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Taste for cheap eats worries German food producers

AFP · 25 Jan 2010, 10:28

Published: 25 Jan 2010 10:28 GMT+01:00

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The French have a love affair with food, for the Italians a good meal is part of their cultural DNA, and even the British are increasingly particular about what passes their stiff upper lips.

But for most Germans, food is fuel. They eat to live, not the other way around, with one in two shoppers getting two-thirds of what they eat by stuffing their trolleys in no-frills discounters, much more than many other Europeans.

The flip side of this phenomenon is that Germany's food industry is being squeezed hard, and if comments at the world's largest agricultural fair in Berlin are anything to go by, many are up to their necks.

At the Grüne Woche (Green Week) food fair in Berlin, which wrapped up Sunday after attracting hundreds of thousands of visitors, the talk was of a battle for survival as retailers wage an aggressive price war.

The five main discount supermarkets (Aldi, Lidl, Netto, Penny and Norma), which together account for 70 percent of Germany's retail food market, have launched 13 price-cutting bonanzas across their range since January 2009.

The head of the federation representing the German food industry, Peter Feller, said his members were suffering from the enormous purchasing power that the no-frills sector is able to bring to bear.

"99.9 percent of our members are small and medium-sized businesses. They are the ones who pick up the bill," he told AFP on the sidelines of the fair.

And the trend towards stack-em-high, sell-em-cheap outlets appears to be a particularly German trait. Consumers in Germany spend a mere 11 percent of their household budget on food, one of the lowest percentages in Europe.

A 2008 study by consumer research group GFK found that 98 percent of Germans shop at least once a week at a budget supermarket.

People are not so miserly when it comes to other ways to spend their money, as seen in the incongruous sight of the parking lots of discount supermarkets being chock-a-block with expensive cars. Some observers have wryly pointed out that Germany is the only country where you can wear Armani and go to Aldi.

"We are worried because German consumers do not seem to understand that if they want to eat well, they need to pay a decent price," said Feller.

Michael Lohse, president of the German Farmers' Federation, said: "The French and the Italians have a relationship with food that is all about enjoyment, freshness and loyalty to local products."

"In Germany, people go straight for the low-cost option. It's completely the wrong way of doing things," he complained.

"Then we encourage our children to do the same and wonder why they are not eating healthily," he added.

But the price war between the discounters continues unabated, with several shops slashing the price for breakfast cereals on the eve of the Grüne Woche - which Lohse described as a "provocation."

Feller said the "downward spiral" of more vicious price wars leading to further pain for producers was not about to end any time soon.

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"We still haven't hit the bottom. I don't know if we'll get there in 2010 or 2011," he said.

The crisis in the food industry has begun to concern politicians in Germany as well.

Speaking at the fair, Agriculture Minister Ilse Aigner said she was "extremely worried" at the "relentless competition" between the discounters which could "weigh on the quality of food and therefore harm consumers."

And it is politicians and regulators that hold the hope for the industry. The government has said it intends to launch a probe into non-competitive practices in several sectors of the economy.

"I could imagine that the food industry would be one of the sectors probed and we will see if it stands up in terms of competition," said Feller.

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Your comments about this article

11:29 January 25, 2010 by michael4096
In fact, farmers are being squeezed much more by large retailers in the UK, for example, than here. The reason that germans pay less for food is that the entire food-logistics sector here is much more efficient that most countries in europe and not because the shops screw farmers more. Compare the number of staff in a mid-sized kaufland to the same sized tesco.

However, there is a problem and regulation won't solve it in the long-term - cooperatives might, though. Friedrich Wilhelm Raifeisen - still remembered through the german bank and the 'ra' of rabo bank - showed how it was done 150 years ago. It just needs bringing up to date.
16:33 January 25, 2010 by mobiusro
In my opinion the farmers are angry at the wrong lot. They should be angry at all the corporations and company and Germany who reduce more and more the benefits they give their employees and the yearly salary increase.

Read somewhere that the gap between manager salaries and employee salaries has risen in the last years. Whad does that tell us?
19:38 January 25, 2010 by michael4096
The big northern industrialised farms can produce milk more cheaply than the little farms in the Bavarian Alps.

Sorry for butting in - but isn't it the big northern farms that are complaining? The small bavarians seem to be differentiating themselves at the point of sale and doing alright - or am I missing something?
23:53 January 25, 2010 by mexican.wav
One important thing to mention about Germanys supermarket culture in general. In other countries such as france and the UK we see your tesco and carefour budget hypermarkts but then we have the high end stores such as monoprix and marks and spencers offering things that are obviously higher standard. It seems Germany hasnt a real "middle class" shopping experience. People would say Kaisers but I dont feel it offers quite the same level of "poshness" as the other countries higher priced stores.

I guess the point is why spend more in a store which is virtually the same as the cheaper one? No wonder the public spend more in Lidl and Aldi when this is their other option!
23:17 January 26, 2010 by aceroni
I find that the real problem of today's middle class is not the decreased purchasing power, but the increased level of expectations: many people would prefer to save on the quality of food then cutting on mobile phones or travels.

This low cost supermarkets and high volume producers are killing agriculture. Come-on, 48c a liter for milk is unbelievable. It's almost cheaper than bottled water. All because of industrial dairy and meat farming, which shouldn't even exist, given the way they treat animals, the chemicals they use for keeping them alive and the damage they do the environment.
20:05 January 27, 2010 by petrag
I buy whatever I can "organic"! Costs a little more, but is better for the animals, the environment and me. OOOps, forgot, I don't eat meat and guess what? I am healthy, not overweight, no cholesterol problem, low BP etc.,etc. Age? 60!

The bottomline is this: spend a little more for really high quality food. That way you'll eat less and healthier. Cheap food makes people FAT and SICK!!! I know, I live in the US at the time.
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