Trade and manufacturers: Price surge on the supermarket shelf

The fact that food is currently becoming more expensive is not only due to the Ukraine war. Some manufacturers now want to collect extra profits, reports the Rewe Group. What about the prices in the supermarket?

Things have been going pretty well for the supermarkets recently: many people were working from home instead of in the canteen at lunchtime, schoolchildren were at home for a long time, and the catering trade was closed for months. The Corona consequences ensured that customers bought significantly more groceries and supermarket sales increased.

But now there is almost only one topic when shopping. Customers speak of “a little shock when you check out” and notice an “enormous price increase”. If the manufacturers of bread, sweets, meat and co. have their way, the items should actually be much more expensive. He has now been in business for almost 30 years, says Rewe boss Lionel Souque. However, he has never seen such a list of price increase requests from manufacturers.

Food companies use price spiral

The Frenchman is at the helm of Rewe, the second largest German food retailer after Edeka. He is certain that not all demands are justified, for example because raw materials have become more expensive. Some international food companies are currently trying to make extra profits.

“A lot of people have surfed this wave. They said: Okay, there are many who are talking about price increases. All the big multinationals said: There is a possibility that we will pay out even more dividends next year,” says Souque. “These are unbelievable price increases that we have never noticed in our career. We got into massive discussions with the industry.”

Noticeable differences in asking prices

It all started in autumn, with rising prices for energy and coffee, for example. With the war in Ukraine, these price talks between food manufacturers and retailers intensified again. Souque believes that the trade as a whole must now be extremely careful. “There are incomprehensible differences,” reports the Rewe boss. “If a supplier asks for a plus of ten percent in Germany and only three in Austria,” one could ask oneself about the reasons if the goods come from the same factory.

What makes it easier for chains like Rewe, Edeka, Aldi and Lidl: they have many own brands in their range. That means they know exactly how their own items are calculated: How much more expensive have the components actually become? What does it matter in the end?

Passing on of increases is only partially possible

But Rewe also emphasizes that even if a lot of things are now becoming more expensive in the supermarket, the price increases in production will not ultimately be passed on to customers 1:1. “It’s very easy for the industry to say: I have a ten percent price increase. I pass ten percent on to the retailer, and they pass it on to the end consumer,” says Souque. He emphasizes: “The calculation doesn’t add up. The end consumer also pays more for petrol, also pays more for energy. It’s totally stupid to believe that we can pass everything on to the last person. Who should pay for it? We have to distributed in the system.”

For example, through low profit margins and attempts to save yourself. For example, Rewe wants to check whether the heating and lighting in the supermarkets can be reduced somewhat in order to save on electricity costs. Even if that could at best dampen the price effects.

Even packaging is becoming more expensive

Customers are already clearly noticing price increases for fruit, vegetables and bread, among other things. Rewe says it is not yet possible to say precisely which products will be particularly expensive in the coming months. That depends on many factors and sometimes also on the packaging. “In the end, all product groups are more or less affected,” said the Rewe boss. “Paper, for example, uses a lot of energy and therefore costs a lot of money, as does aluminium. That means the price of the packaging alone, the can, is going up – even if the goods inside aren’t any more expensive.”

Rewe does not see any delivery bottlenecks or supply problems as a result of the war in Ukraine. Even sunflower oil is sufficiently available despite the large proportion from Russia and Ukraine. There are enough other suppliers. So there is no reason to hamster, warns the Rewe boss. In neighboring countries such as France or Poland, there are no gaps on the shelves when it comes to sunflower oil either. Because everyone is shopping as usual.

Rewe sold its 161 stores in Russia last year – and before that 20 stores in Ukraine to focus on the European Union. “In retrospect, you have to say it was a good decision,” says Souque. “But also a bit of luck.”