Avoiding iced beverages this summer season
In the heart of Germany, Schwalbchen Dairy, a renowned name in the dairy industry, is grappling with a decline in profits. The Bad Schwalbach plant, a hub of dairy production, has seen a significant drop in the number of trucks leaving its premises each week.
Where once up to two dozen trucks departed on sunny days, this summer, it's around ten trucks fewer. This reduction is partly attributed to the increase in costs for personnel, energy, and packaging, leading to a decline in profit.
Despite an 8% increase in revenue in the milk processing sector, reaching approximately 55 million euros, the profit after tax has taken a substantial hit. The figure dropped from one million euros in the first half of 2024 to a mere 100,000 euros.
The Fresh Service sector, responsible for delivering products to large consumers, has also seen a dip in revenue. It decreased by 4.7% to 56 million euros. The decline can be linked to a shift in consumer behaviour, with customers opting for cheaper products from discount stores, affecting regional brands like Schwalbchen Dairy.
The consumption slowdown and intense competition are also contributing factors. Caterers and chefs are paying more attention to prices, which is affecting orders in the Fresh Service sector. Large customers such as cafes and ice cream parlors have held back on orders during bad weather, further impacting sales.
Interestingly, the increase in product prices in the milk processing sector does not seem to have directly affected the profit in the Fresh Service sector. However, the mixed summer weather has had negative effects, particularly on sales of cold coffee drinks.
Despite these losses, Schwalbchen Dairy at least presents positive figures in the milk processing sector. In the first half of 2025, milk processing reached a level of around 53 million kilos, comparable to the previous year.
The challenges faced by Schwalbchen Dairy are not unique in the dairy industry. Businesses often grapple with consumer trends, weather impacts, and competition. As the industry evolves, it's crucial for companies like Schwalbchen Dairy to adapt and innovate to meet the changing demands of consumers.
The management at Schwalbchen Dairy is looking to finance strategies to address the decline in profit caused by increased costs and a shift in consumer behavior towards cheaper products.
The decline in revenue in the Fresh Service sector, responsible for delivering products to large consumers, has raised concerns about the future financial health of Schwalbchen Dairy, a prominent player in the dairy industry.
