A gingerbread heart reading "Greetings from the Nuremberg Christkindlesmarkt" is seen at a booth on the official opening day of the Christkindlesmarkt in Nuremberg
A gingerbread heart reading "Greetings from the Nuremberg Christkindlesmarkt" is seen at a booth on the official opening day of the Christkindlesmarkt in Nuremberg

Will German gingerbread be the next victim of the US trade wars?

By Jan Petermann Time of article published Dec 26, 2019

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Germany - Americans ought to be enjoying their gingerbread and spiced nuts as usual this Christmas season.

Indeed, it might be best if they savour them more than usual this year, because it's not clear if all that gingerbread joy will fall victim in 2020 to punitive tariffs on foodstuffs from the European Union.

"The duties are a heavy burden on our export business," a spokesperson for confectioner Bahlsen told dpa in Hanover.

The new US duties, imposed in a tit-for-tat originally about state subsidies to aircraft makers, have hit German pastry and confectionery makers hard since their imposition at the end of October.

The word from the sector, which includes household names like Bahlsen and Lambertz, is that Christmas trade has been brisk this year. But that was before the tariffs kicked in.

Bahlsen regards the United States as "a promising market where we have shown continuous growth," the spokesperson said. He was unable to put a figure on the impact of the import duties, as delivery contracts are, in general, long-term.

But difficulties loom in the new year, even if no one can yet place a figure on the impact on the prices and sales of gingerbread men.

One thing is clear: "It's definitely going to hit us," the Bahlsen spokesperson said, noting that the company does not own production facilities in the US that could help it weather the storm.

The Association of the German Confectionery Association (BDSI) issued a warning two months ago about the 25-per-cent tariffs imposed on sweet cakes and waffles.

"These punitive duties pose a serious threat to the many years of effort that German manufacturers of fine confectionery have put into the US market," it said, predicting "catastrophic effects."

The trade conflict between the US and EU has seen Washington lash out first at steel and aluminium. Now it has in its sights on food products, such as wines, cheeses and olive oil, which are closely associated with Europe and prized by many on the other side of Atlantic.

Confectioners have been hit in the escalating conflict, which began with a US response to illegal EU subsidies to aircraft maker Airbus, the main international rival for Boeing.

Aachen-based gingerbread and biscuit maker Lambertz is also concerned about the future for its high-quality wares.

"Our sector has been badly hit by this," chief executive Hermann Buehlbecker told dpa, while being unable to put a figure on the damage.

"In the last book year, we turned over 28 million euros (31 million dollars) in the US. If additional costs from a punitive tariff of 25 per cent are now added, no one is going to compensate us for this."

Buehlbecker is satisfied thus far with this year's Christmas business, which began with the start of preparations for the festive season in September.

"The goods sold strongly. By contrast with last year, we had typical autumn weather, and we can assume that December went well as well," Buehlbecker said. Cold weather tends to bring out the craving for a chocolate biscuit, he says.

For Lambertz, the US is the second most important market after Poland, where the company has two production plants.

"We have grown there in stages and are now well represented at Wal-mart and other chains. Now sectors and countries are being picked out that send large quantities of their products to the US," Buehlbecker says.

The Lambertz chief plans to use a confectioners' trade fair in Cologne at the start of February to assess how far the company can raise its prices to accommodate the new duties.

"The US consumer won't simply swallow this," he predicts.

DPA

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