Dutch bakeries face threat of closure as energy costs surge

A surge in energy prices is threatening a wave of closures across the Dutch bakery sector, its industry lobbies warned on Tuesday, with some businesses saying costs have risen as much as tenfold.

Dutch inflation hit 12% in August, Statistics Netherlands said on Tuesday, driven largely by a 151% year-on-year leap in gas and electricity prices.

"I am hearing from a lot of entrepreneurs that if this holds up for much longer, they'll have to close up shop," said Marie-Helene Zengerink, general manager of the Dutch Association for Bread and Pastry Bakers, which has 1,600 affiliated bakers.

"We are talking about a lot of family businesses. It's a real emergency."

The association took out a full-page ad in the Dutch daily Algemeen Dagblad newspaper on Tuesday, appealing to the government to do something about runaway energy costs.

Governments across Europe have pushed through multibillion-euro packages to protect companies and households following a jump in power prices, after Russia's invasion of Ukraine helped drive the cost of gas sharply higher.

Energy contracts for many bakers have expired or are set to expire this year, with power bills sometimes jumping from about 3,000 euros a month to 30,000 euros a month, Zengerink said.

"That's not a cost you can pass on to customers for a loaf of bread."

The general manager of the Dutch Association for Bakers, which represents medium and industrial bakeries, agrees with Zengerink. "Our bakeries are facing the same problems and are wondering how they will survive", Wim Kannegieter said.

The bakery associations are lobbying the Dutch government to temporarily scrap tax on energy and to drop its opposition to an energy price cap imposed in some European countries.

Kannegieter also said that industrial bakeries, responsible for 85% of the bread produced in the Netherlands, are not able to switch to electrical ovens at the moment.

"Even though the technological aspect is there, the infrastructure lags behind", he said, adding that the issue should finally be tackled by the government as well.

Others in the food sector were also suffering from rising costs. Dutch online grocery delivery company Picnic, with annual sales of roughly 450 million euros, said it was halting deliveries of frozen goods.

"The energy crisis has hit our ice supplier so much that it can no longer make sustainable dry ice," Picnic said.

Customers will not be able to order frozen pizzas, meals or ice cream until it has found an alternative supplier, it said.