Dusseldorf Hardly any consumer should know the name Hans Freitag. The biscuit mixes from the family business from Verden near Bremen are available in almost every German supermarket and discounter. The company bakes more than 100 tons of biscuits every day. In retail, they are sold under their own brands such as “ja!”, “gut & Billig” or “Biscotto”.
Hans Freitag makes around 80 percent of its sales with private labels. What used to be a weakness is now proving to be a strength. “During the pandemic, Germans treated themselves to branded biscuits. Our private labels were less in demand during this time,” says Anita Freitag-Meyer, who is the third generation to run the company. “In times of inflation, however, price-sensitive consumers are increasingly turning to the entry-level segment.”
Nevertheless, the biscuit manufacturer does not see herself as a beneficiary of the crisis. Manufacturers of private label products traditionally have very low margins. “For many years we have had to calculate with the fourth decimal place,” says the 53-year-old. “For 30 years we stuck to the retail price threshold of 99 cents for half a kilo of biscuits. That put us under extreme pressure to constantly streamline.”
Costs for energy and ingredients increase sharply
When the price rose to 1.29 euros in 2020, many end users initially had a hard time with the new price. “At Starbucks, a cookie costs over two euros. But half a kilo of biscuits for 1.29 euros was too expensive for many of our customers,” says Freitag-Meyer.
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Since the war in Ukraine, the company has also been struggling with high costs for flour, sugar, cooking oil, chocolate coating, nuts and packaging. Energy prices alone have quadrupled for the company. “We currently only cover our raw material and energy needs for a very short time,” explains the boss. “Buying chocolate six months in advance is too risky for us these days.”
The cost crisis cannot be overcome without higher sales prices, emphasizes the entrepreneur, who is fighting for price increases of 30 percent. “There has never been anything like this since the company was founded.”
The biscuit entrepreneur specializes in private labels. The margins are tight. “For many years we have had to calculate with the fourth digit after the decimal point.”
(Photo: Hans Freitag)
Her grandfather Hans Freitag opened a bakery in Verden in 1946. He later founded a biscuit factory and was soon supplying private labels to Edeka. When he died of a heart attack at the age of 40, his son of the same name persuaded his mother to let him leave school at the age of 14 and run the company with her.
As the eldest of three sisters, Anita Freitag-Meyer was introduced to the company at an early age. After graduating she did her commercial apprenticeship in the company. “I’ll teach you everything you need to know,” her father said at the time. She became managing director at the age of 23 and has been in charge of the company since 2003, which now has around 500 employees.
The family business made losses during the pandemic. At that time, sales were falling, the entrepreneur had to send employees on short-time work and lay them off. This year she is hoping for a balanced result despite the burdens. “After all, our products are in high demand in retail.”
“Cookies are impulse articles”
The company is growing against the industry trend. According to market researcher Nielsen IQ, sales of sweets in German retail reached 1.73 billion euros in 2021, compared to 1.88 billion euros in 2018. This year, too, sales in the industry will shrink slightly.
In terms of sales, private labels currently have a 57 percent share of the German market for confectionery. “In a shrinking market, private labels are losing more than brands, which is primarily due to a handful of strong innovations,” says Nielsen IQ expert David Georgi.
“Cookies are impulse articles,” says Freitag-Meyer. Well-known chocolate brands such as Milka or Kinderschokolade (Kindercards) have entered the market for sweets and are taking market shares from established biscuit suppliers.
Bahlsen is the market leader for sweets. At the end of 2019, Anita Freitag-Meyer took over a factory for waffle mixtures in Schneverdingen from the traditional manufacturer. Bahlsen justified the sale by aligning the business with profitable segments. Freitag-Meyer had big export plans. But a short time later came the pandemic.
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“There could not have been a worse time for a takeover,” she says in retrospect. Nevertheless, she is not only convinced of the synergies in purchasing in the long term. “If the plant had been closed, there would not have been enough pastry and waffle mixes for the German market.”
The purchased plant is expected to generate sales of 30 million euros this year. The turnover of the Verden plant should also reach 48 million euros. In 2019 it was still 51 million euros. For the coming years, the group of companies is aiming for the sales mark of 100 million euros.
Unicorns, like buttons and llamas in the form of cookies
The biscuit manufacturer also wants to grow abroad with private labels. The expansion of the German discounters is helping. In addition, the company’s own Hans Freitag brand is to be expanded, as is the delivery to the food industry. So-called micro biscuits are already being delivered to manufacturers of muesli, yoghurt and ice cream.
“Constantly reinventing the cookie is a real challenge,” admits the entrepreneur. Pastries in the shape of unicorns, like buttons or llamas were bestsellers. However, a pink flamingo cookie with beetroot flopped. “Unfortunately, the taste wasn’t right.” This also applies to previous attempts to reduce the sugar content. “Without sugar, the biscuit doesn’t brown and doesn’t get crispy,” says Meyer-Freitag.
Anita Freitag-Meyer would like to transfer the biscuit company to the fourth generation. Son Max and daughter Anna are already working in the company.
(Photo: Hans Freitag)
The manufacturer is testing new varieties under its Hans Freitag brand. Retailers don’t like to take risks, reports the manufacturer: “In order to stay creative, it’s important that we also produce brands in addition to private labels.”
She recently launched organic vegan cookies under the Friday Organic Bakery brand. This puts it in competition with Lambertz from Aachen, which sees itself as the German market leader for organic biscuits. The young generation values regionality, sustainable and fair trade raw materials. The regular customers, on the other hand, are very traditional and mostly seniors. “Young people don’t eat half a kilo of biscuits. They always want to try something new, a small pack of hemp biscuits, unicorns or organic vegan pastries,” says Freitag-Meyer.
According to the entrepreneur, her children asked her whether the business model had a future. Her son Max has been working in purchasing for two years, and daughter Anna has been in sales since the summer. “We need to rejuvenate our range,” she says. “So that the fourth generation can still follow the motto: We bake it!”
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