Bread is a key food for Germans. Supply bottlenecks and Russia’s war are causing prices to rise. A trend that is likely to continue, warns Christian Hörger. He is the head of the Lieken bakery.
The Lieken bakery, one of the largest German manufacturers, expects the prices for bread and other grain products to rise further in the coming months. “Bread is and must be more expensive,” said Lieken CEO Christian Hörger in the podcast “The Zero Hour”. He assumes a price increase of between “10 and 20 percent” compared to today.
The second-largest wholesale baker in Germany and Harry’s competitor is known for its brands Golden Toast and Lieken Urkorn, among other things. At 20 kilos per capita in 2020, according to the Society for Consumer Research, bread is the most commonly consumed food in Germany.
According to Hörger, the price increase is influenced by various factors, which are primarily related to Russia’s war of aggression against Ukraine. Western economic sanctions are making Russian wheat exports to Europe more difficult, while at the same time Russia is preventing Ukrainian grain from being shipped abroad. “Together they certainly make up around 20 to 25 percent of the global market,” says Hörger. At the beginning of the war, Lieken asked himself: “Even if we have contracts, can we physically get the flour we ordered just because we have a contract?”
Additional costs of over 100 million euros
In the meantime, at least the fear of delivery failures has diminished, even if the price problem remains. “We are well supplied, we get everything, but we have a time lag that costs a lot of money,” says Hörger. “We will spend well over 150 million euros on flour” – more than twice as much as in a normal year. In 2021, the company produced around 500,000 tons of bread in its eight factories, using around 270,000 tons of wheat.
Other consequences of the war also affect the price of bread, such as the supply of natural gas, which is used in the factories. “What happens if we no longer have gas supplies?” asks Hörger. “All of our ovens run on gas, of course we would be affected too.” There are also factors such as packaging materials and personnel costs. Hörger speaks of “well over 100 million euros in additional costs that we will have this year”.
The Lieken boss is convinced that bread in Germany is still “very cheap compared to other European countries”, even if this is now changing. Consumers would have to be prepared to pay more than two euros per kilo of bread.
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