Moderate growth in fine baked goods

While Germany's fine baked goods industry realised moderate growth in 2007, the companies' earnings decreased considerably as a result of explosive increases in costs of raw ingredients. This situation was announced by industrial producers of fine baked goods taking part in this year's ISM, the International Sweets and Biscuits Fair in Cologne. Based on the official statistics released to date, the Association of the German Confectionery Industry e.V. (BDSI) estimates that production of fine baked goods in 2007 was up by 1% to 739,000 tons. The production value was €2.11 billion, a 3% increase on the previous year's result.

Growth in the fine baked goods market was boosted by the introduction of many new products and innovations. And the weather also contributed sustained positive effects: unlike in 2006, there were no extended periods of very high temperatures to diminish demand for baked goods. The second half of 2007 in particular was less warm than in the same period in 2006, which helped to ensure good consumer demand for traditional autumn and Christmas baked goods.

Exports of fine baked goods in 2007 increased in terms of volume by 5.7% to 288,000 tons, which corresponds to an export value of €813 million (+2.3%). Imports of fine baked goods to Germany increased in volume by 2.8% to 192,000 tons, and in value by 0.8% to €453 million. Overall, the foreign trade was characterised by brisk commerce on the European market, whereby a very important factor is what is known as "intercompany exchange". This exchange reflects the division of labour in the production processes of companies that operate internationally and have several locations in the EU.

Despite the modest growth of the fine baked goods market, the producers posted significantly lower earnings. This decline is due to the dramatic increases in prices of key raw ingredients. Last year the price of butter climbed by more than 60%, for example, while the costs of flour and dairy products roughly doubled, and glucose prices increased by as much as 50%. In addition, the sector also felt the effects of rapid increases in energy and packaging costs. This situation has subjected the producers to tremendous cost pressures across the board. As a result, consumers will have to reckon with higher prices for fine baked goods.

The producers that belong to the BDSI expect stable development of the market for fine baked goods in 2008.

The International Sweets and Biscuits Fair (ISM) is taking place in Cologne for the 38th time. With 1,675 suppliers from 70 countries, the most important fair for the confectionery sector has attracted a record-breaking number of exhibitors. ISM is open from Sunday, 27th until Wednesday, 30th January 2008, for trade visitors only.

The organisers of ISM are Koelnmesse and the International Sweets and Biscuits Fair Working Group (AISM), which is the conceptual sponsor.

Source: Association of the German Confectionery Industry (BDSI), Bonn,
Fine bakery wares product group
22nd January 2008

Information on ISM:
www.ism-cologne.de (www.ism-cologne.com)

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