Dusseldorf Empty bakeries, cold ovens: this is the nightmare scenario that more and more bakeries are warning about. The energy crisis and inflation are putting craft businesses in particular under pressure. But large bakeries are also alarmed. The supply is no longer guaranteed. In 2023, a large part of the branch and delivery bakeries will be so burdened that there is a risk of “insolvency, plant closures and, in the worst case, supply bottlenecks in bread, the staple food”, says Ulrike Detmers, President of the Association of German Large Bakeries.
The situation is being closely monitored at Harry Brot in Schenefeld in northern Germany. But the family business continues to produce at all of its locations as usual. The large bakery switched all of its production from oil to gas years ago, and there is no quick alternative. However, Harry Managing Director Frank Kleiner considers a production stop due to a lack of gas to be unlikely. “We are supply-relevant,” he says.
Although the gas prices in purchasing have risen massively in recent months, gas is still not in short supply. “We are in close coordination with the trading partners to make the costs manageable for all parties.”
Harry has experienced a number of crises in its 334 year history. Whether spelled, wheat or rye flour, with or without seeds, whether protein bread, pre-baked rolls or sandwiches – the Harry Brot product range is large. The bakery from Schenefeld in northern Germany has been baking since 1688. First for Hamburg and the north, since the post-war period also for the west and after the reunification in the 90s also for the east of the country.
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In the tenth generation, the company is run by the two owner families – and is therefore the 20th oldest family company in Germany. Two world wars, digitization and a pandemic: the big baker has survived everything so far.
The factory in Schenefeld near Hamburg was considered particularly modern at the time. For the first time, rolls and loaves of bread were produced linearly one after the other and not on different floors as before.
(Photo: Harry Brot)
Harry Brot is Germany’s largest delivery bakery. Almost 4,800 employees at ten locations produce sliced bread, toast, ready-to-bake rolls and frozen baguettes for baking stations. Harry exports baked goods to Austria, Italy, France, Denmark and Switzerland.
The large bakery dominates the supermarket shelves: in 2021, Harry had a market share of 37.8 percent in self-service bread, according to data from the market research company Nielsen. The own brands of the supermarket chains come to 35 percent, the direct competitors Lieken Urkorn and Golden Toast, however, only 4.7 and 4.3 percent.
“The trend is towards packaged bread”
The great dominance is also reflected in sales. It has been rising for years and exceeded the one billion euro mark for the first time in 2018 – and has not fallen below it since. Harry Brot is benefiting from economies of scale while many bakeries are currently closing.
The energy crisis is affecting small craft businesses in particular. In 2021, with 9965 bakeries, there were fewer than 10,000 bakeries in Germany for the first time, according to figures from the Central Association of the German Bakery Trade. “The trend is towards packaged bread,” says Armin Juncker, General Manager of the Association of German Bakeries.
“Breads from the supermarket are of high quality – regardless of whether they are packaged on the shelf or chest, unpackaged in the self-service station or at the counter,” says Juncker. “Consumers now prefer smaller packs. A trend that has intensified during the corona pandemic.”
Johan Hinrich Harry certainly never thought that his bakery would one day become the largest delivery bakery in Germany when he registered his business with the Hamburg bakers’ guild in 1688. First he bakes for his own branches in Hamburg.
The first step in the direction of a large-scale bakery was made around 1900 with rusks. Even back then, the port of Hamburg was the gateway to the world and rusks have a long shelf life – making them particularly suitable for long voyages by ship. Harry soon supplies the major shipping lines with his rusk cans. Managing director Kleiner, who is responsible for marketing and sales, is not one of the owner families, but he says: “The family had a good nose for the market situation”.
There are three main beliefs behind the long-lasting success of Harry Brot.
1. Belief: Stability
It’s not just the Harry family’s good instincts that have brought the company a long way forward. Stability is also a crucial factor. “It’s amazing that a company that’s more than 300 years old only has ten generations,” says Kleiner. The tenth generation is represented by Thomas Blohm, currently managing partner and responsible for human resources and coordination. “The family plans for the long term,” says Kleiner. Harry Brot has always relied on organic growth instead of acquisitions. “We prefer to build it ourselves,” says Managing Director Kleiner.
During the two world wars, Harry bakes “standard bread” for the population. Harry has also had a branch in Hanover since 1929 and delivers bread – first by carriage, then by car. During National Socialism, the bakery in Hanover used forced labourers. “We had tried to find out more with external support, but we still don’t know anything specific,” says Kleiner.
Kleiner has been Managing Director at Harry Brot since 2018 and is responsible for marketing.
(Photo: Harry Brot)
After the Second World War, management becomes female: there is no male successor at the top of the company, so two sisters take over the business. Through their marriages, the name Harry disappears from the owning family. Inge Holthausen manages the business from 1951, five years later her sister Martha “Marlis” Blohm takes over. For more than 30 years Blohm decided the course of the large bakery – and shaped the company like hardly anyone else.
2. Belief: Be bold and encourage innovation
Marlis Blohm does not shy away from daring to try new things and thus stands for a second characteristic of the family company: being courageous and innovative. In the early 1960s, Blohm made the decision to build a new factory. Out of Hamburg, to the “green field” in nearby Schenefeld.
This is where today’s company headquarters and a production facility that was revolutionary at the time was built. “In the past, baking was done on several floors,” explains Kleiner. That’s the end of it in Schenefeld. Harry has moved the entire production line to one floor, from the dough to the finished bread, the production process is now linear. A novelty, but not the only one.
“Marlis Blohm built Harry into his own brand,” says Kleiner. Instead of just producing for other brands, Blohm starts supplying supermarkets under his own company name. Harry finally succeeds in making the leap to the large bakery. New locations are gradually being added.
In 1997, the delivery baker revolutionized the baked goods market again under Managing Director Hans-Jochen Holthausen – this time with the first baking station in an Edeka store in Porta Westfalica in North Rhine-Westphalia. Pre-baked, deep-frozen, pre-baked: the principle for the self-service counters brings fresh rolls to the stores. In the meantime, more than 10,000 retail stations are supplied, three locations in Germany produce the frozen breads and rolls.
Innovations are still important to families today. “We have invested an average of 60 million euros per year in all locations over the past ten years,” says Kleiner. The families are very “willing to invest”.
Bread has been packaged under clean room conditions for 25 years. The highest demands on hygiene conditions mean that preservatives can be dispensed with with the same or even longer shelf life. The business software SAP was only introduced at all locations last year. All orders, flows of raw materials and goods can now be tracked in real time.
To save costs, Harry also automated parts of the production. Today, in the production halls, robots stack cartons with finished rolls and breads fully automatically. “Because of the high wage level, automation was necessary,” says Kleiner. However, employees were never laid off as a result.
The company also likes to try new things when it comes to bread recipes. To this day, the recipes are constantly being adapted and changed, and new products are also being introduced. In the early 1990s, Harry brought sandwich bread to Germany. To date, Sammy’s Super Sandwich is one of Harry’s most successful products. But also the multigrain and spelled bread and the classic “1688 – our mild”, a mixed wheat bread, are bestsellers.
3. Belief: Don’t lose focus
Despite all the innovations, Harry Brot knows his focus – and his unique selling proposition. Baking on a grand scale, but producing fresh and regionally: That is the third conviction of the family business. Grain and flour come mainly from the mills in the vicinity of the works. Even after that, the distances remain short: a loaf of bread only travels an average of 88 kilometers from the factory to the point of sale.
“Many people can bake fresh bread,” says Managing Director Kleiner. But the trick is to deliver this to consumers quickly and freshly. 1,200 drivers deliver to more than 11,000 shops every day. Fresh goods, every day. “The retail distribution channels are longer than via our fresh produce service,” explains Kleiner, explaining the decision to run our own sales force.
The oldest family businesses in Germany
Even if Harry is not only a baker, but also a logistician, the company’s goal is primarily traditional craftsmanship. To keep it that way, the company management is taking drastic steps. In 2021, Harry sells the Backfactory subsidiary. “The self-service bakery has become more of a system gastronomy,” says Kleiner. That doesn’t fit Harry so well anymore.
However, the effects of the pandemic may also have played a role. When inner cities were deserted due to lockdowns, Backfactory’s sales plummeted. Overall, however, Harry came through the crisis well. “The corona measures in production were expensive and the result suffered,” says Kleiner. The two different business areas of baking stations and self-service bread balanced each other out.
For the owner families, long-term action also counts for the employees. “We want to spread the sense of togetherness across all locations,” says Kleiner. Harry consciously wants to be a family business. What the management culture should look like in such a future is currently being revised internally. Here, too, the long-term planning of the families is evident. There is already a new generation ready, but one should not rely on the fact that there are always interested family members, says Kleiner. The “Harry spirit” still lives on in the families and employees.
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