German shoppers see dairy prices increase

German shoppers started May with an unprecedented increase of up to 8% on the cost of milk and related products including cream, fresh cheese and even tinned condensed milk. The move was started by leading discounter Aldi, which added four eurocents to its average litre price of around EUR0.50. The development, after the annual spring discussions between retailers and processors throughout the country, will be followed by all other retailers in the sector, according to market observers. But such moves by the leading discounter are always regarded with extreme suspicion by the competition. Result: two days later, other major players were holding back increases on their shelves just in case Aldi pulled a fast one and dropped its price again. For instance supermarket chain Edeka announced it was staying with its current prices for dairy produce but watching the market carefully.
All dairies have been pressing for serious increases in their prices, pointing to the scarcity of milk on the world market. In fact, leading food industry newspaper Lebensmittel Zeitung reports that some processors are looking for a 20% rise in the payments received from the retailers.
But even 8% on the retail cost comes as a shock in a country where milk prices have been stable for around a year, despite most processors steadily increasing the prices paid to farmers. Last month (April), the favourite UHT 1.5% drinking milk was averaging around EUR 0.48/l on discounter shelves, with this rising up to around EUR1/l for pasteurised premium brands in other main outlets.