Climbing costs hit German snack market

By Catherine Boal

- Last updated on GMT

Related tags Potato Weather Cost

Hot weather, the rising cost of raw materials and a poor potato
harvest have contributed to a downturn in the German snack market –
threatening profits for producers balancing mounting costs with
waning demand.

The Association of the German Confectionery Industry (BDSI) predicts a rise in snack food prices this year as costly raw materials in short supply left manufacturers struggling and resulted in minimal market growth of 1.3 per cent.

Last year, a very hot July followed by a wet August contributed to a disappointing potato yield, only a small percentage of which were suitable for crisp production.

The BDSI said: "With the prices of potatoes, wheat and corn having increased by about a third, the sector expects prices of snack items to rise significantly this year."

The price of wheat rose by around a third last year – upping the cost of flour – while glucose also climbed by more than 30 per cent.

The sector also felt the effects of rising prices of oils, fats and packaging materials.

In conjunction with the climbing costs involved in biscuit production, demand diminished due to a number of factors.

Snack sales did not benefit from the expected World Cup surge as the hot weather drove football fans outdoors where they consumed less than they normally would watching matches at home.

The unseasonably warm weather turned consumers off bakery items and consequently no growth occurred in the biscuit sector in 2006.

Around 100 German biscuit makers noted a lack of growth in production or exports.

Estimates from the BDSI suggest there was no change from 2005's 711,000 tonnes biscuit production volume and no growth in production value from around €2.18 billion.

However the BDSI remained optimistic about the future of the market.

The organisation said: "Germany's biscuit industry is expecting more positive developments in 2007.

The sector companies are hoping that the weather will be more cooperative in 2007 and that their high-quality German biscuits will attract buyers in Germany and abroad."

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