The gaps in the supermarkets are getting bigger: the price war between international corporations and German retailers is escalating like never before. Smaller companies from Germany could benefit from this.
German consumers had become accustomed to the gaps on the supermarket shelves in the wake of the corona pandemic. First the toilet paper, later the flour. “It used to be incredibly embarrassing for me if we didn’t have a product. Today, unfortunately, it’s standard,” was heard between the shelves as early as 2021. But that’s no comparison to what consumers can expect in Germany’s supermarkets these days. Gaps, gaps, gaps. But where some manufacturers are at loggerheads with retailers, opportunities arise for others. And that’s exciting to watch, especially from a German perspective.
Miracoli, bars from Snickers, Bounty or Twix, chewing gum from Wrigley’s, pet food from Frolic and Sheba: Mars sells more than 300 items in Germany. At Rewe, Penny, Edeka and Netto, the brands of the US giant are largely out of stock because the delivery stop was imposed. Mars explains it this way: “We try to absorb rising costs internally as much as possible, but a certain degree of price adjustment is necessary”.
The German dealers consider this to be a grossly euphemistic understatement and also shoot back on social media. An Edeka spokesman says: “Not only Mars, but also many other international brand groups such as Coca-Cola or Procter
The situation is similar with another US giant: Mondelez no longer supplies Edeka since the retailer did not participate in its price increase. Affected brands include Milka chocolate, Miracel Whip mayonnaise and Philadelphia cheese. Edeka has also fallen out with Coca-Cola, and they even meet in court. PepsiCo is taking a similarly tough path and can hardly be found at Aldi Nord, for example. At Aldi, the Fruchtzwerge and other products from Danone are also in short supply – here too there is disagreement about the new prices.
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The dispute between Kellogg’s and Rewe is the other way around – here the retailer has listed the products of the US giant and replaced brands such as cornflakes or frosties with its own brand Ja! replaced. Rewe justifies this with a price increase of almost 30 percent, with Kellogg’s only asking five percent more in other countries. To all appearances, the profit margins of the US giants are by no means as slim as they are currently claiming. On the other hand, one should not assume that retailers are only doing all this to protect consumers from excessively high prices.
The price war that is usual in the industry is just much more intense than usual. “The fight won’t last forever. The trade cannot do without these big brands in the long term. An agreement will be reached and the products will return to the shelves,” predicts Martin Fassnacht, retail expert at WHU. But all this is likely to take time and during this time consumer habits could change in favor of well-known brands from German manufacturers. Kölln flakes instead of Kellogg’s, so to speak, Fritz Cola instead of Coca Cola, Ritter Sport instead of Milka. “It’s an opportunity for medium-sized companies to gain a foothold in the minds of consumers,” says Fassnacht.
Aurélien Duthoit, trading expert at Allianz Trade, is of the same opinion: “In my opinion, this offers alternative providers, including local medium-sized companies, the opportunity to conquer shelf space and market share.” This is not a purely German phenomenon either: “We are also seeing it abroad Examples of the renaissance of some domestic brands.” Many also notice the intensive reporting. Some consumers will probably take away from the reporting that some supposedly German brands are not so German at all, but belong to a US giant.
But it’s even more likely that retailers’ private labels will benefit. At Edeka, for example, they are called “Gut
The often medium-sized manufacturers, who tend to operate in secret and produce private labels for the corporations, would particularly benefit from this. Bahlsen, Frosta, Intersnack, Lambertz, Gabower and DeBeukelaer, for example, also produce private labels. Some openly state what differences there are or aren’t from their branded products, while others keep it a big secret. Coppenrath
Experts say: At some point, brands and retailers will come to an agreement and offer customers prices that they can and want to pay. It will be interesting to see which new actions consumers will have become accustomed to by then.
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The article “Why domestic brands are increasingly replacing Coca-Cola, Mars and Miracoli” comes from WirtschaftsKurier.