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COST OF LIVING

German bakeries fight for survival as costs spiral

Faced with exploding energy and ingredient costs, German baker Tobias Exner has installed new energy-efficient ovens, shortened his opening hours and even considered baking at lower temperatures.

German bakeries fight for survival as costs spiral
Photo: Pixabay.

But “it just doesn’t taste the same without a good crust”, he said, adding that in any case such efforts could do little to counter the existential crisis he and other bakers are facing.

“If the conditions don’t change, then sooner or later a large share of bakeries in Germany will simply no longer exist,” Exner told AFP.

Bakeries in Germany have been among the businesses hardest hit by the economic fallout from Russia’s invasion of Ukraine.

The war has sent energy prices spiralling across Europe, but especially in Germany, which was previously heavily dependent on Russian gas.

“Bakeries all have ovens. Seventy percent of artisanal bakeries have gas ovens and gas prices are going through the roof,” said Friedemann Berg, managing director of the German Bakers’ Federation.

And two of the main ingredients used by bakers — flour and oil — are among those that have been affected by blockades at Ukrainian ports.

Exner’s business is relatively large with 220 staff and 36 branches in Berlin and the surrounding area, leaving it better placed than many to survive the crisis — but even he is struggling.

Wheat is now 2.5 times more expensive than before the crisis, he said, while the cost of a litre of oil has risen from around 82 cents to more than three euros ($2.91).

Dough in the dark

Energy bills for the business, meanwhile, have almost quadrupled compared with 2020.

“You can see that the calculations no longer work,” Exner said to the hum of machines at the company’s main production site in the town of Beelitz.

But Exner is reluctant to pass the cost increases on to his customers, who he simply believes “would not pay those kinds of prices”.

In central Berlin, the mood on the ground appears to confirm his fears.

“Even more? No way. It’s getting extortionate,” said unemployed Gloria Thomas, 56, when asked whether she would be prepared to pay more for her favourite loaf.

Many bakeries in Germany have already gone under as a result of recent cost increases, with others staging protests to demand urgent help from the government.

And there is more at stake than just bread rolls, according to Exner.

“These businesses are often the most important institution in the village — they are at once grocery store, social centre, post office, etc.”

In early September, around 800 German bakeries served customers in the dark for a day to draw attention to their plight.

Insolvency blunder

Germany’s centre-left government has announced relief measures worth almost 100 billion euros to tackle inflation, but small businesses have so far been largely excluded from the help.

Worse still, they were left feeling insulted by controversial comments by Economy Minister Robert Habeck earlier this month.

Asked on a TV panel show whether he thought Germany was heading for a wave of insolvencies, Habeck replied: “I can imagine that certain industries will simply stop producing for a while.”

The comments provoked anger from bakers in particular, who accused Habeck of having no understanding of their industry.

“Habeck is probably not a stupid person, but the question is, is he qualified for the job he has right now? And I would say no,” said Exner.

The Bakers’ Confederation is calling for “quick and unbureaucratic” financial aid.

Bakeries can shave off costs here and there but they “can only do so much”, according to Berg.

If government help does not arrive soon “the future looks bleak,” he said. “It could be that many businesses have to give up their operations or simply file for bankruptcy.”

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PRACTICAL TIPS

How a quarter of German households can save on their electricity bills

Customers can save a high three-digit sum on their household electricity costs, according to calculations done by German price comparison portals. Here's why you may want to switch your tariff.

How a quarter of German households can save on their electricity bills

German households are overpaying for electricity by billions of euros each year, according to calculations carried out on the Verivox price comparison portal.

This is because nearly a quarter of households in Germany purchase electricity via the most expensive tariff group from their local supplier – the so-called ‘basic supply’, or Grundversorgung in German.

But in Germany, customers have energy tariff options, and saving hundreds on your energy bill can sometimes be as simple as checking your current tariff online and switching to a cheaper one in a matter of minutes.

Based on approximately ten million households consuming electricity from the basic supply, Verivox calculates that Germans are overpaying by about €5.5 billion annually. That’s because the average difference between basic supply rates and the cheapest local energy rates currently amounts to 20 cents per kilowatt hour (kWh).

What is the ‘basic supply’ for household energy?

Household electricity in Germany is purchased through different tariffs (Stromtarifs). Through these various tariffs, local energy companies offer different prices for electricity, depending on customer contracts.

The basic supply tariff for electricity can be thought of as the default. When a new house is connected to the energy grid, for example, its electricity will be provided via the basic supply unless the homeowner chooses another tariff option.

READ ALSO: How to change electricity and gas providers in Germany

The basic supply is intended to ensure that everyone has access to electricity, even if they haven’t shopped around for an energy provider on their own. It can also be advantageous in the short term because it can be cancelled at any time, as opposed to other tariffs which typically come with longer contracts.

But the basic supply is comparatively expensive. According to Verivox, basic supply electricity currently goes for an average of 44.36 cents per kilowatt hour (kWh), whereas the cheapest available rates on average come to 24.7 cents/kWh across Germany.

How much can you save?

At current rates, you can expect to save about 44 percent on your electricity bill if you switch from basic supply to the cheapest option with a price guarantee. 

That amounts to significant savings, considering that annual electricity costs regularly come to a few thousand euros in German households.

The Hamburger Abendblatt reported that a three-person household consuming 4,000 kWh would save an average of €786.

These prices will vary from provider to provider and from region to region. 

Keep in mind that choosing other tariff options often comes with some additional fees. Still, in many cases taking a look at different electricity tariff options can save households some money.

Also, switching tariffs is different from switching your energy provider. If you currently get basic supply electricity from Vattenfall, for example, you could potentially switch to a different tariff option while maintaining your business with them. But if you are between contracts, or currently on basic supply, you could also consider switching providers.

In this case, a comparison portal like Check24 can be useful to get an idea of which companies offer the best rates.

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