German hard discounters unleash butter war

German hard discounters have unleashed a fierce butter war in the run-up to Christmas. They are using packaged butter at extremely low prices to attract customers. The lowest price so far is €0.75 for a 250-gram package of butter. Calculated at B2B level, this would mean that butter must have been purchased for €2,400 per tonne, with around €600 added for packaging and distribution. That seems not to be a realistic scenario. The discounters must therefore be subsidizing the stunt, which just a few months ago would have seemed totally surreal. The butter price was indeed at a record high. However, a few weeks ago, butter suddenly appeared for a price of €1.99 per 250 grams, a price that was low but felt somewhat normal and familiar to the German consumer again. Last week, however, discounter Norma suddenly came up with an offer of €0.99 per 250 grams. The butter turned out to be from Molkerei Wagenfeld Karl Niemann, a relatively small butter producer in a village near Bremen. This turned out to be the starting signal for a broader action. Discounter Penny thought it could offer even lower and placed butter on the shelf with a discount of 24 cents on Norma's offer. And as a final stroke of genius, real branded butter from Arla suddenly appeared on the shelves for a price of €0.77 per 250 grams. These prices are well below the level in the Netherlands, but German retail is known for aggressive price stunts. Normally, large dairy producers such as Arla do not directly participate in major price stunts, but rather go through intermediaries. Apparently, the pressure on the butter market is now such that this hesitation has been set aside. Less explicitly, other large producers such as Ammerland are also involved. However, the offers are currently limited to the Christmas season, or at least the end of the year.