News Update
» Sugar price depends on the world market
Mats Liljestam Chief Marketing Officer, Nordzucker AG
“It is important that the European Commission reaches an early decision on measures that need to be implemented, such as releasing non-quota sugar and additional imports.”
After Eastern Europe, the retail sector in Germany has now also raised the price for a kilo package of sugar. At the beginning of October, ALDI announced that it was raising the price for a kilo package of sugar from 65 cents to 85 cents. Another discounter, Lidl, and the food retailing conglomerate REWE, announced their own price rises just one day later. Good reasons for Akzente to find out more from Mats Liljestam – Nordzucker Chief Marketing Officer.
Akzente: Mr Liljestam, large retail chains in Germany have significantly raised the price for a kilogramme of sugar. What is behind these price rises? Mats Liljestam: One has to be aware of many aspects to be able to assess these price rises properly. Firstly, there was a big price war amongst the food chains in autumn 2009. Lidl dramatically dropped the
price of flour and sugar at that time – the price for sugar for instance went down from 85 cents to 72 cents. ALDI joined in and slashed the price of a kilogramme of flour by 36 per cent, and cut the price for sugar by 19 per cent. The food retail chains were therefore putting themselves under a great deal of pressure. That is one of the factors. The other is that the food retailers in Germany – unlike those in Poland for instance – close long-term supply contracts with the suppliers – in other words, with us. You will probably remember reading in the newspaper in summer that the sugar prices in supermarkets in Poland and other Eastern European countries (comment from the editor: see Akzente 02/11) were on the up. That was attributable to the fact that the retail chains in Eastern Europe had only closed short-term supply agreements; and because the world market price for sugar was very high, the food retail groups also had to pay a very high price for their sugar. We were not affected by these factors in summer because we closed supply agreements lasting 12 months. These now need to be renewed and because the world market price is still high, the food retail chains also have to buy sugar at a higher price than they did in 2009 for instance. Akzente: But the sugar which we buy here is made from sugar beet and also comes from here. Why does the global market price have an impact? Mats Liljestam: It is true that we produce sugar here from sugar beet. But we also import sugar from the world market. The reforms to the sugar market regime made in
Retailers implemented a delayed rise in prices.
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