How Inflation Is Devastating The Dutch Bakery Industry

Amid record global inflation levels that have sent energy and food prices soaring worldwide, consumers, restaurants, bakeries, and food service providers alike have had to grapple with sky-high grocery bills.

Although the United Nations recently reported that global food prices dropped for the fifth consecutive month, many culinary businesses have continued to struggle with the ballooning costs of supplies and fuel.

One such industry that has been sharply impacted by inflated energy costs is the Dutch bakery industry, according to insiders (via Reuters). Earlier this month, inflation in the Netherlands reached a record 12%, with the cost of gas and groceries up significantly, illustrated by a 13% increase in the average Dutch household's food bill compared to the previous year (via Dutch News).

According to Statistics Netherlands, Dutch energy prices have also reached unprecedented heights, up 151% since last year. One of the key factors in the European nation's soaring energy prices is the war in Ukraine, which has caused major concern that Russia, which currently provides around 15% of Netherland's gas supply, will halt gas exports to the country (via Deutsche Welle).

Bakeries have struggled to survive in the face of unprecedented energy costs

According to lobbyists for the Dutch bakery industry, the increased cost of energy coupled with record inflation has wreaked havoc on bakeries across the nation. "I am hearing from a lot of entrepreneurs that if this holds up for much longer, they'll have to close up shop," Marie-Helene Zengerink, of the Dutch Association for Bread and Pastry Bakers, told Reuters.

Zengerink's association, along with the Dutch Association for Bakers and other industry groups, have urged the Dutch government to enact policies that will help reduce energy costs for businesses. Proposed policies include a cap on gas prices and a temporary lift of energy taxes.

According to Zengerink, some of the bakeries her association represents have seen monthly energy costs rise tenfold in the last year, from 3,000 euros a month to 30,000 euros. Due to equipment cost and availability, switching from gas powered ovens to electrical ovens is not a viable short-term option for small businesses or the industrial bakeries that account for 85% of Dutch bread production.

In 2021 alone, Netherlanders consumed nearly 800 million kilos of bread (via Statista). But as Dutch bakers continue to grapple with rising costs, without government intervention family owned bakeries and industrial bread juggernauts alike find themselves at risk of shutting off their ovens for good.