Groceries Set for Relative Stability, Except for Pricey Coffee - A Wake-up Brew for Consumers
Supermarket chain Edeka anticipates steady food prices - At present, coffee experiencing 'unprecedented' high cost figures
Craving a budget-friendly shopping spree? Hear this: Supermarket behemoth Edeka predicts a smoother wallet ride for shoppers this year, with only minor exceptions. While some goods may still break the bank, others are plummeting in price.
Edeka's CEO, Mark Rosenkranz of Minden-Hannover - the largest regional player - foresees a moderate price hike of approximately two percent in the food sector persisting throughout 2023. That's good news, as inflation has finally returned to normal levels, following hefty increases in 2022 and early 2023[1].
However, there's a catch - corrosive to caffeine lovers' wallets. Coffee prices are currently skyrocketing, worryingly high - if history serves as our judge[1]. On a brighter note, there are products that have dropped in price, like cooking oil, which was astronomically priced for years. Now, it's unbelievably affordable. Chocolate and butter prices have joined the bargain bin, as well[1].
Edeka Minden-Hannover managed to boost their 2022 earnings by 2% to €12.24 billion despite a hobbling economy. This growth was partly due to higher prices, and there was even a slight increase in volume, according to Rosenkranz. However, profit after tax dropped from around €179 million to €146 million[1].
Consumers have grown frugal with the global economic downturn, and this frugality is trickling down to the shopping aisles. "The retail food sector stands strong through crises and business cycles because people always have to eat," said Rosenkranz, referring to the sector's resilient nature. Yet, customers are scrutinizing prices more closely whilst shopping[1]. Edeka has witnessed a boom in sales for their affordable "Good & Cheap" label.
Even Edeka isn't immune to the hesitant spending habits of consumers, with the reluctance to buy non-food items visible in Edeka's self-service department store, Marktkauf. Marktkauf records 20% of its sales from non-food items, and the economic downturn has led to a noticeable decrease in these sales. Luckily, Edeka's primary focus on food means it's less impacted[1]. Rosenkranz anticipates the consumer climate to improve by summer at the earliest, but predictable trade restrictions remain an uncertainty[1].
Edeka's dominance extends across Germany, encompassing territories from the Netherlands to Poland, including East Westphalia, Lower Saxony, Bremen, Saxony-Anhalt, Berlin, and Brandenburg. The cooperative includes over 600 independent retailers and approximately 76,000 employees, with an estimated 40% based in Lower Saxony[1].
[1] ntv.de, jki/dpa
### Discussion Points: - What products are becoming cheaper? - Why is inflation slowing down? - Why are coffee prices so high? - How are consumers responding to the economic downturn, and what impact is that having on retailers like Edeka? - What does Edeka's expansion across various regions in Germany mean for the company?
- Some products, such as cooking oil, chocolate, and butter, have dropped significantly in price, offering budget-friendly options for consumers.
- Edeka, a major German supermarket chain, attributes the slowing down of inflation to a return to normal levels following hefty increases in 2022 and early 2023. However, coffee prices are still on the rise, leading to concerns among consumers.
