German supermarket highlights climate costs by selling food at 'true prices'

Prices for groceries in Germany have been soaring in 2023 - with some staple products like butter going up by as much as 20 percent per month. Yet environmentalists argue that food is still too cheap, since the ecological damage caused by their production is not reflected on the price tag. 

The German discount supermarket Penny is drawing attention to this through a week-long 'Wahre Kosten' (true costs) for nine of its more than 3,000 products. 

All 2,150 branches in Germany are taking part in the campaign week, set to run until Saturday, August 5th. 

“We see that many of our customers are suffering from the persistently high food prices,” said Penny manager Stefan Görgens. “Nevertheless, we have to face the uncomfortable message that the prices of our food, which are incurred along the supply chain, do not reflect the environmental costs.”

The campaign has seen the price of popular products such as sausages rise from €3.19 to €6.01, yogurt increase by 31 percent from €1.19 to €1.56, and mozzarella go up by 74 percent to €1.55.

The increases, calculated in collaboration with Nuremberg Institute of Technology and the University of Greifswald, reflect often invisible costs such as damage from intensive farming and animal feed production, groundwater pollution and climate-harming emissions. 

German environmental and consumer advocates saw the widely-advertised campaign as a first step and are now calling for further-reaching measures from politicians, industry and retailers.

But there was also clear criticism of the action of the low-cost provider, with some customers reportedly horrified at yet another price spike after already seeing their groceries get more expensive amid high inflation.

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"The true prices at Penny make it clear that many foods are produced without regard to the environment and climate," said Greenpeace agricultural expert Matthias Lambrecht.

 "The action in the supermarket must finally be followed by fundamental measures. The supermarket chains are just as responsible as the federal government."

€6 billion in climate costs

Greenpeace estimates the environmental and climate damage caused by the manufacture of meat and dairy products in Germany at around €6 billion a year. To change this, the organization advocates eliminating the VAT on plant-based foods. 

At the same time, the VAT on meat and dairy products, the production of which is much more environmentally harmful than that of fruit and vegetables, should be significantly higher, said Lambrecht. He argued that this would lead to an actual change in consumption habits.

Germany’s Environmental Production Agency (BUND) and the Federal Association of Consumer Centers also praised the initiative - while calling for it to be compatible with people who are already struggling to pay their grocery bills each months.

"We think it is necessary for products to be sold at prices that are significantly closer to their 'true price'," said BUND, and added that there needs to be a government subsidy for lower income people.

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While many consumers praised the initiative, a majority seemed loathe to take part, according to a YouGov survey. Only 16 percent of Germans said they plan to buy products at "true prices", whereas 44 percent do not plan to do so.  

Around 30 percent of those surveyed said they didn't have a nearby Penny where they could shop.

Penny wants to donate the additional income to a project for climate protection and the preservation of family-run farms in the Alps.