Now it’s here, the falling demand as a result of the inflation that has been going on for months. Germans are beginning to question their spending. The first sectors are reporting slumps in sales. Is this the beginning of the recession?
The Germans are increasingly keeping their money together. Experts warn of a so-called “cleansing”, a wave of insolvencies that will hit poorly positioned companies in particular, but can also drag the entire country into recession. And the wave is already rolling.
Sustainable brands and organic supermarkets are the first to do so. According to research by the Handelsblatt, the Bacher health food store chain filed for bankruptcy under self-administration at the end of July. The family business from Düsseldorf has more than 100 branches throughout Germany.
The supermarket chain Superbiomarkt also filed for bankruptcy under its own responsibility at the beginning of August. It is clearly noticeable that consumers have become more cautious, said owner Michael Radau to the “Handelsblatt”. When shopping, customers are increasingly focusing on prices.
Likewise, many bulk stores that offer goods to fill yourself can no longer bridge the falling demand. The industry pioneer from Berlin is insolvent, as is Hamburg’s unpackaged general cargo store.
Most customers do not switch to conventional products, but to the organic own brands of supermarkets, drugstores and discounters: “German consumers continue to buy sustainably, but cheaper,” says consumer expert Robert Kecskes from the data and analysis provider GfK dem “Handelsblatt”.
Not only the manufacturers suffer from this, but also the specialized trade from health food stores to brand shops: “The specialist markets for high-quality sustainable products suffer particularly badly,” says Kecskes. According to GfK, sales in health food stores and health food stores fell by 39.1 percent in the first half of the year. Organic supermarkets lost 16.5 percent in sales.
Accordingly, sustainable discounters and retail brands have increased significantly since May. Manufacturer brands are falling behind. In packaged organic food, manufacturer brands have lost nine percent – just as much as private label has gained. “Customers are increasingly buying sustainable everyday products from organic biscuits to natural cosmetics in the entry-level price segment,” says Kecskes.
This buying behavior is also causing problems for Nicola Baumgartner. In recent years, she has given 19 employees jobs with her organic tea web shop Shuyao, which they would hardly have gotten on the open job market. And their shop concept was also successful. But now she too is bankrupt. Sales in the web shop collapsed by half. “In times of inflation, Germans continue to treat themselves to vacations, and at home many save on high-quality, sustainable food. We have not increased our prices, but after all there is cheaper organic tea in bags,” Baumgartner told the “Handelsblatt”.
The shift from manufacturer products to organic private labels is particularly evident in natural cosmetics. According to GfK, sales of manufacturer brands fell by 13 percent in the first half of the year, while private label gained six percent.
And big butchers like Tönnies also see the new development. According to the “Handelsblatt”, the slaughterhouse from North Rhine-Westphalia recently terminated the first contract farmers of the animal welfare initiative. According to the company, it had to “adapt to demand due to the currently low demand for animal welfare meat from meat buyers”.
Thus, after a few years of record sales, the industry suffers a severe setback. At the beginning of the corona pandemic in 2020, sales of organic food had increased by 22.3 percent and then amounted to almost 15 billion euros, according to a calculation by the Federal Organic Food Industry (BÖLW). Those times are now apparently over for now. The cleanup wave is rolling.
