Kaufland and Aldi are starting with deep discounts on a liter of milk, cheese, yoghurt and other products.
(Photo: IMAGO/Martin Wagner)
Dusseldorf Dairy prices in Germany slipped again. Discounter Aldi announced on Tuesday it would permanently reduce prices by up to 15 per cent on more than 50 dairy products including milk, cream or yoghurt from Wednesday. The price of a liter of Milsani’s own brand of UHT milk or fresh whole milk will drop from 1.15 euros to 99 cents.
That same evening, discounter Kaufland joined Schwarz Group-owned Lidl in announcing permanent price cuts on dairy products. For example, K-Classic brand UHT milk has also been reduced from 1.15 euros to 99 cents. In total, about 350 products will be offered at lower prices. Kaufland proves this with lower raw material costs. Edeka and Netto also announced that they would reduce the price of dairy products “to a considerable extent”.
The move is not surprising. The trade magazine “Lebensmittel Zeitung” had already reported last week that dairy prices were under pressure again amid trade talks with dairies. “There are signs that drinking milk and other standard white-line goods will be cut again,” the paper wrote.
Dairy is considered a price point, which customers use as a guide when perceiving a retailer’s prices. Aldi is seen as a market player that moves the industry with its price movements. For years, the price of a pound of butter has been the benchmark for gauging current food price levels.
However, it is uncertain how long consumers will benefit from the price cuts. According to the “Lebensmittel Zeitung”, dairies expect prices to rise again starting in autumn. “We are heading towards a deficit,” the newspaper quoted Dairy Industry Association (MIV) chairman Peter Stahl as saying. Such a bottleneck already existed in the previous year.
Price talks with retailers hang in the balance
Mathias Hauer, CEO of Sachsenmilch Leppersdorf, also expects a trend reversal in milk prices in the second half of the year, the report said. Milk prices on the producer side have been at record levels for months, squeezing profit margins at cheese dairies. Recently, milk on the Commodities Exchange has become significantly cheaper again. Overall, however, development is shaky.
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However, many manufacturers are finding it difficult to pass the increased costs on to consumers through retailers – and have to sell at the expense of return on sales. In all areas of the food industry, further talks with large retailers will take place soon and the situation for producers should improve again.
Since the outbreak of the war in Ukraine, food prices have risen for a long time due to inflation, high energy costs and shortages of raw materials. It’s also increasingly driving high-income shoppers into discount stores.
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