The German Bakery Market, Between Inflation and Convenience

In the land of the pretzel, Berliner donuts, and the beautiful Stollen, bakeries are part of everyday life. They provide on-the-go breakfast, delicious snacks and bread for the main meals of the day, but also embody an ancient cultural heritage that has overcome any diet fads. That doesn’t mean it’s not struggling now.

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 increase by 5% in current terms in 2022 to EUR17.4bn
• Dessert pies and tarts is the best performing category in 2022, with retail value sales growing by 6% in current terms to EUR823m
• Retail sales are set to increase at a current value CAGR of 2% (2022 constant value CAGR of -0.4%) over the forecast period to EUR19.3bn

Higher production costs driving up retail prices

According to Euromonitor International, even compared to the high inflation in Germany as a whole, baked goods have been particularly affected by rising production costs and retail prices. Many bakeries did not even pass on the increased production costs to their customers on a one-to-one basis. In particular, the energy for the ovens, which are often gas-fired, has risen immensely in price for many baked goods, such as traditional bread and rolls, since the beginning of 2022. Added to this are the increased prices for basic ingredients, such as various types of flour or edible oil, which means that many bakeries are struggling to operate profitably.

Discounters and supermarkets see rise in bread demand 

In 2022, consumers in Germany were tending to purchase baked goods more in discounters and other retailers with low prices than in local bakeries in order to save money. Lieken and Harry-Brot continued to lead bread, both established in this product area over a long time in the German market, in spite of artisanal bread accounting for more than half of sales. Artisanal bread can be found either in traditional bakeries or in the bakery departments at grocery retailers, which can be found in many supermarkets in Germany nowadays.

Convenience trend rising due to remote working and home seclusion

You can read the rest of this article in the September-October issue of European Baker & Biscuit, which you can access by clicking here. 

Market analysis based on data provided by Euromonitor International.