Thursday December 30th 2021
“In the end, the customer pays for it”
Rewe boss complains about the hunt for high prices
At the end of the second Corona year, Rewe boss Lionel Souque looks back on the suffering of the Group’s tourism division and growing delivery problems. The manager also warns of food manufacturers who “want to ride the price wave” and brag to shareholders.
The retail giant Rewe is currently facing a wave of price demands from the food industry. “There have never been so many calls for price increases from the industry as this year,” said Rewe boss Lionel Souque. The manager admitted that some of the price increases were justified. After all, raw material prices have recently risen significantly for many products such as pasta or coffee. “But there are also manufacturers who only want to ride the price wave,” complained Souque.
There are multinational corporations who brag to their shareholders about how they had cut their costs and still tried to cling to the price wave. “We have to be careful not to let these companies get away with their demands, because in the end the customer pays for them,” said Souque. That is why it is also important that Rewe have enough bargaining power.
At the same time, the manager complained about growing delivery problems. “In Germany, too, delivery bottlenecks have become part of everyday life. In many weeks, the industry is currently delivering less than 90 percent of the food ordered. This is completely unusual and sometimes unacceptable,” he said. Sometimes there is a lack of raw materials or packaging material. Often, however, the bad organization of the food companies is to blame, said Souque.
In order to save money, multinational consumer goods manufacturers in particular have often foregone their own fleet of vehicles or long-term contracts with logistics companies, preferring to buy the required transport capacities at short notice and at low cost. “That is falling on their feet now. Because the market has been swept empty and they simply cannot get any trucks to transport their products to the trade.”
How long this situation will last, he does not know, emphasized the manager. For the customers, however, the damage is limited. There is no article group in which the shelves are empty. Everywhere there is the possibility of switching to other brands in the event of bottlenecks.
Rewe tourism division suffers from pandemic
After the significant growth in sales at the beginning of the Corona crisis, 2021 was also a good year for Rewe and the discount subsidiary Penny in Germany, Souque said – even if the exorbitant growth rates of the first Corona year were not achieved again. In the coming year the group expects only a “slight growth in sales” in the supermarkets in Germany.
The Rewe tourism division, which includes well-known brands such as Dertour, ITS and Kuoni, suffered from the pandemic again this year. “Economically, the corona pandemic was a huge problem for Rewe-Touristik. In 2020 the losses there totaled over 400 million euros. This year we should cut the loss roughly in half – to a little more than 200 million euros,” said Souque.
Nevertheless, the group is sticking to the division. In order to get out of the crisis stronger and faster than the competition, Rewe strengthened the tourism business during the pandemic through takeovers – especially in the area of exclusive offers.