Germans Love Their Bread The Most

As the pandemic and its restrictions are more and more a distant memory, so are the habits that it brought into people’s lives. In Germany, the bakery market is on the rise after the pandemic slump, and bread is its rising star.

One of the largest bakery markets in Europe, Germany is facing the same challenges as other European countries. The post-pandemic, war-in-Europe world has brought on historic inflation, supply chain problems, workforce shortages, energy price increases and long lasting changes in lifestyle.

The market analysts at Euromonitor International took all these changes into consideration when they looked at the forces influencing the market in the present and in the future. Their report offers an insight into what manufacturers and producers should take into account when developing marketing strategies and new product developments.

Highlights

• Retail value sales rise by 13% in current terms in 2023 to EUR20.2bn
• Bread is the best performing category in 2023, with retail value sales growing by 15% in current terms to EUR12.9bn

According to Euromonitor International, high ingredient and energy prices have had a significant impact on the production costs of baked goods in Germany. The German baking industry has been facing mounting challenges due to rising expenses. Ingredients such as flour, sugar, butter or eggs are vital components in the production of baked goods and fluctuations in their prices directly affect profit margins. Global factors, including climate change-related crop yield variations and supply chain disruptions, have led to increased costs for these essential ingredients in 2022 and 2023. In addition, energy prices play a crucial role in the baking industry. The energy-intensive nature of baking makes it highly vulnerable to fluctuations in energy costs, especially gas. These soaring costs ultimately translate into higher prices for consumers to some extent, affecting their purchasing decisions. To remain competitive, German baked goods producers must consider adopting more energy-efficient technologies and explore alternative ingredient sources over the coming years.

In-store bakeries available in supermarkets and discounters

In 2023, in-store bakeries, a prominent feature of German supermarkets and discounters, were continuing to gain popularity, since they are often a compromise between traditional, independent bakeries and packaged bread from the supermarket. This growing trend is a continuation of a pattern that began several years ago, but gained additional momentum in 2022, with consumers in Germany increasingly turning to supermarkets and discounters for their baked goods, seeking to make prudent financial choices.

In this evolving landscape, which is heavily impacted by consumers having a higher cost of living, prominent leading players maintained their strong positions in packaged bread. These well-established companies have cultivated a reputation for quality and reliability over a long period in the German market. However, even as industrial bread production thrives, artisanal, traditionally crafted bread remains a formidable force, commanding a significant share of overall sales. This shifting consumer behavior represents a broader transformation in the way Germans source and enjoy baked goods, with affordability, convenience and diverse choices playing pivotal roles in shaping the future of baked goods.

Market analysis based on data provided by Euromonitor International.

Read the rest of the story in the January / February edition of European Baker & Biscuit.