Everybody loves a good David versus Goliath story – the underdog, unlikely to win but fighting for a good cause, defeating an overpowering opponent. But what if there are titans on both sides of the ring?
Because that’s exactly what is happening in Germany’s grocery sector. The subject of the battle, currently being fought in the industry, is the retail prices of products like chocolate bars and soda.
Should consumers have to pay significantly more for their favourite snacks to compensate for sharply risen energy and production costs since Russia’s invasion of Ukraine, as food processors argue?
Or should prices be kept as low as possible to shield consumers (and, importantly, supermarkets’ revenues) from the blow – even if this means the food industry has to tighten its belt?
The fight is on.
In one corner: food giants like Mars and Coca-Cola, true heavyweights in the industry with yearly revenues of $35 and $33 billion, respectively, and between 75,000 and 80,000 employees worldwide.
Between chewing gum, pasta, instant rice, pet food and, of course, famous chocolate bars, Mars is omnipresent on German supermarket shelves. Meanwhile, Coca-Cola is the market leader for soft drinks in Germany with a market share of almost 11% and more than 40% for coke specifically.
In the opposite corner: major supermarket chains like REWE and EDEKA, two of Germany’s big four food retailers that, together, divide three-quarters of the market up among them and hold considerable market power.
It is a true battle of Goliath against Goliath, in which both sides have started exchanging heavy blows.
After tough talks failed and supermarket groups refused to cave into processors’ demands to significantly raise retail prices for their products, both Mars and Coca-Cola recently suspended deliveries to EDEKA and/or REWE.
“We try as best we can to cushion the blow of rising costs internally, but a certain degree of price adjustment is necessary,” Mars Inc. justified in a statement.
With stocks shrinking, more and more customers looking for the brands’ soda or sweets in supermarkets find themselves in front of empty shelves.
Naturally, Germany’s retail giants were quick to deal with their counter-blow, which came in the form of legal action against the halted deliveries.
However, EDEKA’s legal challenge against Coca-Cola was struck down by a regional court, which ruled the food processor was well within its rights to put a stop to the deliveries – and experts think the ruling could set a precedent for similar cases.
With its first strike intercepted, the supermarket chain turned to a new tactic: public attack.
“Don’t fancy Mars prices going over the moon? Come to Netto!” EDEKA’s discount subsidiary Netto taunted in a pun-ridden Instagram post which adds that the food processor is demanding “disproportionate price increases” while the supermarket chain is “fighting for you” – that is, the consumers.
Public statements such as these also show how, in this Goliath versus Goliath battle, both parties try hard to portray themselves as the David of the situation, the relatable underdog standing up to an overpowering opponent who finally needs to be taken down a notch.
International food companies like Mars and Coca-Cola “use unilateral supply stops to mount pressure on retailers” and “try to ride the inflation wave with excessive price demands meant to up their returns,” an EDEKA spokesperson told German newspaper Handelsblatt.
To hammer in the point that food companies, not retailers, are really the big baddies, the spokesperson also cited the processors’ massive revenues and high-profit margins.
On the other hand, the food industry argues retailers use their far-reaching market power in Germany to practice methods that are unusually harsh compared to other countries.
While it remains unclear who will come out on top in this industry arm wrestling, the episode illustrates the contrast between the interactions big retailers have with food processing giants and those they have with farmers.
Here, the balance of power is much more tilted – an actual David versus Goliath situation, with supermarket chains exerting considerable pressure to lower producer prices.
Because we should remember that it is these small actors in the food chain – farmers, but also consumers and smaller retailers – that are taking the biggest blow from the current crisis, while the giants of the sector are battling it out in the spotlight.
By Julia Dahm
Agrifood Podcast: CAP network launch, most pessimistic town in Finland, REACH
This week, EURACTIV’s agrifood team talks about the Commission’s reluctance to commit to a timeline for the EU chemicals regulation, REACH, and how changes in the temporary state aid framework will impact farmers. We also explore the launch of the new Common Agricultural Policy (CAP) network and what this means in practice with the help of its newly appointed team leader, David Lamb, as well as David Armellini, in charge of the rural agenda in the French national agency of territorial cohesion. We also speak to Santeri Rahkamaa about the most pessimistic town in Finland and how one innovative rural project has turned this pessimism into a positive marketing tool.
Agrifood stories of the week
Commission asks industry, member states for ‘input’ into EU fertilisers communication
The European Commission has met with industry and member states to ask for proposals for its upcoming fertiliser communication, but seemingly has no plans to broaden consultations, a move that has sparked backlash among NGOs. Natasha Foote has the story.
Commission to propose EU-wide phaseout of male chick killing
The European Commission will table a proposal to phase out the systematic killing of male chicks, food safety Commissioner Stella Kyriakides told a meeting of national ministers, during which several member states called for an EU-wide ban of the practice. Julia Dahm has more.
Centre-right warns Commission overstepping its mark on pesticide cuts
The European Parliament’s largest political group, the centre-right EPP, has warned the European Commission against overstepping its mark on its plans to slash the use and risk of pesticides in half, vowing to push back on the proposals as tensions reach breaking point. Natasha Foote and Gerardo Fortuna have more.
Temporary extension of EU glyphosate approval hits roadblock
Several member states blocked the temporary extension of the EU approval of the controversial pesticide glyphosate for one more year on Friday (14 October) after it failed to reach the necessary majority. Natasha Foote has the story.
Experts caution as campaigners call to broaden scope of EU deforestation law
As negotiations on a new anti-deforestation EU law between European Parliament, ministers, and the Commission begin, a coalition of over 140 NGOs called to broaden the scope of the text. Experts, however, say a narrower approach could be more effective. Julia Dahm has the details.
Commission, EU countries agree on importance of manure-made fertilisers
Fertilisers from livestock manure could be key to reducing costs and increasing independence from non-EU countries, according to EU27 agriculture ministers and the European Commission. Hugo Struna has more.
Inflation, Green Deal put heavy strain on CAP budget, says report
Inflation, combined with the European Commission’s push to achieve ambitions laid out in the Green Deal, is threatening the budget for the EU’s Common Agricultural Policy (CAP), according to a new report published by the think tank Farm Europe. Hugo Struna explains more.
AMR: Germany to tighten rules for livestock antibiotics
German Agriculture Minister Cem Özdemir is pushing a bill through the country’s parliament that aims for stricter control of antibiotics use in animal husbandry to counter the increasing risk of resistant germs. But associations warn restrictions should not come at the expense of animal health. Julia Dahm has more.
Agri-bites
On the Commission’s 2023 menu. The European Commission released its 2023 work programme this week. On the menu for agrifood includes:
- Legislation for plants produced by certain new genomic techniques – Q2
- Revision of food waste and textiles aspects of the EU waste framework Directive – Q2
- Initiative on protecting, sustainably managing and restoring EU soils – Q2
- Revision of EU animal welfare legislation – Q3
- Legislative framework for sustainable food systems – Q3
- REACH chemicals revision (see here for background) – Q4
EEAS aims to take a coordinating role on food security. The European External Action Service’s (EEAS) Oana Matei said during an event on Thursday (20 October) that, in light of the Ukraine war, the EEAS needs to “step in much more than before to address food security” to take a convener role “connecting the dots” between key players. Concretely, this would involve more focus on trade efforts, including a stronger role in facilitating the export of grain from Ukraine and the grain deal extension, as well as working more closely inside the Council with member states to set food security as a “key geopolitical priority”.
Top agri MEP influencers. According to the 2022 EU matrix index of MEP influence, the top MEPs shaping EU’s agri-food policy include Norbert Lins, Martin Häusling, Veronika Vrecionová, Ulrike Müller, Tilly Metz, Herbert Dorfmann, Clara Aguilera, Anja Hazekamp, Elsi Katainen and Eleonora Evi. The centre-right EPP was found to be the most influential group on agri-food topics, both in absolute terms but also proportionally to its size. The index notes that the changing shift in the narrative, especially since the war in Ukraine, seems to be benefitting the conservative EPP group. However, the Greens/EFA are in second place in terms of proportional influence on this topic, with the index concluding that the debate on this topic remains “very polarised”.
Vegan meals on every menu. The European Commission decided to register a new European Citizens’ Initiative (ECI) entitled ‘European citizens’ initiative for vegan meals’ this week. The initiative calls for a law requiring to explicitly make a vegan alternative available in private and public spaces selling food and drinks in Europe. The Commission has not analysed the substance of the proposal at this stage.
‘Dublin declaration’ on meat. International experts gathered in Dublin this week to take a closer look at the importance of meat to society in a two-day summit to launch the so-called ‘Dublin declaration’. Learn more.
News from the CAPitals
ROMANIA
Romania enters the final stage of the CAP plan submission
The final draft of the 2023-2027 National Strategic Plan (NSP) was electronically submitted to the European Commission on 18 October 18, according to a ministry of agriculture and rural development statement. The plan was subject of intense negotiations after concerns the previous draft favoured large companies over small farms. The plan is now awaiting the official green light from the European Commission. (Manuela Preoteasa | EURACTIV.ro)
BELGIUM
Belgian food companies buckle under strain of energy crisis. According to a Belgian case study from FoodDrinkEurope on the impact of the energy crisis on food businesses, for 63% of food and drink companies in Belgium, gas and electricity bills have more than doubled in 2022, while 40% of Belgian food and drink companies have even seen their bills triple. Meanwhile, 2 out of 3 food and drink companies in Belgium say the situation is critical, with their ‘hazard warning lights on’, and 4 out of 10 food and drink companies in Belgium could reduce or temporarily stop production (Natasha Foote | EURACTIV.com)
GREECE
Commission paves way for CAP plan adoption. The European Commission has given its green light for starting the formal approval process of Greece’s CAP National Strategic Plan after intense negotiations and a recent visit of a Greek government delegation to Brussels meant to speed up the relevant procedures. The finalised CAP plan was posted on the EU’s official fund management platform on Monday (17 October). (Marianthi Pelekanaki| EURACTIV.gr)
GERMANY
German city strikes meat off school menus. The southern German city of Freiburg has sparked controversy with a decision to make school and kindergarten canteens fully vegetarian from the coming school year on. While city council justified the step as an effort to save costs by offering just one option rather than giving students the choice between meat or fish and vegetarian food, critics slammed the decision for “dictating students what to eat.” For the city’s mayor, “meat consumption is a thorn in the side,” Liberal city councillor Franco Orlando said. Meanwhile, the Greens food policy spokeswoman, Renate Künast, welcomed the step as a “healthy move.” (Julia Dahm I EURACTIV.de)
FRANCE
Farmers called upon to confine poultry amid avian flu spread. Free-range poultry will have to be confined in the major poultry producing regions of Brittany and Pays de la Loire to combat the spread of avian flu, agriculture minister Marc Fesneau announced on Wednesday. EURACTIV France has more.
AUSTRIA
Austria ramps up World Food Programme contribution. Austria will massively up its contribution to the United Nation’s World Food Programme from around €1.6 million yearly to €20 million each year between 2023 and 2025. The step was announced by the government on Monday (17 October) on the occasion of World Food Day celebrated on 16 October. Russian president “Putin – displaying incredible cynicism – consciously uses food as a weapon,” foreign minister Alexander Schallenberg stressed in a statement, adding Austria’s increased contribution is meant to “take powerful countermeasures against this.” (Julia Dahm I EURACTIV.de)
LUXEMBOURG
New pilot project to boost on-farm solar panels. Luxembourg’s agriculture minister Claude Haagen and energy minister Claude Turmes have launched a call for participation in a new pilot project meant to help farmers install solar panels on agricultural land while still continuing production on the land. “The primary function of this agricultural land will still be sustainable food production,” Haagen stressed, adding that areas used for solar panels would still count as farmed land and thus remain eligible for CAP funds. (Julia Dahm I EURACTIV.de)
IRELAND
Food safety incidents on the rise. The number of food incidents has been on the rise this past year, according to the Food Safety Authority of Ireland’s (FSAI) annual report, with the COVID-19 pandemic, Brexit and limited resources all listed as key challenges. (Natasha Foote | EURACTIV.com)
UK
Avian influenza sweeps across Britain. An avian influenza prevention zone has been officially declared across Great Britain this week, making it a legal requirement for all bird keepers to follow strict biosecurity measures. See here for more information. (Natasha Foote | EURACTIV.com)
MALTA
Malta’s iconic cheese to be considered for EU protection. Malta is set to apply for EU protective status for its famous round cheeselet, the Gbejna, but stakeholders are divided over whether it will benefit the local cheese sector. Read the full story here. (Alice Taylor I Exit.al)
SPAIN
Food banks at the limit as crisis shrinks reserves. Spanish food banks are in a “worrying” situation due to the decrease of between 40% and 50% in their pantry reserves during this year as a consequence of the food crisis caused by the war in Ukraine as well as inflation. Find out more from EURACTIV’s partner EFE Agro.
Events
24 October | ENVI committee meeting, including a report back on Land use, land use change and forestry (LULUCF)
24-25 October | European Parliament’s agriculture committee meeting, including a debate with with the Ukrainian Deputy Agriculture Minister
25 October | ENVI committee debate on transmission of antimicrobial resistance (AMR) and zoonotic agents during animal transport
26 October | À Table! Perspectives on the Sustainable Food Systems Law
26 October | Roundtable on Front-of-Pack nutritional labelling
26 October | Presentation of results from pesticides contamination of MEPs
26 October | EURACTIV Germany event ‘Integration von GAP und Green Deal – Die Zukunft nachhaltiger Landwirtschaft?’
26 October | ENVI health working group Antimicrobial resistance workshop
[Edited by Nathalie Weatherald]