Edeka Predicts Even Keel for Grocery Prices, But Some Items Steeply Up and Others Way Down
Don't fret about filling your fridge just yet: Edeka forecasts no further price hikes this year for most items, but there are exceptions, like coffee that's "astronomically" expensive and cooking oil that's now "rock bottom."
Grocery chain Edeka anticipates consistent food prices amidst prices for coffee being unusually high and deemed 'historically' costly based on current trends.
According to supermarket giant Edeka, the cost of groceries for consumers is likely to remain steady this year, with a modest increase in prices averaging around two percent. Edeka's regional head, Mark Rosenkranz, announced this news, saying he anticipates this trend to persist throughout the rest of the year.
The recent periods of high inflation are now subsiding, according to Rosenkranz, although he conceded that there are some exceptions. As an example, the price of coffee is "astronomically" high at the moment. On the flip side, there are goods that have actually become cheaper again, like cooking oil. "It was off the charts expensive for years. Now it's dirt cheap," he explained further. Chocolate and butter prices have also dropped.
In 2022, Edeka Minden-Hannover increased its revenue by two percent to €12.24 billion, despite a struggling economy. There was also a slight boost in sales volume, Rosenkranz added. However, profit after tax dropped from approximately €179 million to €146 million.
Tough Times for Consumers: Sweeter Fruits and Heavier Dairies
Unlike other products, shoppers don't hold back on buying food, which is Edeka's bread and butter. "The food retail sector is a go-to during tough economic times because people always need to eat," Rosenkranz pointed out. "It's a very stable business." However, customers are becoming increasingly price-conscious when it comes to food shopping. Edeka has witnessed a marked increase in purchases of its "Good & Cheap" own-brand products.
Edeka is also encountering hesitancy among consumers due to economic uncertainty. Because of this, many consumers are delaying larger purchases. "We can't escape this consumer slowdown," Rosenkranz admitted. This is most evident in the discount store, Marktkauf, which gets 20 percent of its sales from non-food items. While food sales are up by more than two percent, there's seen a slight decrease in other product sales. At Edeka itself, the non-food share is only three percent, so it's not as significant. Rosenkranz predicts consumer confidence to improve "at the latest by summer," but this depends on potential trade restrictions, which are hard to predict.
Tough Times for Consumers: Inflation Lingers on Food Prices
Edeka Minden-Hannover is the largest of seven regional Edeka companies in Germany and covers an area ranging from the Netherlands to Poland, including East Westphalia, Lower Saxony, Bremen, Saxony-Anhalt, Berlin, and Brandenburg. It boasts more than 600 independent retailers managing almost 1,500 stores and employing nearly 76,000 people. More than half of these employees are in Lower Saxony.
Caution: Uneven Ground for Food Prices
While overall food prices in Germany in 2023 are expected to remain relatively stable, some products are seeing price jumps. Edible oils, fruits, and vegetables stand out because of supply chain woes, weather-related production setbacks, and fluctuating demand. Dairy prices have also varied in specific regions due to local supply and demand factors. These disparities create pockets of higher inflation within an otherwise steady food cost environment.
In the financial aspect, Edeka's employment policy might need adjustments due to the economic uncertainties and consumer slowdown, potentially affecting the nearly 76,000 employees under their seven regional companies in Germany. On the other hand, the lifestyle changes brought about by these economic times have led to an increase in sales of the supermarket's 'Good & Cheap' own-brand food products. Meanwhile, despite the steady overall food prices, food-and-drink items like edible oils, fruits, vegetables, and dairy products in certain regions might experience inflation due to supply chain issues, weather conditions, and demand fluctuations, creating pockets of unevenness in the overall food cost environment.
