe, especially Germany, have soared. According to a report on the 25th, bakeries are one of the businesses most severely hit by rising energy prices in Germany. Compared to 2020, German bakeries are now spending nearly three times more on energy.

A bakery in Cologne, Germany

“Bakery shops have ovens. 70 percent of artisan bakeries use gas ovens, and gas prices are soaring,” said Friedmann Berger, one of the principal heads of the German Bakers’ Federation.

In addition, the prices of the two main ingredients for baking, flour and cooking oil, are also skyrocketing. The price of wheat in Germany is now about 2.5 times more expensive than before the escalation of the Russian-Ukrainian conflict, and the price of edible oil per liter has also risen from 0.82 euros to more than 3 euros.

Tobias Exner runs a sizable bakery business with 220 employees, a chain of 36 bakeries in and around Berlin, and a larger bakery in the small town of Belitz factory. Exner is more likely to survive the crisis than other small bakeries, but he’s also struggling. In response to soaring costs, he installed energy-efficient ovens, shortened bakery hours, and considered lowering the bake setting temperature.

In Exner’s view, none of these efforts can fundamentally solve the existential crisis faced by bakers. If “the operating environment does not change, a large part of German bakeries will sooner or later cease to exist”.

However, Exner is not passing on the cost increase to consumers like some of its peers, because it is worried about the loss of customers due to the increase in bread prices.

In central Berlin, the response from consumers appeared to confirm Exner’s concerns. Asked if she planned to pay more for her favourite bread, Gloria Thomas, a 56-year-old unemployed woman, said: “Any increase? No. It’s getting ridiculously high now. .”

Germany is a big consumer of bread. According to Reuters data, Germans spend about 15 billion euros a year on bread. However, many bakeries in Germany are now closed due to soaring costs. Bakery operators have called on the government to provide emergency assistance. At the beginning of September, about 800 bakeries opened for a day in the dark, in an attempt to draw attention to the difficulties of bakery operations.

The Federation of German Bakers has called on the government to provide “quick, non-bureaucratic” financial aid. Bakeries can cut costs, but operators “can only do so much,” according to Berg. If the government cannot get help as soon as possible, the business “prospects are bleak” and “there may be many stores that have to give up their operations or simply file for bankruptcy.”

Responsible editor: Wang Meng