Beer, meat, frozen food, milk: Now suppliers are threatened with dying in the catering trade

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All well-known breweries have signed.

300 beer manufacturers from Germany draw attention to their current plight in an open letter: "From week to week more and more breweries, brewery restaurants and specialist wholesalers get into existential hardship through no fault of their own and are threatened with bankruptcy," says the letter that the two industry associations German Brewers' Association and private breweries in Germany have coordinated.

The reason for the fears about the future is the slump in sales and turnover as a result of the catering trade closings lasting for months and the tens of thousands of unusual festivals, celebrations and events.

Most recently, the companies even had to destroy draft beer worth many millions of euros - because the best-before date is now running out.

In return, significantly more beer is sold in supermarkets and discounters.

"The low-margin bottled beer sales in retail cannot even come close to compensating for the massive sales losses in the hospitality industry and the losses in export," the manufacturers write in their appeal for help.

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At the same time, the bottom line is that the quantities are clearly in the red: According to the Federal Statistical Office, beer sales in 2020 actually fell almost as sharply as in the ten years before combined.

In this industry crisis, the breweries are now complaining about a lack of political support: "For the catering industry, aid measures have been developed in this context from November 2020 - the 1,500 German breweries, who are indirectly affected by their forced closure, are left with nothing, with a few exceptions."

And the brewers aren't the only ones feeling left in the lurch right now.

Other sectors in the vicinity of the catering and hotel industry are also sounding the alarm in view of massive and persistent losses.

The companies behind the gastronomy are forgotten

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"Everyone is talking about the emergency in the hospitality industry - but that there are other value chains behind it with companies that are now also reaching their limits and the edge of existence is apparently being forgotten or suppressed", criticizes Sabine Eichner, the managing director of the German Deep-Freeze Institute ( DTI), in an interview with WELT.

In association with five other industry associations, for example from the dairy industry, the meat industry or the fish trade, the DTI recently sent a fire letter to Federal Food Minister Julia Klöckner (CDU).

The goal: The industries want to be recognized by politics and to be shown a perspective.

"Politicians apparently see gastronomy and out-of-home business as leisure activities and private enjoyment," says Eichner.

"But there is a whole industry behind it."

A separate “economic summit” is therefore proposed for the so-called out-of-home market, which ranges from service catering to work and apprenticeship catering to leisure and adventure catering as well as fast food.

In addition to the top gastronomy organizations, the associations of the supplier industries should also take part.

"This direct dialogue with politicians could be the first step towards a concept for an opening strategy that is supported by everyone," says the letter that WELT has received.

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At the same time, one could explain the structures to politics and jointly develop tailor-made solutions to get economic aid on the way and to open up economic prospects for survival.

Because that is sorely needed, write the associations.

In any case, short-time work alone is no longer enough.

"In the meantime, the first layoffs can unfortunately no longer be avoided and bankruptcies are threatened."

Because a number of companies are highly specialized.

"Your products, containers and production facilities are geared towards the needs of gastronomic customers," says the association's letter.

It is therefore not easily possible to compensate for the losses in the short term by developing new products or using other sales channels.

"The associations therefore receive more calls for help every day."

For example from the frozen food industry.

The industry turned over a good 15 billion euros in 2019, including around seven billion in the catering business.

According to DTI information, current figures for the Corona year 2020 will not come until the end of March.

Frozen food for gastronomy remains lying around

But managing director Eichner expects a severe slump.

Because while the end-consumer business with ready-made pizzas, fish fingers, baked rolls and frozen spinach in supermarkets and discounters is likely to have increased significantly in the face of lockdowns, home offices and homeschooling, there are signs of an even more severe crash for suppliers of restaurants, canteens and canteens.

Eichner refers to a current quick survey of their deep-freeze institute: According to this, the sales and turnover losses of the companies specializing in the out-of-home market are between 30 and even 90 percent.

The size of the losses depends on the segment in which the company operates.

In many places, businesses have long been idle - and Eichner fears the worst.

"When it starts again, it will show who is still there and who is not," says the industry representative.

Because liquidity is becoming increasingly tricky.

And almost none of the companies get state aid: "Only the catering industry is eligible to apply, not the supplying industry."

Source: WORLD infographic

Eichner fears that their problems could now affect other upstream suppliers.

"Quite a few companies are now afraid for their own supply chains and are therefore helping to secure their existence."

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At the same time, it is not a matter of course to switch from wholesale to retail business.

“Supermarkets cannot do anything with the 25-kilogram bags from specialist companies.

However, the systems cannot even be converted to 1.5 kilogram bags, ”says Eichner.

In addition, it is a completely different business with different rules and different competitors.

"There is always a reason why companies specialize."

Hardly any sales for high-quality beef

Medium-sized company Peter Mattfeld & Sohn from Hamburg also belongs to the specialty company category.

The more than 70-year-old family business with around 175 employees and a turnover of 100 million euros in 2019 is a meat wholesaler with its own cutting facility, which usually does around 70 percent of its business with restaurants and the remaining 30 percent with grocers and butchers.

But despite long-standing connections to trade and craft, Mattfeld & Sohn is currently not getting rid of a large part of its goods, especially beef.

“Steak, fillet and roast beef are mainly eaten in restaurants,” explains managing director Matthias Rudolph.

Especially since such high-quality pieces are often portioned and refined into a dish in a restaurant kitchen.

"Such products are hardly sellable for the end consumer: Many do not dare to use them, apart from that the large pieces of meat are also too expensive for most of them."

Especially since the pieces are usually much too big for household use.

Because Mattfeld & Sohn imports the beef from South America.

And in the container there are roast beef pieces that weigh an average of four kilograms, with fillets in the order of 1.5 to 2.5 kilograms and finally steak hips weighing at least 2.5 kilograms.

“Of course we could cut the pieces.

But as soon as the meat is unpacked and comes in contact with oxygen, it changes color.

The restaurateur knows this and can handle it, especially since the taste does not change, ”describes manager Rudolph, according to which the January business was a good 70 percent below the same month last year.

"But the average consumer in the supermarket doesn't want these pieces anymore."

So there is simply no demand for the otherwise huge quantities.

Medium-sized company Mattfeld & Sohn has already rented additional storage facilities and parked almost 500 pallets of meat there - frozen.

"That is emotionally difficult", as meat lover Rudolph explains.

Most of all, it's financially painful.

On the one hand, the storage space costs high rental fees, and on the other hand, the meat immediately loses half of its market value as soon as it is frozen.

Noble goods are marketed as minced meat or goulash

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But things can get worse when it comes to the destruction of value.

“The first companies are also starting to market fine goods as minced meat,” says Heike Harstick, General Manager of the German Meat Industry Association (VDF).

Or as so-called processing meat, for example in the form of goulash.

Significantly less is already being slaughtered, around ten percent of cattle compared to the previous year.

According to the industry, countermeasures cannot be taken here at will.

After all, the space in the stalls is limited and the next generations of young animals will gradually move up.

Times are correspondingly tough for the beef specialists.

"Politicians are forgetting the businesses that are behind the catering business and supply the restaurants with goods," complains Harstick.

"The need is increasing day by day and so is the frustration about the lack of prospects."

After all, unlike beer, no meat had to be destroyed.

But now the expiry of some best-before dates is getting closer and closer.

“Any surplus is usually given to the chalkboard in portions.

But we could soon reach dimensions that could no longer be mastered there, ”says entrepreneur Rudolph.

“For example, we still have goods from the first lockdown.” At the same time, however, there are no write-offs, as the VDF complains.

"The retail trade is compensated for depreciation on perishable goods, although it is open as always - but not for the wholesale trade, although the largest group of customers has disappeared through no fault of its own," confirms Harstick, the head of the association.

"Mr. Scholz's bazooka shoots past us," says Rudolph.

The associations also complain about this in their fire letter.

"Our industries are a system-relevant component of value creation in the catering industry and are insufficiently considered by politicians in discussions and funding."

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One no longer wants to accept that without complaint.

After all, it's about food.

“The Ministry of Agriculture otherwise fights publicly against waste and wants to prevent food from ending up in the garbage.

But now the industry is being left alone, ”says DTI boss Eichner.

Even with frozen goods, which already have excessively long retention periods, the use-by date is now pressing for some products.

And not every food bank organization has the equipment and facilities to collect and distribute such goods.

Some of it could therefore end up in biogas plants.