Facts & Figures
Confectionery industry - Only slight decline in 2009 despite the crisis
The German confectionery industry posted relatively good results in 2009 despite the economic and financial crisis. According to estimates by the Association of the German Confectionery Industry (BDSI), confectionery production in 2009 decreased by 2.3% to 3.57 million tonnes compared to the previous year's result. Production last year was down in value by 0.6% to 12.2 billion Euro.
For the first time in years, confectionery exports decreased (-0.4%), but they were up slightly in value (+0.5%). In this time of crisis Germans indulged somewhat less in sweets than in 2008.
Sources of particular concern in the sector are, for one thing, the high price of the key raw ingredient cocoa as a result of speculation, and also the low prices for end products due to the fierce competition in the food retail trade in Germany.
While the German food industry on the whole calculates a decline in turnover of about 4% for 2009, the confectionery industry remained relatively stable. "Compared to other sectors - including the food industry - we have emerged in fairly good shape, and we hope that will continue to be the case," reports Tobias Bachmüller, Vice Chairman of the BDSI and Chairman of the Committee for the International Sweets and Biscuits Fair (AISM).
A "mixed bag" of developments in the sector
Winners during the crisis were producers of snack items, who posted improved results after a somewhat weaker performance in 2008. Production of snack items, according to BDSI estimates, rose 1.8%, and its value even increased by 8.4%. The tendency during the crisis to engage in the trend of "cocooning" and to enjoy snacking at home probably helped to boost the results for snack items.
On the other hand, even the Christmas business couldn't ensure that 2009 would turn out to be a positive year for producers of chocolate, chocolate products and fine baked goods. Production of chocolate and chocolate products was down 3% in terms of volume and 1.1% in value.
The declines were even more significant among producers of fine baked goods. In 2009, according to BDSI estimates, production of fine baked goods decreased 3.3% compared to the previous year and there was a 1% drop in value. Both of these segments are concerned about the record high price of the raw ingredient cocoa, currently 2,600 Euro/t, which is the result of speculation. This development creates a situation that cannot be reconciled with the falling demand for products among end consumers.
Production of sugar confectionery fell 2.1% in terms of volume and 1.3 % in value.
Strong euro and lack of credit insurance are hindering exports
This year Germany aims not only to capture the world championship in football but also to remain the world's leading confectionery exporter. More than 40 % of its products are exported. BDSI estimates show that in 2009 export volume was down slightly for the first time in years. In terms of value, however, exports rose by 0.5% to 4.7 billion Euro. This is where the impact of the worldwide economic and financial crisis is being felt. Given the strength of the euro and currency exchange rate fluctuations, German confectionery and snack items were hardly able to compete in key export markets. This applied particularly to Russia and Hungary.
Making matters worse is the fact that credit insurance, which is indispensable for exports, has no longer been approved for many countries since mid-2009. Every producer must carefully consider whether to continue supplying long-standing export customers. "Without credit insurance for exports, exporting is an incalculable risk for us," says Bachmüller. "This is where political decisions are needed."
The politicians also must take the right steps in terms of legal regulations. The BDSI is urging the EU Commission in particular to abandon the nutritional profiles project, which calls for creating profiles of food product characteristics. These profiles do not have a sound scientific basis and are particularly burdensome for producers, most of whom are medium-size businesses. The sector advocates a reliance on the consumers' autonomous decision-making power instead of allowing others to make decisions for them.
Uncertain outlook for 2010
Taking into account the difficult situation in terms of raw materials, the continuing price war among German food retailers and the excessively bureaucratic legal requirements from Brussels, 2010 will be a year full of uncertainty for the German confectionery industry. The sector hopes that Germans will continue to be in the mood to buy its products, despite possible rising unemployment, and hopes to see sales momentum generated by the World Cup.